(rentlemen  Lorrowir^ 
this  book  will  please 
not  deface  it  with 
pen  or  pencil  riccrks. 


UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


SCHOOL  OF  LAW 
LIBRARY 

Gift  of 
Howard  Surr 


TREATISE 


LAW  OF  PARTNERSHIP. 


BY 

TIIEOPHILUS   PARSONS,   LL.D. 

DAKE   PROFESSOR  OF   LAW   IN   HARVARD    UNIVERSITY,   AT    CAMBRIDGE. 


THIRD   EDITION. 

REVISED     AND     ENLARGED. 


BOSTON: 
LITTLE,  BROWN,   AND   COMPANY. 

1878. 


T 

1578 


Entered  according  to  Act  of  Congress,  in  the  year  1866,  by 
Theophilus  PaRSOJ7S, 
in  the  Clerk's  Office  of  the  District  Court  of  the  District  of  Massachusetts. 


Entered  according  to  Act  of  Congress,  in  the  year  1870,  by 

Theophilus  Parsons, 

in  the  Clerk's  Office  of  the  District  Court  of  the  District  of  Massachusetts. 


Entered  according  to  Act  of  Congress,  in  the  year  1878,  by 

Theophilus  Parsons, 
in  the  Office  of  the  Librarian  of  Congress,  at  Washington. 


CAMBRIDGE: 
PRESS   OF   JOHN   WILSON  AND   SON. 


s 


S 


PREFACE 


TO    THE    LAW    OF    PARTNERSHIP. 


I  HAVE  followed  the  same  plan  in  this  as  in  my 
former  works  ;  judging,  from  the  favor  they  meet  with 
and  all  I  can  learn  about  them,  that  it  is  satisfactory  to 
the  profession. 

It  may  be  briefly  described  thus  :  In  the  text,  I  state 
the  law  as  clearly  and  succinctly  as  I  can ;  enlarging 
upon  the  reasons  and  principles  involved,  when  I  treat 
of  questions  more  than  usually  important,  difficult,  or 
uncertain.  In  the  notes,  I  give  all  that  the  complete 
library  of  this  Law  School  could  supply  me  with,  of 
authorities  needed  to  verify  the  law  as  stated,  or  exhibit 
the  qualifications  or  modifications  to  which  it  is  subject, 
and  enable  an  inquirer,  with  a  library  at  command,  to 
make  a  thorough  investigation  of  any  question.  The 
great  and  still  growing  increase  in  the  number  of  reports 
makes  it  very  difficult  for  any  individual  to  have  a  full 
collection  of  them  ;  and  leads  me  to  believe,  that  a 
work  intended,  on  the  one  hand,  to  supply  on  its  spe- 
cific subjects  the  want  of  a  library  so  far  as  any  single 
work  can  hope  to  do  this,  and,  on  the  other,  to  facili- 


306203 


IV  PREFACE. 

tate  the  use  of  a  complete  library  for  those  who  have 
access  to  one,  will  be  found  useful  to  students  and 
practitioners. 

This  work  has  been  long  in  hand ;  and  would  have 
been  published  some  years  ago,  had  I  not  thought,  with 
my  publishers,  that  it  was  better  to  wait  for  peace.  I 
shall  not  regret  this  delay,  if  it  has  enabled  me,  by 
additional  labor  and  the  use  of  recent  authorities,  to 
offer  it  in  a  less  defective  condition  to  the  profession, 
whose  kind  reception  of  my  other  works  gives  me  so 
much  cause  for  gratitude. 

Cambridge,  1867.  T.  P. 


PREFACE 

TO     THE    THIRD    EDITION. 

In  this  edition,  the  Law  of  Partnership  is  brought 
down  to  the  present  time,  —  it  is  hoped,  accurately 
and  fully.  About  four  hundred  cases  have  been  se- 
lected from  those  decided  since  the  last  edition  ;  which 
either  present  new  points,  or  illustrate  or  modify  earlier 
decisions.  ' 

T.  P. 


CONTENTS. 


THE  PAGES  REFERRED  TO  ARE  THE  STAB  PAGES. 


CHAPTER  I. 

FAOK 

Of  the  Origin  and  Purpose  of  Partnership 1 

CHAPTER  IL 

"What  Partnership  is  and  how  it  is  made 6 

Sec.    I.  What  partnership  is 6 

Sec.  II.  How  partnership  may  be  made 6 

CHAPTER  III. 

Of  Partners 16 

Sec.    I.  Who  may  be  partners 16 

1.  Infants 17 

2.  Married  women 23 

3.  Of  aliens 27 

4.  Of  the  insane  and  persons  under  guardianship,  28 

5.  Of  corporations 29 

Sec.  II.   Of  the  kinds  of  partners 30 

1.  Ostensible  or  public  partners 30 

2.  Secret  or  unknown  partners 30 

3.  Nominal  partner 31 

4.  Silent  partner 32 

5.  Dormant  partner 33 

6.  Retiring  partner 34 

7.  Incoming  partner 34 

8.  General  partner 34 

9.  Special  partner 35 

CHAPTER  IV. 

Of  the  Purposes  and  Kinds  of  Partnership      ....  36 


VI  CONTENTS. 

CHAPTER  V. 
Who  are  Partners  as  to  each  Other 40 

CHAPTER   VI. 

Who  are  Partners  as  to  Third  Parties 61 

Sec.      I.   General  grounds  of  liability 61 

Sec.  II.  lYlien  a  person  is  liable  as  actual  partner  ...  66 
Sec.  III.  How  far  stipulations  between  the  partners  affect 

third  parties 93 

Sec.  IV.  When  credit  is  given  to  one  partner  only  .  .  .  103 
Sec.      V.  When  a  person  is  liable  because  he  is  held  out 

as  a  partner 115 

Sec.    VI.  Of  liabilities  arising  from  annuities,  loans,  leases, 

or  trusts 136 

Sec.  VII.  How  far  partners  are  liable  in  solido  for  the  torts 

of  other  partners 150 

CHAPTER   VII. 

Op  the  Rights  and  Duties  of  Partners  between  Them- 
selves    150 

Sec.       I.  Of  the  right  of  choice  as  to  partner 159 

Sec.     IL  Of  the  right  of  assigning  or  transferring  prop- 
erty    162 

Sec.    hi.  Of  the  foundation   and   general   extent  of   the 

power  of  a  partner 170 

1.  Of  the  foundation  of  this  power     ....  170 

2.  Of  the  general  extent  of  this  power  .     .     .  171 

3.  Of  the  power  to  submit  to  arbitration      .     .  176 

4.  Of  the  power  to  affix  a  seal 178 

5.  Of  the   representations   or  admissions  of  a 

partner 184 

6.  Of  the    power    to   vary  the    business   of  a 

partnership 197 

Sec.  IV.  Of  negotiable  paper 199 

Sec.  V.  Of  the  power  of  a  majority  of  the  partners  .  .  218 
Sec.  VI.  Of  the  conduct  which   partners   may  require  of 

each  other 222 

1.  Of  good  faith 222 

2.  How  for  a  partner  may  transact  independent 

business 227 


CONTENTS.  Vil 

3.  How  tlie  accounts  of  the  firm  shall  be  kept,  228 

4.  Oi  a  partner's  right  to  extra  compensation  .  229 

5.  How  far  partners  are  tiustees 231 

Sec.    VII.  Of  the  articles  of  copartnership 231 

1.  General  principles  of  the  construction  and 

effect  of  articles 231 

2.  Bill   in  equity  tor  specific   performance  of 

articles 234 

3.  Of  waiver  of  provisions  in  the  articles     .     .  238 

4.  Of  renewal  of  a  partnership 239 

5.  Of  provisions  for  advances  by  a  partner  .     .  240 

6.  Of  provision  as  to  tlie  accounts      ....  242 

7.  Provisions  for  giving  care  and  skill  and  time 

to  the  partnership 243 

8.  Of  provisions  for  a  dissolution 244 

9.  Of  provisions  for  the  determination  of  differ- 

ences by  arbitration  ;  for  the  powers  of  a 

majority ;  or  for  division  of  profits  .     .     .  247 

10.  Of  provision  for  damages  for  misconduct  of 

a  partner 250 

11.  Of  provisions  for  appropriation  of  property 

to  a  partner 252 

12.  Of  provisions  respecting   the  name   of  the 

firm 254 

Sec.  VIII.  Of  the  rights  of  property  of  the  partners  inter  se,  256 

1.  What  constitutes  partnership  property     .     .  256 

2.  Of  the  good-will,  and  of  trade-marks,  copy- 

rights, and  patent-rights 261 

3.  Of  the  trade  name 265 

CHAPTER  VIII. 

On  the  Remedies  of  Partners  inter  se 267 

Sec.       I.   General  considerations 267 

Sec.     II.  Of  questions  between  partners  of  which  the  courts 

of  law  take  cognizance 270 

1.  Of  demands  distinct  from  the  affairs  of  the 

partnership 270 

2.  Of  a   demand   founded   upon   a  balance   of 

account  stated 278 

3.  Of  a  demand  for  contribution 285 

Sec.  III.  Of  questions  between  partners  cognizant  only  by 

courts  of  equity 288 


VIU  CONTENTS. 

1.  Demands  between   firms  having  a  common 

member 288 

2.  Of  the  demand  of  a  firm  grounded  on  the 

tort  of  a  member  thereof 293 

Sec.  IV.  On  the  methods  and  processes  of  equity  applicable 

in  cases  of  partnership 297 

1 .  Of  a  decree  for  specific  performance   .     .     .     297 

2.  Of  a  decree   for   a  dissolution   and  for  an 

account 299 

3.  Of  a  decree  for  an  injunction 302 

4.  Of  a  decree  for  a  receiver 312 

Sec.    V.  Of  torts  between  partners 321 

CHAPTER   IX. 

Of  Remedies  by  Partners  against  Third  Parties     .     .  325 

Sec.    I.  Of  remedies  for  breach  of  contract 335 

Sec.  II.  Of  the  remedies  of  partners  against  third  parties 

for  torts 337 

CHAPTER   X. 

Of  the  Remedies  of  Third  Persons  against  the  Part- 
nership AND  against  Partners 342 

Sec.    I.  Of  the  appropriation  of  the  property  to  the  debts,     342 
Skc.  IL  Of  the  suit,  attachment,  and  levy  of  a  private  cred- 
itor against  a  partner  personally   indebted  to 
him 350 

CHAPTER   XI. 

Of  the  Real  Estate  of  a  Partnership 362 

Sec.      I.   General  considerations 362 

Sec.    II.  When  and  by  what  means  real    estate   becomes 

partnership  pi-operty 363 

Sec.  III.  How  courts  of  law  treat  the  real  estate  of  a  part- 
nership    366 

Sec.  IV.  How  the  real  estate  of  a  partnership  is  treated  in 

equity 369 

1.  How  far  it  is  regarded  as  personal  estate       .  369 

2.  Of  dower  in  such  real  estate 372 

3.  Of  the  inheritance  of  such  real  estate  .     .     .  373 

4.  Of  the  right  of  creditors  of  the  firm  to  its  real 

estate 375 


CONTENTS.  IX 

5.  Of  the  riglit  and  power  of  the  partners  as  to 

the  real  estate  of  the  partnership      .     .     .  376 
Sec.     V.  Of  conveyances  to  strangers  of  the  real  estate  of 

the  partnership 377 

CHAPTER   XII. 

Of  Dissolution 379 

Sec.      I.  Of  the  extent  and  duration  of  a  partnership    .     .  379 

Sec.    II.  Of  dissolution  by  a  provision  in  the  articles     .     .  380 

Sec.  III.  Of  dissolution  by  the  will  of  all  the  partners    .     .  384 

Sec.  IV.  Of  the  general  effects  of  a  dissolution     ....  386 

1.  Of  its  effects  on  the  interest  or  rights  of  part- 

ners     386 

2.  Of  winding  up  the  concern 388 

3.  Of  the  effect  of  a  dissolution  upon  third  parties  394 

4.  Of  actions  and  remedies  after  a  dissolution  .  398 
Sec.     V.  Of  dissolution  by  the  act  of  a  part  of  the  firm  only,  399 

1.  AVhat  acts  dissolve  a  partnership    ....  399 

2.  At  what  time  and  in  what  manner  a  partner 

may  terminate  a  partnership 401 

CHAPTER  Xni. 

Of  a  Change  in  the  Partnership 406 

Sec.      I.  Of  the  effect  of  any  change  in  the  partnership      .  406 

Sec.    II.  Of  a  retiring  partner 408 

1.  How  retirement,  of  itself,  affects  the  liability 

of  the  partner 408 

2.  Of  notice 410 

3.  When  the  retiring  partner  is  discharged  by 

the  creditors 421 

4.  When  the  retiring  partner  is  discharged  by 

appropriation  of  payment 427 

Sec.  III.  Of  an  incoming  partner 433 

Sec.  IV.  Of  the  death  of  a  partner 438 

1.  Dissolution  by  death 438 

2.  Of  the  powers  and  interest  of  the  surviving 

partners 440 

3.  Of  the  settlement  of  the  estate  of  a  deceased 

partner 447 

4.  When  the  deceased  has  made  his  partner  his 

executor 450 

5.  When  a  power  of  appointment  is  given  by 

the  articles 451 


X  CONTENTS. 

CHAPTER   XIV. 

Of  Dissolution  by  Dkcuee 457 

1.  Of  a  decree  for  misconduct  of  a  partoer  .     .  457 

2.  Of  a  decree  where  miriconduct  is  not  charged,  4G0 

CHAPTER  XV. 

Of  Bankruptcy 469 

Sec.      I.   Wheu  and  how  a  bankruptcy  dissolves  a  partner- 
ship    469 

Sec.    II.  Of  the  effect  of  the  bankruptcy  of  a  partner  upon 

solvent  partners        471 

Sec.  III.  How  the  funds  are  appropriated  to  the  debts  .     .  480 

Sec.  IV.  Whatdebtsor  funds  are  joint,  and  what  are  several,  484 

Sec.    V.  Of  a  sale  of  the  effects  in  bankruptcy      ....  506 

CHAPTER  XVI. 

Of  an  Account 508 

Sec.      I.  When  an  account  will  be  ordered 508 

Sec.    II.  Of  opening  an  account  for  error 513 

Sec.  III.  How  an  account  should  be  taken 519 

CHAPTER   XVII. 

Of  Limited  Partnership 526 

CHAPTER   XVIII. 

Of  Joint-stock  Companies 541 

CHAPTER   XIX. 

Of  Part-owners  of  Ships 548 

Sec.      I.  Of  the  peculiar  nature  of  part-ownership  of  ships,  548 
Sec.    II.  Of  the  rights  and  obligations  of  part-owners  of 

ships  in  relation  to  each  other      ....  553 

1.  Of  repairs,  sale,  insurance,  and  the  like   .     .  553 

2.  Of  the  employment  of  the  ship 558 

3.  Of  the  lien  of  part-owners  of  ships  .     .     .     .  563 


CONTENTS.  XI 

Sec.  til  Of  the  rights  and  obligations  of  part-owners  of 

shii)s  as  to  thii-d  parties 564 

1.  Of  the  power  of  a  part-owner  to  represent 

the  owners 564 

2.  Of  the  ship's  husband 569 

3.  Of  mortgagees,  mortgagoi's,  and  cliarterers   •  570 

4.  How  far  part-owners  are  bound  for  the  torts 

of  each  other  or  of  tlieir  servants      .     .     .  571 


INDEX   TO    CASES   CITED, 


THE  PAGES  REPEURKD  TO  ARK  THE  STAR  PAGES. 


A. 

PAGE 

Abat  V.  Penny  407 

Abbot  V.  Bay  ley  24 

V.  Johnson  222 

Abbott  V.  Smith       273,  285,  286,  295, 

350 

Abbott's  Appeal  372 

Abel  V.Sutton  891,411,413 

Abell,  Ex  parte  482,  493 

i:  Forgue  173 

Aberfoyle,  Tiie  572 

Abpt  V.  Miller  203 

Achley  v.  Stachlin  112 

Ackernian,  Ex  parte  483 

Adam,  Ex  parte  22,  491,  499 

Adams,  Ex  parte       480,  500,  501,  502 

V.  Bankart  176,  177,  182 

V.  Carter  44 

Adams  Bank  v.  Rice  7 

Addams  r.  Tutton  885 

Adderley  v.  Dixon  235 

Addis  V.  Knicrlit  849,  448 

Addison  v.  Overend  337 

Aflalo  V.  Fourdrinier  502 

Agace,  Ex  parte         111,  112,  113,  175 

Agawam  Bank  v.  Morris  489 

Agnew  V.  Johnson  323 

V.  Piatt  474 

Akhurst  v.  Jackson  241,  296,  503 

Ala.  Coal  Mining  Co.  v.  Brainard    201 

Albers  v.  Wilkinson  179 

Albretcht  v.  Sussman  28,  327 

Alcock  V.  Taylor  382,  401 

Alder  v.  Fouracre  307 

Alderson  v.  Pope  95,  120,  196 

Aldrich  v.  Grimes  19 

Alexander,  Ex  parte  292 

V.  Barker        172,  291,  334, 

501 

V.  Dowie  552 

V.  Heriot  19 

V.  Hutcheson  19 

r.  Kiml)ro  365 

?'.  Stern  175 

Alexandria  v.  Patten  427,  428 

Alfele  V.  Wriglit  168 

Alger  V.  Thaclier  410 

AUcott  V.  Strong  12,  194,  429,  432 

Allegre  v.  Insurance  Co.  248 


PAGB 

Allen  V.  Blancbard  36 

V.  Centre  Vale  Co.  345,  353 

V.  Coit  213,  522 

V.  Davis  36,  44,  144 

V.  Dunn  69,  300 

V.  Farrington  173 

V.  Hill  440 

V.  Kilbre  506 

V.  Owens  196 

V.  Rostain  7 

j;.  Wells   348,  349,  352,  421,  449, 
482 
V.  White  135,  292,  329 

Allfrey  v.  Allfrey  515 

Alliance  Bank  v.  Keasley  175 

Al.sop  V.  Mather  455 

Alter  V.  Brook  353 

Alvord  V.  Smith  12,  162 

Ambler  v.  Bradley  42,  89 

V.  Whipple  458 

V.  AVilson  458 

American  Bank  v.  Doolittle  173 

American  Bank  Note   Co.  v.  Ed- 
son  243 
American    Linen   Thread   Co.   v. 

Wortendyke  411 

Ames  V.  Downing      442,  443,  528,  536 
Amiable  Nancy,  The  572 

Amidown  v.  Osgood  413,  414,  415 

Aniory  v.  Francis  489 

Amoskeag  Manufacturing  Co.  v. 

Spear  265 

Amphlett  v.  Hubbard  494 

Anders  v.  Meredith  556 

Anderson  v.  Anderson  458 

V.  Clay  7 

V.  Ilenshaw  110 

V.  Lemon  226 

V.  Levan      65,  108,  133,  194 

V.  Maltby  142,  492 

V.  Moncrieff  287 

V.  Taylor  229,  304 

V.  Tompkins    163,  1G4,  166, 

183,  510 

V.  Wallace  304 

V.  Wanzer  196 

V.  Weston  413 

Andrew  v.  Boughey  487 


XIV 


INDEX   TO    CASES   CITED. 


Andrews  v.  Brown 
V.  Pillison 
V.  Essex  F 
V.  G.arstin 
V.  Keith 


364,  368,  373,  376 

276,  '297 

&M.  Ins.  Co.  11 

7 

343 

V.  Planters'  Bank      216 

V.  Schott      100,  535,  538 

Anger  v.  Price  25 

Anna  Miiria,  The  572 

Annett  r.  Carstairs  553 

Anonymous  (2  Ca.  Ch.)    175,  309,  559 

(2  Eq.  Abr.  12)  517 

(2  Havw.)  178 

(1  Mackl.  Ch.)  236 

(12  Mod.  446)  172,173,472 

(Sitinner,  230)  562 

(Styles,  370)  1,  199 

(Taydor,  113)  178 

(1  Ves.  476)  810 

(2  Ves.  629)  13,  236 

(2  Ves.  Sen.  630)235,286 

(16  Vin.  Abr.)  163 

(W.Jones,  253)  337 

V.  Lavfield         1,  172,  217 

Ansell  V.  Waterliouse  158,  273,  286,  287 

Anten  v.  Pvllingwood  44 

Anthon  v.  Fisher  28 

Anthony  v.  Butler  180 

Apollo,  The  558,  559.  561 

Appeal  of  Second  Nat.  Bank  371 

Appeal  of  the  York  Co.  Bank  345,  346 

Apperly  v.  Page  512 

Appleby,  Ex  parte  426,  487 

Apsey,  Ex  /xiiie  155 

Arbonin,  Ex  parte  491,  496,  497 

Archibald  v.  Mercantile  Ins.  Co.        11 

Arden  v.  Sharpe  199,  201,  212 

V.  Tucker  334 

Argall  V.  Smith  539 

Arkwright,  E.r  parte  497 

Arlington  v.  Merrick  332,  333 

Armsby  v.  Farnam  330,  423 

Armstrong  v.  Armstrong  9 

V.  Fahnestock  168 

V.  Hussey  63,  415 

V.  Lewis  9,  10 

V.  Robinson  178 

Arnold  v.  Brown  163,  210,  400, 461, 470 

V.  Camp  111,  424 

V.  Del  Col  572 

Artisans'  Bank  v.  Treadwell  533,  535, 

538 

Arton  V.  Booth,  174,  175,  325 

V.  Lond.  &  N.  W.  R.  R.  Co.  330, 

358,  385,  4no 

Ashton  V.  Robinson  365 

Aspinwall  v.  WiUiams         13,  118,  125 

Astley  ;;.  Weldon  252 

Atherton  v.  Tilton  86 

Atkins  V.  Atkins  476 

V.  Hunt  6 

V.  Tredgold   185, 186,  187,  188, 

451 


Atkinson 

V.  Farmers'  Bank 

476 

V.  Foster 

551 

V.  Laing 

292,  330, 

331, 

398 

V.  Mackreath 

152 

267 

V.  Maling 

550, 

571 

Atkyns  V 

.  Rinnier 

252 

Attorney-General  v. 

Brooksbank 

520 

V. 

Burgess 

156, 

157 

V, 

Heelis 

644 

V. 

Mackreth 

47 

V. 

Parnther 

28 

V. 

Siddon 

156 

V. 

Stranyforth 

1.56 

V. 

Wilson 

287 

A  tt  water 

V.  Fowler 

278, 

520 

Attwood 

V.  Banks 

110 

V.  Rattenbury 

334 

At  wood  I 

.  Gillett 

193 

Aubert  v 

Maze 

10 

287 

Auld  V.  Butcher 

511 

Ault  V.  G 

oodrich 

187,  223 

395 

451 

Austin  V. 

Bostwick 

189, 

192 

V. 

Holland 

413 

V. 

Vandermark 

216 

V. 

Walsh 

331 

V 

Williams 

13, 

118 

Averill  v 

Lyman 

173 

423 

Avery  v. 

Lauve 

14,  15 

Axe  V.  C 

arke 

309 

Ayer  v.  Tilden 

230 

Ayrault  i 

;.  Cliamberlin 

416, 

435 

Babb  V.  Read 

544 

Babcock  v.  Brashear 

447 

V.  Stewart 

435 

V.  Stone 

212, 

289, 

326 

Babonneau  v.  Farrell 

838 

Bachurst  v.  Clinkard 

342, 

353 

Backus  V.  Murphy 

481 

V.  Richardson 

838 

Badlam  v.  Tucker 

571 

Bagley  v.  Peddle 

251, 

252 

Bagshaw  v.  Parker 

465 

Bailey  v.  Clark 

60,  96, 

142 

V.  Ford 

459 

V.  Lymaa 

328 

V.  Moore 

509 

V.  Starke 

271, 

275 

285 

Bailiffs,  &c.  v.  Trinity  House 

572 

Bainbridge  v.  Wilcocks 

516 

Baird  c.  Baird 

299 

512 

V.  Cochran 

112 

208 

Baker,  Ex  parte 

489 

V.  Biddle 

514 

516 

V.  Charlton     120, 

122 

214 

223 

V.  Jewell 

331 

V.  Plaskitt 

542 

i;.  Rappier 

122, 

124 

V.  Ruchtrieb 

39 

V.  Stackpoole 

193 

INDEX   TO    CASES   CITED. 


XV 


Baker  v.  Wlieaton 

474 

Barker  v.  Blake 

111 

423,  429 

Baker's  Appeal 

345 

V.  Burgess 

112 

Baldiiey  v.  Ritchie             290 

554,  566 

V.  Buttress 

451 

Baldwin  v.  Jotinson 

377 

V.  Goodair 

309, 

461, 

469,  471, 

V.  Useful  Knowledge 

So- 

472, 

474 

476 

481,  606 

ciety 

298 

V.  Parker 

332 

4.55,  505 

Ballon  t\  Spencer 

45 

V.  Richardson 

174,  175 

Ballum  V.  Price 

173 

Barklie  v.  Scott 

18 

145,  147 

Baimain  v.  Shore 

159,  439 

Barlow  v.  Reno 

179 

Balmer,  Ex  parte 

9 

V.  Wiley 

23 

Baltzell  V.  Trump 

230 

Barnadiston  v.  Chapman 

556 

Bamford  v.  Barron 

496 

Barnes  v.  Bartlett 

556 

Banchor  v.  Cilley 

148 

Barnett,  Ex  parte 

497 

Bandier,  Ex  parte 

483 

V.  Lynch 

158 

Bangor  v.  Warren 

486,  567 

V.  Smith 

60,  132 

Bank,  Ex  parte 

174 

Barney  i-.  Currier 

196 

V.  Carrolton 

353 

V.  Smith 

447 

V.  Horn 

471 

Barnley  v.  Bice 

199 

Bank,  Canadian  v.  Wilson 

201 

Barnstead  v.  Empire  Mining 

Co.   457, 

First  Nat.  v.  Breese 

201 

510 

Bankhead  v.  AUoway 

201 

Barratt  v.  Collins 

838 

Bank  of  Chenango  v.  Osgood 

173 

Barrett  v.  McKenzie 

353 

V.  Root 

197 

V.  Swann 

55,  202 

Commonwealth  v.  Mudgett 

Barringerf.  Sneed 

198 

418 

Barrow,  Ex  parte 

11 

,53, 

160,  169 

England,  Ex  parte 

491,  499 

V.  Rhinelander 

518 

Kentucky  v.  Brooking      200, 

Barry  v.  Nesham 

58,78 

212 

21G,  233 

Barson  v.  Kiiicaid 

173 

V.  Keizer 

482 

Barstow  i\  Adams 

471 

Louisville  v.  Hale 

365 

V.  Gray 

292 

Mobile  V.  Andrews 

439 

Bartle  v.  Coleman 

10 

New  York  v.  Vandcrhorst  438 

Bartlett  v.  Jones 

50,85 

Port  Gibson  v.  Baug 

h         391 

v.  Walter 

548 

Rochester  v.  Bowcn 

216 

Barton  v.  Hanson 

104,  118 

V.  Monteath       126, 

V.  Williams 

45, 

163, 

323,  355, 

128, 

129.  130, 

556 

200,  233 

Bar  wis,  Ex  parte 

22 

St.  Marys  v.  St.  Joh 

n  33,  292 

Bascom  r.  Young 

172,  175 

Scotland  v.  Christie 

422 

Bass  V.  Estill 

349 

South  Carolina  v.  H 

jm- 

V.  Taylor 

339 

phreys 

391,419 

Batard  i\  Hawes 

273 

Tennessee  v.  Saffarans     205, 

Bate,  Ex  parte 

491 

216 

Batson,  Ex  parte 

484 

500,  502 

the  United  States  v. 

Davis 

Battaile  v.  Battaille 

535 

420 

Battersby  i\  Smyth 

556 

Vergennes  v.  Cameron      1!)3, 

Battley  v.  Bailey 

14 

212,  216 

Batty  V'.  M'Cundie 

95 

Banks,  Ex  parte 

491 

Bawden  v.  Howell 

334 

V.  Gould 

320 

Baxter  v.  Clark 

63,  96 

V.  xMitchell 

289,  325 

V.  Connoly 

262 

Bannatyne  v.  Leader 

496 

V.  Plunkett 

201 

Barber  v.  Backhouse 

112,  207 

V.  landman 

59,  82 

V.  Hartford  Bank 

449 

V.  West 

457 

Barclay,  Ex  parte 

487 

Baylis  v.  Dineley 

18 

V.  Gooch 

287 

Beach  v.  Hay  ward 

292,  447 

V.  Lucas 

332 

V.  Hotchkiss 

270, 

278, 

282,  331 

V.  Phelps 

489 

V.  State  Bank 

200,  216 

Bard  well  v.  Perry      348,  349, 

352,  376 

Beaeham  v.  Eckford 

228. 

509,  524 

Barfoot  v.  Goodnll 

419 

Beak  v.  Beak 

390, 

392, 

394,  522 

Bargate  v.  Sliortridge 

162 

Beale  i'.  Caddick 

163,  432 

Baring  v.  Crafts 

128, 423 

V.  Hayes 

252 

V.  Dix            381,  458, 

459,  467 

i\  Mouls 

434,  436 

V.  Lyman 

2B9 

Beall  V.  Lowndes 

121 

XYl 


INDEX  TO    CASES   CITED. 


Beanian  v.  TVliitney 

13 

Benton  v.  Chaniberlin 

415,  416 

Bean  r.  Morgan 

24 

Berkeley  v.  Hardy 

179 

Beard  v.  Webb 

23 

Berkshire  v.  Evans 

10 

Beardsley  v.  Hall 

194 

Berley  v.  Kampacher 

24 

Beatty  i'.  Bates 

36 

Bernard  i'.  Torrance 

411, 

413,  416 

V.  Wray 

230, 

231,  444 

V.  Wilcox 

292 

Beaumont  v.  Bramley 

513 

Berry  v.  Cross 

459 

V.  Meredith 

37, 

458,  467, 

Bertiiold  v.  Goldsmith 

86 

545 

Besch  V.  Frolick 

465,  467 

Beauregard  i\  Case 

44 

Best  V.  Givens 

10 

Beaver  v.  Lewis 

381 

Beste  V.  His  Creditors 

224 

Beck  V.  Martin 

172,  175 

Bethel  v.  Franklin 

274 

Beckford  v.  Wade 

515 

Betts  V.  Bagley 

474 

I'.  Wildman 

521 

Bevan,  Ex  parte 

490,  491 

Beckham  v.  Drake 

106 

V.  Lewis         104 

105, 

213,  309 

V.  Knight 

106,  565 

Bevans  i'.  Sullivan 

195, 

228,  229 

r.  Poay 

193,  210 

Bewley  v.  Tarns 

183 

Beckwith  v.  Talbot 

44 

Biddlecombe  v.  Bond 

247 

Bedford  v.  Brutton 

275 

276,  297 

Bidwell  V.  Madison 

71 

V.  Deakin    397, 

422, 

424,  425, 

Biernan  v.  Braches 

271 

485,  488 

Bigelow  V.  Grannis 

19 

Beebe  v.  Kogers 

105 

Bigg,  Ex  parte 

491,  499 

Beecli  V.  ILyre 

434 

Biggs  V.  Fellows 

477 

Beechara  v.  Dodd 

7, 

42,  49,  89 

V.  Lawrence 

341 

Beeclier  v.  Guilburn 

225 

Bignold,  Ex  parte 

174 

Beers  v.  Reynolds 

532 

536,  538 

V.  Waterhouse 

102, 

175,  196, 

Beitz  V.  Fuller 

188 

420 

Beldon  v.  Campbell 

568 

Bill  V.  Porter 

486 

Belknap  v.  Gibbens 

288 

Billings  ('.  Meigs 

210 

Bell,  Ex  parte 

10,  287 

Binford  v.  Dommett 

822 

473,  501 

V.  Ansley 

336 

Binney  v.  Le  Gal 

179 

V.  Banks 

107,  108 

Birch  V.  Stephenson 

251 

V.  Humphries 

570 

Birchett  v.  BoUing 

13 

235,  236 

V.  Lay  mans 

323 

Bird  V.  Caritat 

475 

V.  ]\Iorrison        186 

189 

190,  193 

V.  Hamilton 

6,14 

V.  Newman        345 

,449 

,  482,  503 

V.  Lanius 

104 

1-.  Pbyn 

370 

V.  McCoy 

290 

Bell  airs  v.  Ebs  worth 

333 

Birdsall  v.  Colie 

812,  316 

Belote  V.  Wynne 

190 

Bisel  V.  Hobbs 

63 

Belton  V.  Hodges 

22 

Bishop  V.  Breckles 

404,  458 

Benedic^t  v.  Davis 

120,  132 

V.  Sheplierd 

82 

Benfield  n.  Solomons 

367 

Bispham  i'.  Patterson 

190 

194,  195 

Benham  v.  Bishop 

19 

Bitzer  v.  Sliunk 

179 

V.  Gray 

387 

Bixby  V.  Whitney 

550 

Benjamin  v.  Porteus 

77,  145 

Black  V.  Black 

363,  368 

V.  Stremple 

324 

V.  Bush 

845,  350 

Bennet,  Ex  parte 

473,  489 

Black's  Appeal 

482 

Bennett  v.  Ames,  In  re 

469 

Blackburn,  Ex  parte 

499 

V.  Marshall 

179 

V.  McCallister 

178 

V.  Kussell 

223,  229 

Blackett  v.  Weir 

278,  285 

V.  Stickney 

174 

Blades  v.  Free 

397 

Bennett's  Case 

394 

Blain  »'.  Agar 

296 

Benninger  v.  Clarke 

263 

Blair  v.  Bromley 

150,  172 

Bensley  v.  Bignold 

10 

V.  Snover 

331 

Benson,  Ex  parte 

499 

Blake,  Ex  parte 

499 

V.  Hadfie 

426 

V.  Dorgan 

381 

V.  Heathorn 

394,  596 

V.  Nutter 

363,  364 

V.  M'Bee 

39,  52,  57,  100 

V.  Wheadon 

326 

V.  Tiiompson 

554,  565 

V.  Williams 

474 

Bentle}'  v.  Bates 

301,  317 

Blakeley  v.  Graham 

277 

V.  Craven 

226 

Blakeney  v.  Dufaur  313 

,314 

,  317,  459 

V.  Harris 

63 

Blanchard,  In  re 

552 

V.  White 

89,  52,  99,  100 

V.  Coohdge 

50,  84,  145 

INDEX   TO    CASES   CITED. 


XVII 


Bliiiichanl  v.  Pasteur  109 

Bland,  Kx  parte  553,  565,  566,  567,  569 
V.  Haselrig  185 

Blaiikonliajfen,  Ex  parte  491 

Blansliuni,  In  re  558,  559 

Blew  V.  Wyatt  897,  426 

Bligh  V.  Hreiit  546 

Blight  V.  Tobin  151 

Blin  V.  I'ierce  291 

Blinn  v.  Evans  205 

Blisset  V.  Daniel        223,  234,  245,  400, 
402,  407 
Blodgett,  In  re  494 

V.  Weed  103,  201 

Blood  V.  Goodrich  179 

Bloodgood  V.  Zeily  513,  514 

Blount  V.  Ilipkins  546 

Bloxam  v.  Hubbard  337 

Bloxham,  Ex  parte  489 

V.  Pell         137,  140,  141,  14-2 
Blue  v.  Leathers  44,  144,  280 

Biundell  v.  Winsor   395,  542,  543,  544, 
645,  547 
Boardman  v.  Gore  96,  152 

V.  Keeler  292,  501 

V.  Mosman  155 

Bobo  V.  Hansel!  19 

Bockleu  1'.  Hardenberg  44 

Bodenham  v.  Purchas  432,  523 

Bodle  ('.  Chenango,  &c.  Ins.  Co.      336 
Bogget  V.  Frier  24 

Bosjgs  V.  Curtin  334 

Bolitho,  Ex  parte  64,  105,  128,  129,213 
BoUand,  Ex  parte  153,  154 

Boiling  ly.  Boiling  514 

Bolton,  Ex  parte  476 

V.  Puller  52,  328,  494 

Bonbonus,  Ex  parte  101,  112,  113,  205, 
206,  208,  499 
Bond,  Ex  parte  491,  499 

V.  xVitkins  105,  107,  181 

V.  (iibson  163,  164 

V.  Hays  184 

V.  Pittard       41,  46,  57,  132,  235 
Bonfield  ;•.  Smith  591 

Bonnaffe  r.  Fenner  7,  274 

Bonner  v.  Campbell  370 

Bonney  v.  Ridgard  615 

Bonsall  v.  Conly  494 

Bonsteel  v.  Vanderbilt  65 

Booth  V.  Clark  315 

V.  Hodgson  10,  287 

V.  Meyer  469 

V.  Parks  239,  240,  401,  441, 

443,  523 
V.  Smith  486 

Bosanquet  v.  Wray    52,  244,  288,  290, 
325,  326 
Boson  V.  Sandford  158 

Bostwick  0.  Champion  156 

Bosvil  V.  Brander  483 

Bosvvell  ''.  Dunning  334 

V.  Green  163,  166 


Botifeur  v.  Weyman 
Boucher  v.  Lawson 
Bouldin  v.  Page 
Bouller  V.  Peplow 
Hound  ('.  Latiirop 
Bourne  r.  Freeth 


513,  514,  515 

11,  572 

196,  420 

273 

188,  196 

132 


V.  Wooldridge  209 

Boussmaker,  Ex  parte  27 

Bovill  V.  Hammond        36,  51,  56,  269, 

282,  283 

Bowas  V.  Pioneer  Tow  Line  44 

Bowden  i'.  Sciiatzell  349,  448 

Bowen  v.  Argall  632,  538,  539 

V.  Mead  203 

V.  Rutherford  12 

Bower  v.  Swadlin  173 

Bowker  v.  Burdekiii  180 

V.  Smith  349 

Bowman  v.  Bailey  42,  89 

Bowyer  v.  Anderson  36,  85,  144 

Boyce  <-•.  Burchard  314 

V.  Owens  24 

V.  Watson  195 

Boyd  V.  Cann  419 

V.  Emerson  176,  177 

V.  Mynatt  238,  463 

Boyden  v.  Boyden  19 

Boyers  v.  Elliott  372 

Boynton  v.  Page  228 

Boys  V.  Ancell  251,  252 

Boyson  v.  Gibson  550 

Bozon  I'.  Farlow  263,  264 

Brace  v.  Taylor  619 

V.  Washburn  556 

Braches  v.  Anderson  63,  163 

Bracken  v.  Kennedy  287,  289,  510 

Bracket  v.  Winslow  394 

Bradbury,  Ex  parte  487 

V.  Barnes  367 

V.  Smith  47,  637,  538 

Braden  v.  Gardner  552,  563,  564 

Bradford  v.  Kimberly  229,  394,  503 

Bradley  v.  Chamberlin  239,  394,  401, 

446 

V.  Harkness  160 

V.  Holdsworth  546 

V.  White  84 

Bradstreet  v.  Baer  25 

Brady  v.  Calhoun  37,  45,  363 

V.  Hill  193 

Braithwaite  v.  Britain  448,  485 

Braley  v.  Goddard  86 

Brand  v.  Boulcott  272 

Brandon  v.  Hubbard  37 

V.  Nesbitt  28 

V.  Robinson  473 

Brandram  v.  Wharton  186,  188 

Brandred  v.  Muzzy  57 

Brannon  v.  Hursell  230 

Brasier  v.  Hudson  173 

Brassington  v.  Ault  292,  501 

Bray  u.  Fromont  12,  160,  168,  546 

Brazier  v.  Bryant  427 


XVlll 


INDEX    TO    CASES    CITED. 


Breekenbridge  v.  Ornisby  18 

Brcekcnridgo  r.  iShrieve  100 

Breiiiner  i\  Cliamberlayne  484 

Breimn  v.  Preston  817,  558 

Bieiiolilej',  Ex  parte  502 

Brent  v.  bavis  96 

V.  liny  564 

Bretlierton  v.  Wood  158 

Brett  v.  Beckwitli  348 

Brettell  v.  Williams  217 

Brewer  v.  Wortliington  421 

Brewster  v.  Hanimet  310,  343 

V.  Hardeman  I'JO,  192 

V.  Mott       112,  113.  203,  209, 

211,  293 

V.  Wakefield  234 

Brickhonse  v.  Hunter  522 

Brick  wood  v.  Miller  474 

Bridge  v.  Gray  192,  194,  196 

V.  McCullongh  349 

Brierly  v.  Cripps  278,  282,  283 

Briggs,  Ex  parte  142 

IK  Vanderbilt  55 

V.  Wilkinson  552,  553,  569 

Brigliam,  Ex  parte  435 

V.  Clarke  44 

V.  Dana  42,  48,  230 

V.  Eveleth  273,  281 

Bright  V.  Hiitton  43 

V.  Rowland  252 

V.  Sampson  174 

Brimley  v.  Kupfer  279,  284,  523 

Brisban  v.  Boyd  193 

Briscoe  v.  Anketel  190 

Bristow  V.  James  475 

V.  Taylor  325 

V.  Towers  27 

Broad  v.  Jollyfe  410 

Broadbent,  AV  parte  511 

Broadus  v.  Evans  210 

Brock  V.  Bateman  348 

Brockenbrough  i\  Hackley  189 

Brockway  v.  Burnap  85 

Brodie  v.  Howard  553,  554,  566 

Brooke  v.  Knderby  432 

V.  Evans  118 

V.   Washington  63,  364 

Brooks  V.  Martin  223 

Broom  v.  Broom  364,  374 

Broome,  Ex  parte        13,  296,  457,  479, 

502 

Bropliy  V.  Holmes  142 

Brothroyd,  In  re  494 

Brown,  Ex  parte  105,  108 

V.  Agnew  280,  285,  287 

V.  Clark  391 

V.  Cook  80 

V.  l)e  Tastet    12,  53,  160,  443, 

447,  472,  474,  503,  524 

I'.  Duncan  9 

V.  Duncanson  203 

V.  Fifield  25 

V.  Gordon  426 


Brown  v.  Heathcote  168 

V.  lligginbotham  85 

V.  Jewett  26,  400 

V.  Lawrence  172 

V.  Leonard       95,  120,  411,  414 

V.  Litton  224,  443,  447,  503 

V.  McFarland's  Ex.  444 

V.  Marsh  173 

V.  Tapscott      55,  276,  282,  287, 

510,  569 

V.  Turner  10 

V.  Vidler  447,  503 

V.  Wilkinson  572 

Browne  v.  Carr  476 

V.  Gibbins  113,  295 

Brownel  v.  Brownel  517 

Brownlee  v.  Allen  144,  366 

Brownrigg  v.  Rae  164 

Brozee  v.  Poyntz  66 

Brubaker  v.  Robinson  283 

Bruen  v.  Marquand  182,  325 

Bruiidred  v.  Muzzy  146 

Brutton  v.  Burton  179,  181,  183 

Bry  u.  Cook  517 

Bryant  v.  Wardell  48 

Brj'den  v.  Taylor  147 

Brydges  v.  Branfill  150,  151 

Bryson  v.  Whitehead  410 

Buchan  v.  Sumner    364,  371,  372,  377, 

378 

Buchanan  v.  Curry  176,  177,  178 

Buchoz  V.  Grandjean  176 

Buck  V.  Mosley  209,  298 

V.  Winn  372 

Buckingliaui  v.  Burgess  120 

V.  Hanna  159 

Buckland  i\  Newsame  175 

Buckley,  Ex  parte  128,  214 

V.  Bramhall  638 

V.  Buckley  864,  366,  371,  372 

Bucknal  v.  Roiston  168 

Bucknam  v.  Barnum  42,  85,  194 

Buckner  v.  Lee  42,  81,  129,  130 

Buddington  v.  Stewart  548,  559 

Buell  V.  Cole  270 

Buffalo  City  Bank  v.  Howard  411 

Buffuin  V.  Butfura  7,  864 

Buford  V.  Neely  400 

Bulfincii  V.  Winchenbach  56,  860 

Bulkley  v.  Barber  548 

V.  Dayton  182 

r.  Marks  682,  637,  538 

Bull  V.  Schuberth  59 

BuUen  v.  Sharp  67,  74,  160 

Bullock  V.  Bovd  516 

Bullpin  V.  ClaVke  25 

Biunage  v.  Frosser  388 

Bumpass  v.  Webb  271 

Bunn  V.  Guy  410 

Burch  V.  Breckinridge  25 

Burckle  v.  Echart  42,  85 

Burden  v.  Burden     230,  231,  894,  442, 

443,  451 


INDEX    TO    CASES    CITED. 


XIX 


Burdick  v.  Green 
Bunion  v.  Dean 
Burfield  v.  Lougliborough 
Biiririin  V.  Lyell 
Burgess  v.  Atkins 
V.  Lane 
V.  Merrill 
Burgne  v.  Firmin 
Burk  V.  McClain 
Burke  v.  Winkle 
Burleigii  v.  Parton 

V.  Stott 
Burley  r.  Harris  288. 

Burniester  v.  Norris 
Burn,  E.r  ptnte 

V.  Burn 

V.  Morris 
Burnell  v.  Hunt 

V.  Minott      273,  283, 
Burnes  v.  I'ennell 
Burnliani  v.  Whittier 
Burnliisel  v.  Firman 
Burns  v.  Harris 

I'.  Nollingliam 

V.  Kowlands 
Burnside  v.  Merrick  3G4, 

Burrell,  Ex  parte 
Burton,  Ex  parte 

V.  Goodspeed 

t'.  Issitt 

V.  Wookey    226,  227, 
Burtus  V.  Tisdall  346, 

Burwell  v.  Mandeville       438, 
Busby  V.  Clienault 
Bush  V.  Crawford 

V.  Stowell 
Busliell,  Ex  parte 
Butcliart  v.  Dresser  314,  315, 
388,  392, 
Butcher  v.  Forman  272, 

Butler  V.  Burleson 
V.  Stocking 
Butlin,  Ex  })arle 
Butterfield  v.  Ilartsliorn 

V.  Hensley 
Button  r.  Hampsou 
Butts  V.  Dean 
Buxton  c.  Lister  IS, 

V.  Snee 
Byers  v.  Dobie 

V.  Van  Deusen 
Byrd  v.  Fox  133, 


Cabell  V.  Vaughan 
Cadwallader  v.  Blair 

V   Kroesen 
Cady  V.  Shepherd      178, 
Calder  v.  Rutherford 
Calder  &  Hebble  Nav.  Co.  v.  Pilling  54c 


486 

Caldicott  V.  Griffiths 

43,  297 

483 

Caldwell  v.  Gregory 

474,  497 

230 

V.  Lawrence 

190 

413 

V.  Leiber      38, 

227. 

229,  230, 

352 

243 

244 

,  394,  522 

195 

V.  Sigourney 

188 

23 

V.  Sithens 

126 

194 

V.  Siileman 

390 

475 

Calkins  i'.  Smith 

201,  210 

24 

Callumb  V.  Bead 

364,  371 

204,  210 

Calvert  v.  Mario w 

278 

186 

Calvin  v.  Markliara 

288 

,  290,  326 

Calvit  V.  Markhani 

516 

09 

Caniblat  v.  Tupery 

299,  512 

493,  406 

Cambridge  v.  Hobart 

188 

180 

Cammack  v.  Johnson 

310, 

349.  360. 

331,  334 

448,  501 

7,  48 

Camp  V.  Grant 

349 

,  286,  287 

Campanari  v.  Woodburn 

397 

546 

Campbell  i-.  Bowen 

218 

200,  320 

V.  Dent 

67 

2:J0 

V.  Hastings 

12,  469 

494 

V.  Mathews 

173 

279 

V.  Mullett  257, 

325, 

345,  346, 

66 

351,  442, 

474, 

493,  503, 

368.  372, 

504 

374,  441 

V.  Stein 

570 

500,  502 

V.  Stewart 

102 

412,  407 

V.  Thompson 

550 

67 

Candler  v.  Candler 

17,  56,  264 

174,  302 

Canfield  v.  Hard 

37 

438,  450 

,  305,  306 

Cann  v.  Cann 

513 

347,  353 

Cannan  v.  Bryce 

10 

450,  454 

V.  Meaburn 

572 

440 

Cannon  v.  Alsbury 

21 

201 

Capen  v.  Alden 

433 

195 

V.  Barrows 

275 

276, 279 

122 

Cape  Sable  Co.'s  Case 

381 

385,  464 

386,  387, 

Card  V.  Hope 

559 

393, 440 

Garden  v.  General  Cemetery 

Co.     545 

477,  562 

Carey  v.  Carver 

112,  113 

445 

Cargill  V.  Corby 

06,  100 

216 

Carlen  v.  Drury         286, 

459, 

541,  545 

491 

Carlisle  v.  Mulhern 

374,  376 

485 

Carlton  v.  Ludlow  Woollen  Mill      190 

05 

Carmichael  v.  Greer 

469 

179 

Carpenter,  Ex  jiurte 

492 

486,  567 

V.  Lockhart 

252 

235,  236 

Carr  v.  Smith 

282 

564,  569 

Carrick  v.  Yickery 

526 

475 

Carrington  v.  Cantillon 

174 

468 

Carroll  v.  Blencow 

23 

237,  283 

Caner,  Ex  parte 

479,  502 

V.  Home 

225 

V.  Southall 

106 

V.  Whalley     120, 

131, 

411,416 

Carver  i-.  Dows 

112 

333,  337 

V.  Miller 

554 

434 

Carvick  v.  Vickery 

39, 

148,  109 

176,210 

Gary  v.  Williams 

322 

189,  102 

Casco,  The  Brig 

572 

447 

Case  V.  Abeel 

441,  442 

lling  543 

V.  Maxey 

274 

XX 


INDEX  TO  CASES  CITED. 


Casey  V.  Brush  280,  612 

Casli  V.  Tozer  179 

Castell,  Z;.!-  parte  480,  502 

Castelli  v.  Cook  558 

Castle,  Ex  parte  496 

Caswell  V.  Cooper  272,  273 

V.  Cross  572 

Catskill  Bank  v.  Gray  29,  80 

V.  Messenger  173 

V.  Stall  212.  216 

Catt  r.  Howard  196,  435 

Caiulell  V.  Shaw  23 

Causteii  V.  Burke  273 

Cavitt  V.  James  391 

Cavton  V.  Hardv  16 

Chadsev  v.  Harrison  280,  282 

Chadwiek  v.  Clarke  289,  545 

Chalmers  v.  Bradley  515 

Chamberlain  v.  Dow  897 

V  Madden  65 

V.  Walker  271 

Chambers  v.  Clearwater  152 

V.  Goldwin  516,  517 

V.  Howell  442 

V.  Walker  272 

Champion  v.  Bostwick  55,  80,  92 

V.  Mumford  200 

V.  Bigby  515 

Champlin  v.  Butler  571 

V.  Tilley  195 

Chandler,  Ex  parte  482,  483 

V.  Brainard  148 

V.  Herrick  173 

V.  Parkes  22 

Channel  v.  Fassit  11,  160 

Chaniiell  v.  Ditchburn  186 

Chapin  v.  Coleman  195 

Chapline  v.  Conant  67 

Chapman  v.  Beach  458,  459,  512 
V.  Durant  554,  565,  566,  567 

V.  Koops   270,  309,  343,  352, 
480 

V.  Thomas  386 

V.  Wilson  7,  132 
Chappedelaine  v.  Dechenaux  613,  516 

Chappel  ".  Brockway  410 

Chappie  y.  Cadell  249,512 

Chardon  v.  Oliphant  193 

Charlton  v.  Boulter  804,  305,  311 

Charmaii  v.  Henshaw  130 

Charrington  v.  Laing  252 

Chase  v.  Barrett  48,  60,  144 

V.  Garvin  283,  284 

V.  Stevens  148 
Chavany  v.  Van  Sommer  237,  304,  311, 
381,  400,  402 

Chazournes  v.  Edwards  112,  113,  202, 
203,  204 

Cheap  V.  Cramond     36,  51,  56,  76,  89, 
145,  172,  196 

Cheddick  v.  Marsh  252 

Cheeny  v.  Clark  43,  100,  271 

Cheeseman  v.  Sturges  163 


Cheever  v.  Smith  566,  667 

Chenowith  r.  CiiambeMin  216 

(yheshire  v.  Barrett  19 

Chesley  v.  Thompson  556 

Ghesson  v.  Chesson  514 

Chester  v.  Dickenson  7,  152,  349 

Chevalier,  Ex  parte  491,  499 

Chidsey  v.  Porter  132 

Ciiild  V.  Hudson's  Bay  Co.  543 

Chilton  r.  London  &  Croydon  K.  Co.  543 

Chippendale  v.  Thurston  187 

V.  Tomlinson  445 

Chissam  v.  Dewes  263 

Chitty  V.  Naish  427 

Christian  v.  Ellis  510 

V.  Senhouse  317 

Christie,  Ex  parte  214 

V.  Bishop  195 

V.  Craig  658 

Chuck,  Ex  parte    31,  66,  139,  142,  496 

Church  V.  Knox        167,  310,  313,  350, 

360,  449.  481 

V.  Sparrow  63,  105,  172 

Churchman  v.  Smith  42,  81 

Churton  v.  Douglass  409 

Citizens  Ins.  Co.  v.  Wallise  483 

City  Bank  of  Brooklyn  v.  Dearborn 

415 

V.  McChes- 

ney  415,  418 

City  of  Maynoketa  v.  Willey  346 

Clagett  V.  Hall  517 

Clagget  V.  Kilbourne  37 

Clairborne  r.  Creditors  458,  467 

Claiicarty  v.  Latouche  520 

Clapp  V.  Rogers  412,  413,  415 

Clark,  In  re  17 

V.  Clement  173 

V.  Dibble  278,  283 

V.  Flint  235 

V.  Hooper  187 

V.  Houghton  97 

V.  House  447 

V.  Howe  330 

V.  Huffaker  194 

V.  Leach  234 

V.  Miller  292 

V.  Reid  148 

V.  Sigourney  188 

V.  Van  lleimsdyk  195 

V.  Wilson  167 

Clarke,  Ex  parte  491 

V.  Imjierial  Gas  Co.  546 

V.  Richards  87,  258 

V.  Tipping  516 

Clarkson,  Ex  parte  497 

V.  Carter  292,  501 

Clay,  Ex  parte  848,  482,  493 

V.  Cotrell  104,  112,  203 

V.  Langslow  195 

V.  Rufford  340 

Clayton's  Case  155,  428,  432,  433,  523. 

524 


INDEX   TO    CASES    CITED. 


XXI 


Clegg  V.  Fishwick  319,  393 

V.  Houston  494 

Clegliorn  v.  Ins.  Bank  of  Columbus 

345 
Clement  v.  Brush  107,  108,  178, 

180 

V.  Foster  ul2 

V.  Hadlock  85 

Clements  v.  Hall  393 

Clementson  v.  Blessing  27 

V.  Williams  190 

Clerk  V.  Blackstock  139 

Cleveland  v.  Woodward  291 

Clifford  V.  Brooke  296 

Clowes,  P2x  parte  148,  435 

V.  Hawley  324 

Coates  V.  Coates  244,  30(3 

!'.  Williams  57,  146 

Coats  V.  Ilolbruok  265 

Cobb  r.  Abbott  55,  156 

V.  III.  Con.  R.  R.  198 
V.  New  England  Mut.  M.  Ins. 

Co.  177 

Cobliam,  Ex  parte  499 

Cochran  v.  Perry          12,  1G2,  400,  462 

Coekburn  v.  Thompson  545 

Cocke  V.  Bank  of  Tennessee  197 

V.  Branch  Bank  100 

Cockerell  v.  Aucompte  43 

V.  Cholmeley  515 

Cocks  V.  Nash  173 

Coddington  v.  Hunt  412 

Coder  v.  Huling  378 

Codman  c.  Rodgers  520 

Coflee  V.  Brian  273,  275,  2b2 

Coffin  V.  Jenkins  81 

Cofton  V.  Horner  311 

Cohen  v.  Gibbs  471 

V.  Haiinara  3;;6 

V.  N.  Y.  Life  Ins.  Co.              27 

Coit  V.  Tracy  188,  189 

Colbeck,  In  re  76,  136,  138 

Colburn  v.  Phillips  334,  335 

Colby  V.  Lamson  24 

Cole  V.  Albers  493 

V.  Pennel  23 

V.  Pennoyer  18 

V.  Reynolds  325 

V.  Sackett  110,  486 

V.  Terry  323 

Coleman  v.  Coleman  273 

Coles  V.  Coles  163,  363 

V.  Gurney  174 

Collamer  v.  Foster  271,  273 

Collier  v.  Leech  107,  108 

Collins  V.  Prosser  173 

V.  Warren  372,  373 

I'.  Young  319 

Collyer  v.  Collyer  508 

Colnaghie  v.  Block  887,  399 

Colt  V.  WoUaston  296,  4-58 

Colwell  V.  Lawrence  475 

Commercial  Bank  u.  Warren  203 


Commercial  Bank  v.  Wilkins  167,  338, 
343,  345,  353,  360,  503 
Commercial  Bank  of  Manchester 

V.  Lewis  199,  212 

Com.  V.  Bennett  67 

Compton  V.  Greer  516 

Comstock  V.  Smith  486,  567 

Conant  v.  Frary  375 

Condry  v.  Gilliam  307 

Conery  v.  Hayes  194 

Conklin  v.  Barton  86,  92 

Conkling  v,  Washington  Univer- 
sity 142 
Connecticut  River  Bank  v.  French  201 
Connelly  v.  Cheevers                         447 
Conro  V.  Port  Henry  Iron  Co.    412,  414 
Consequa  i'.  Planning                         516 
Const  17.  Harris  219,  222,  238,  313,  314, 
315,519 
Contee  v.  Dawson                      248,  517 
Converse  v.  Sliambaugh  12 
Conwell  V.  Sundidge  167, 261,  345, 400, 
446,  503,  525,  552 
Cook,  Ex  parte     473,  480, 483,  493,  502 
V.  Batchellor                    337,  338 
V.  Beech                          330,  337 
V.  Carpenter  7 
V.  Castner                                 196 
V.  Collingridge       443,  446,  473, 
507,  511,  515,  524,  525 
V.  Fowler                                  230 
V.  Jenkins                                 389 
Cooke,  Ex  parte                                    347 
V.  Seeley                 106,  329,  334 
Cookingham  v.  Lasher              290,  350 
Cookson  V.  Cookson           370,  473,  511 
Coombs  V.  Boswell                             396 
Coomer  v.  Broomley                          150 
Coons  V.  Renick                                  175 
Coope  V.  Bowles                                164 
V.  Eyre     36,  41,  45,  47,  62,  105, 
526 
Cooper,  Ex  parte                                497 
V.  Henderson                         471 
V.  McClarkan                        212 
V.  Watlington                       244 
V.  Watson                              410 
Cope's  Appeal                                   481 
Copeland,  Ex  parte                             165 
C'oppard  v.  Page                                    77 
Corbett  V.  Poelnitz                               23 
Corbin  v.  McChesney                         112 
Cork  &  Bandon  R.  R.  Co.  v.  Caze- 

nove  21 

Cornwall  i-.  Hoyt  24 

Corpe  I'.  Overton  18 

Corps  V.  Robinson  194,  196 

Corwin  v.  Suydam  103 

Cosio  V.  Del5ernales  23,  26,  328 

Coslake  v.  Till  263,  445 

Cosleker  v.  Horrox  518 

Coster  V.  Clarke         363,  364,  372,  373 
Cothay  v.  FenueU      291,  334,  335,  501 


xxu 


INDEX    TO    CASES   CITED. 


Cotter  V.  Bettner 
Cottle  V.  Leitch 
Cotton  ('.  Evans 
Cottrill  V.  Vamluzen 
Coiicli  v.  IMills 
Cough  V.  Riidcliffe 
County  V.  Gates 
Courcey  v.  Baker 
Course  v.  Prince 
Coursen  v.  Hamlin 
Court  V.  Cross 
Cowan  V.  Burgess 
Cowell  r.  Edwards 

V.  Sikes 
Cowles  V.  Garrett 
Cox,  Ex  parte 
V.  Bodfish 
V.  Delano 
V.  Hickman 
V.  McBurney 
V.  Keid 
Crabtree  v.  May 
Cadiifck  I'.  Simpson 
Cragin  v.  Carletou 
Craig  V.  Alverson 

V.  Hulschezer 
Cramer  v.  Noonan 
Crane  v.  Ford 

V.  French 
Crapster  i>.  Griffith 
Crater  v.  Binninger 
Craven  v.  Knight 

V.  Widdows 

Crawford  v.  Austin 

V.  Baum 

V.  Collins 

V.  Hamilton 

V.  Stirling 

Crawshay  v.  Collins  223,  224,  232,  234, 

239,  241,  263,  388,  401, 

406,  440,  443,  444,  445, 
469,  472,  474,  503,  505, 

5U9,  511,  524,  525 

V.  Maiile     36,  159,  236,  237, 

314,  317,  319,  381,  382, 

388,  393,  399,  401,  404, 

407,  438,  440,  446,  452, 
464,  469,  507,  524,  525 


55, 

156 

458 

112,  113, 

203 

66, 

132 

173 

458, 

467 

179 

200, 

217 

280, 

282 

229 

186 

323 

569 

348, 

485 

159,  160, 

323 

174 

545 

82 

144 

74,86 

146 

864 

553, 

566 

18,  21 

7 

195 

193 

293 

339 

315 

179 

359 

558 

271 

502 

232 

67 

481 

125 

254 

407 

217 

Creath  v.  Sims 
Creel  v.  Bell 
Cremer  v.  Higginson 
Crisdee  v.  Bolton 
Crisp,  Ex  parte 
Crispe  i'.  Perritt 
Crocker  v.  Colwell 
V.  Higgins 
Crockett  v.  Grain 
Croft  V.  Pyke 
Croinpton  v.  Conkling 
Cromwell  v.  County  of  Sac 
Cronise  v.  Clark 
Cronker  v.  Crooker 
Crosbie  v.  Guion 


424 
334,  335 

427 
251 
483 
470 
201 


4G1, 


349 

168,  849,  481 

475 

230 

18 

481,  485 

438 


Cross  V.  Cheshire      273,  275,  277,  281, 

282,  510 

V.  Jackson  276 

V.  Langley  12 

C'rosthwait  v.  Ross  100 

Crottes  V.  Frigerio  268 

Crouch  V.  Bowman  126,  215 

Croughton  v.  P^n-rest  164 

Crowdor,  Ex  parte  347 

Crowe  V.  Clay  486 

Croxton,  Ex  parte  234 

Crozier  v.  Kirker  127,  199 

Ciumless  v.  Sturgess  194 

Crusader,  The  81 

Crutwell  V.  Brown  182 

V.  Lye  262,  444 

Cullen  V.  Duke  of  Queensbury         545 

Cullum  V.  Bloodgood  166 

Gumming  v.  Forester  835 

V.  Hackley  287 

V.  Parish  95 

V.  Powell  18 

Cummins  v.  Cassily  178,  179,  183 

V.  Cummins  395 

Cumpston  V.  McNair  89,  51,  55 

Cunlitfe  v.  Dyerville  230 

Cunningham  v.  Bragg  390 

V.  Littlefield        173,  510 

V.  Munroe  437 

Curling  v.  Robertson  554 

Currier  v.  Cameron  103,  202 

V.  Silloway  31 

V.  Webster  271 

Curry  v.  Larer  252 

Curtis  V.  Belknap  292,  334,  335 

V.  Hubbard  567 

V.  Perry  497,  499,  556 

Gushing  v.  Marston  329,  330 

V.  Smith  116 

Cushman  v.  Bailey  81 

Gust,  Ex  parte  492,  500 

Cutbush  V.  Cutbush  454 

Cutler  V.  Thomas  7 

V.  Winsor  82,  85,  144 

Cutts  V.  Gordon  28 

Cuxon  V.  Chadley  485 


D. 

Dabney  v.  Stidger 
Dacie  v.  John 
Dailey  v.  Hall 
Dain  v.  Cowing 
Dakin  v.  Demming 
V.  Graves 
V.  Williams 
Dale  V.  Hamilton 
Dalton  V.  Dalton 
V.  Hawes, 
V.  Murphy 
Dana  v.  Lull 

V.  Stearns 


197 

821,  522 

44 

823 

514 

284 

251 

8,  37,  363 

44 

44 

25 

168,  165,  166 

21 


INDEX   TO    CASES    CITED. 


xxm 


Dance  ;;.  Girdler 
Diinfortli  V.  Carter 
Daniel  v.  Cross  149, 

V.  Daniel         176,  209,  293, 


V.  Townsend 
Dann  v.  Si)urrier 
Darby  v.  Baincs 

V.  Darby 
Darling  v.  Marcli 


303,  368,  370 
112,  192,  197, 
21C,  387, 
l')arracott  v.  Pennington 
Darst  V.  Eotli  180, 

Dart  V.  Walker 
Dartiiery  v.  Lee 

Davenport  v.  Gear  280, 

V.  llackstrow  135, 

?;.  IJunlett         112,113 
Davlrl  V.  EUice  110,  307,  422,  485, 
Davidson  v.  Bridgeport 
V.  llobertson 
Davies  v.  Edwar<ls 
V.  Hawkins 
i;.  Penton 
V.  Spurling 
Davis  V.  Allen 
V.  Briggs 
V.  Brig  Seneca 
I'.  Burton 

V.  Christian    364,  367,  368, 
373 
V.  Cliurch 
V.  Coleman 
V.  Davis 
V.  Jolinston 
V.  Keyes 
?'.  Mason 
Davis  &  Desauque,  Estate  of  111, 
Dawes  v.  Head 
Dawliani  r.  Rogers 
Day  V.  Bosvvell 
V.  Lafferty 
V.  Lock  wood 
V.  McQiiillam 
Deal  V.  Bogue     337,  339,  343,  358, 
Dean  v.  McGliie 
V.  New  hall 
V.  Riclnuond 
Dear,  Ex  parte 
De  Berenger  v.  Hammell 
De  Berkom  v.  Smith     39,  66,  99, 
132,  195, 
Deckard  v.  Case  164,  166, 

Decker  v.  Howell 
Decreet  v.  Burt 
Deering  v.  Flanders 
Deerly  v.  Mazarine 
Deford  v.  Reynolds  412,  413,  414, 


276.  291 


289 
559 


554,  559,  561 
397,  411, 


De  Gaillon  v.  Darby 
V.  L'Aigle 
De  Jarnette  v.  McQueen 


330 

215, 

285, 


333 
194 

426 

295, 
350 
349 
494 
558 
371 

203, 
390 
47 
181 
152 
516 
283 
292 
202 
487 
486 
200 
194 
545 
252 
517 
413 
326 
561 
181 

372, 
376 
447 
188 
338 
562 

413, 
410 
300 
476 
85 
41 
180 
229 
474 
359 
571 
333 
24 
448 
459 

131, 
495 
183 
44 
289 
413 
24 

416, 

418 

337 

24 

272, 
287 


Deland  r.  Anicsbury  Man.  Co.         423 
Delaney  v.  Timberlake  44 

Delano  v.  Blake  19 

Delauney  v.  Strickland  37,  43 

Del  Col  t:  Arnold  572 

De  Lizardi  v.  Gossett  538 

Delmonico  v  Guillaume  343,  364 

Deloney  v.  Hutcheson       364,  372,  374 
De  Mautort  v.  Saunders  290,  291 

De  Mazar  v.  Pybus  37 

Deming  v.  Colt  165,  166 

De  Montmorency  !'.  Devereu«        516 
Denioss  v.  Brewster  174 

Demott  ().  Swaim  193- 

Denman  v.  Dosson  411,  413 

Dennett  v.  Chick  05 

Dennis  v.  Green  353 

Denny  v.  Cabot     83,  84,  87,  90,  92,  96 
V.  Metcalf  288 

Denton  v.  Richmond  251 

V.  Rodie  105,  213 

De  Pusey  v.  Du  Pont  247 

Descadillas  v.  Harris  486,  567 

Desha  v.  Holland  334 

V.  Smith  229,  230 

Desideri,  In  re  469 

Despatch  Line  of  Packets  v.  Bel- 

laiMv  Manuf.  Co.  108 

De  Tastet,  E.r  parte  483,  489 

V.  Bordenave  306,  322 

V.  Carroll  172,  477 

V.  Shaw  269,  289,  290,  326 

Devall  V.  Burbridge  224 

Devaynes  v.  Noble   348,  397,  426,  428, 

432,  433,  448,  485,  523 


Deveau  i\  Fowler 
Devin  v.  Harris 
De  Wahl  v.  Braune 
Dewdney,  /i.r  parte 
Dewey  v.  Dewey 
De  Wolff.  Gardiner 
Dexter  v.  Arnold 
De  Zeng  v.  Bailey 
Dickenson  v.  Lockj'er 

V.  Lord  Plolland 
Dickinson 


306 
233 
28 
483 
372 
548 
514 
173 
395,  427 
515 
Bold  240,  446 

V.  Dickinson  194,  397,  506 
V.  Granger  280,  281 ,  285, 623 
V.  Legare  106,  510 

V.  Valpy  14,  99,  119 

Dickson,  Er  parte 

V.  Alexander 
i\  Indiana  Mfg.  Co 
Die  Fire  Damer 
Dietriclisen  v.  Cabburn 
Digby,  Ex  parte 
Dilk  V.  Heighley 
Dillon  V.  Brown 
Dilwurth  v.  Mayfield 
Diruon  V.  Hazard 
Dinham  v.  Bradford 
Dinsmore  v.  Dinsmore 
Dios  V.  Owners  of  the  Reven 


164, 


489 

175 

395 

572 

298 

76 

18 

376 

303,  3G8,  376 

409 

230 

188,  189 

e   572 


XXIV 


INDEX   TO    CASES    CITED. 


Ditchburn  i'.  Spraclilin  194,  475 

Ditts  ('.  Lonsilalt'  201 

Divine  v.  Miteliarn  o7'2 

Dix  V.  Morcantile  Ins.  Co.  33ti 

V.  Otis  14,  56 

Dixon  i\  C^onper  77,  145 

Doak  V.  Swann  55 

Doane  ?••  Adams  48 

Dob  V.  Halsey       5G,  81,  112,  113,  204, 

209,  329 

Dobbin  V.  Foster  331,  398 

V.  Hubbard  25 

Docker  V.  Somes  155 

Doddington  v.  Hallett      344,  548,  550, 

551,  552,  554,  563,  564 

Dodgson,  Ex  parte  160 

V.  Bell  26,  162 

Doe  V.  Cbippeiiden  290 

Doe  dem.  Elliott  >:.  Hulme  107 

Dotrgett  V.  Jordan  7 

Dolman  v.  Ordiard    GC,  119,  132,  411, 

414 

Dommet  r.  Bedford  478 

Domville  v.  Solly  518 

Donaldson  v.  Kendall  510 

V.  Williams  228 

Donelson  r.  Posev  261 

Doner  v.  Stauffer"l67, 343,  345, 449, 503 

Doniphan  r.  Gill  108 

Donnally  v.  Kyan  105 

Dore  i".  Wilkinson  156 

Doremus  v.  McCormick    150,  173,  325 

V.  Selden  272,  334 

Doty  V.  Bates  127,  202,  214 

Dougall  V.  Cowles  163,  200 

Dougherty  v.  Van  Nostrand  226,  229, 

262,  263,  264,  394,  444,  446,  525 

Douglas  V.  Horsfall  340 

V.  Russell  555 

V.  Winslow  343,  352 

Dounce  v.  Parsons  155 

Dow  V.  Phillips  201 

V.  Savward  96,  102,  310,  352 

Dowley  I'.'Hall  44^ 

Downham  v.  IMattliews  237 

Downing  r.  Linville  210 

Downs  V.  Collins  159,  4.50,  454 

V.  Gazebrooke  515 

V.  Jackson  287,  386 

Dowzelot  V.  Rawlings  195 

Dovle  V.  Bailey  510 

Drake  v.  Klwyn  7,  125,  200 

V.  Kanney  60,  142 

V.  Rogers  167 

Dran  ;-.  Newliall  173 

Drennen  v.  House  116 

Drew  V.  Ferson  228 

V.  Power  516 

Drewry  v.  Montgomery  365 

Driver  v.  Burton  330 

Druid,  The  572 

l^rumrigbt  i'.  Pliilpot  181 

Drury  i-.  Roberts  314 


Drv  V.  Boswell  48,  76,  88,  89,  91 

V.  Davy  332 

Dublin   &  Wicklow  R.  R.  Co.  v. 

Black  21 

Dubois  r.  Ludcrt  290 

V.  Roosevelt  526 

Dubois's  Appeal  163,  184 

Duckworth  v.  Allison  251 

V.  Stratford  316 

Dudley  v.  Littlefield  87,  863 

Duff  V.  East  India  Co.  173,  306 

r.  McGuire  44 

Duggins  I'.  AVatson  572 

Duhring  v.  Duhring  364,371,  373,  374, 

376 

Dulles  V.  De  Forest  432 

Dumas  v.  Jones  336 

Dumont  v.  Ruepprecht  437 

Dunbar  v.  Lane  516 

Duncan  v.  Clark  212 

V.  Lewis  103 

t'.  Lowndes  217 

V.  Lyon         271,  275,  285,  510 

V.  Worrall  308 

Dundass  v.  Gallagher  216 

Dundee,  The  572 

Dunham  v.  Dodge  190 

V.  Gillis  275 

V.  Hanna  481 

I'.  Jarvis  317 

I'.  Rogers  117 

Dunlop  V.  Gregory  410 

Dunn  r.  Slee  287 

Dunning's  Appeal  535 

Dupuy  V.  Johnson  287 

V.  Leavenworth  864 

Durbin  r.  Barber  459 

Durj'ea  v.  Jiurt  67 

Duryee  v.  Elkins  81 

Dusar  v.  Murgatroyd  512 

Dulton  V.  Morrison       3,  180,  309,  461, 

469,471,474,  476,  481,  506 

V.  Woodman  124,  194 

Duvergier  i\  Fellows         542,  545,  547 

Dwight  ('.  Brewster  156,  172 

Dwinel  v.  Stone  7,  49,  56 

Dyer  v.  Clark    167,  363,  864,  365,  366, 

368,  371,  372,  373,  374,  378,  438, 

440,  441,  497,  523 

Dyke  v.  Brewer  14,  62,  163,  4.34 

Dyster,  Ex  parte  496 


E. 


Eagle  V.  Bucher  401 

Earl  of  Chesterfield  v.  Janssen  516 

Earl  Pomfret  v.  Lord  Windsor  517 

Early  v.  Reed  216 

Eason  v.  Cherry  224 

Eastburn  v.  Kirk  811 

East  India  Co.  v.  Blake  251 

V.  Vincent  494 


INDEX   TO    CASES    CITED. 


XXV 


Eastman  v.  Cooper 
!'.  Foster 
V.  Wright 

Eastwood  V.  Brown 

Eaton  V.  Boissoncault 

Ebbert's  Appeal 

Eccleston  v.  Clipsham 


175 

48y 

175, 288,  325,  329 

496 

230 

7,371 

233,  243,  275, 

276 

167,  449,  480 

378 


273 


Eddie  v.  Davidson 
Edgar  v.  Donally 

r.  Fowler 

r.  Knapp 
Edjreriy  v.  Shaw 
Ediiiistoii  V.  Writjht 
Edmonson  r.  Davis 
Edmund  v.  Caldwell 
Edmumlson  ;•.  Thompson 
Edwards  v.  MeFall 
r.  Mcyrick 
V.  Tracy 
Egberts  v.  Wood 

Egyptienne,  The 

Ehle  V.  Pnrdy 

Einer  v.  Deynoodt 

Elder  v.  Hood 

Elderkin  v.  Winne 

Eldredge  v.  Frost 

Electric  Telegrapli  Co.  of  Ireland, 

In  re  381 

Elgie  V.  Webster  7,  142,  271,  510 


166,  167,  345, 


287 
287 

19 
175 
157 
335 
116 
416 
515 

44 
442, 


470,  474 
560 
333 
1G6 
273 
52 
44 


307,  387, 
112, 


Elizabeth  &  Jane,  The 
Eilicott  ('.  Nichols 
Elliot  V.  Brown 
V.   Davis 
Elliott  V.  Dudley 
V.  Sleeper 
V.  Stevens 
Ellis,  Ex  parte 

V.  Bronson 
V.  Jameson 
V.  Watson 
Ellison  V.  Chapman 
V.  Dezell 
V.  Moffat 
Ellston  V.  Deacon 
Ellsworth  V.  'J'artt 
Elton,  Ex  parte 
Emanuel  v.  Bird 

V.  Draughn 
Emerson  v.  Harmon 
V.  Knower 
Emly  V.  Lye 
Emmet  v.  Butler 
Enderby,  Ex  }tarte 
England  v.  Curling  223,  235,  236,  238, 

459 
Englis  V.  Furniss  288,  290,  325 

Ennis  v.  Williams  411 

Ensign  i'.  Wands  39,  99,  526 

Ensniinger  v.  ]\Iarvin  202 

Essex  c.  Essex  370,  371 


560 

190 

441 

180 

203 

486 

354 

479,  502 

411,416 

195 

195 

275 

182 

514 

112 

55 

348,  481,  482,  493 

349,  449 

42,  55 

172,  175,  212 

182,  325 

105,  213 

414 

496,  497 


Estabrook  v.  Messersmith 


462 


Estabrook  v.  Smith 
Estes  V.  Whip])le 
Estwick  V.  Conningsby 

Etheridge  v.  Binney   63, 

Etnyre  v.  McDaniel 
Eubanks  v.  Peak 
Evans  v.  Bennett 

V.  Bicknell 

V.  Biddleman 

V.  Corriell 

V.  Drummond  62 
415 

V.  Evans         319, 

V.  Gibson 
V.  Silverlock 
V.  Wells 
r.  Yeatherd 

Everard  v.  Heme 

Everett  v.  Coe 
V.  Stone 

Everit  v.  Strong 
V.  Watts 

Everitt  v.  Chapman 

Evernghin  v.  Ensworth 
Ewing  V.  French 

V.  Osbaldistone 
Exeter  Bank  v.  Sullivan 
Experiment,  The 


Fagely  v.  Bellas 
Faikney  v.  Heynous 
Fail  V.  McTiee 
Fairburn  v.  Pearson 
Fairchild  v.  Fairchild 

V.  Holley 
Fairlie,  Ex  parte 
Fairthorne  v.  Weston 
Faith  V.  Kichmond 
Falilo  V.  Griffin 
Falkland  v.  Cheney 
Fall  River  Whaling  Co. 


328, 329 

276,  289 

314,  319,  321, 

442 

129,  130,  172, 

201,  202 

230 

19 

333 

296,  513 

104 

195 

111,  19.5,397, 

,  423,  485,  488 

440,  442,  446, 

507,  525 

366,  374 

294,  330 

212 

273,  286 

173 

81,  89 

476 

166,  183 

25 

7,  44,  63,  118, 

256 

112,  210 

334 

10 

185,  190 

559 


184 

9 

46 

813 

364 

428,  430,  432 

148,  149 

313,  4.59,  512 

126,  127 

414 

218 

,  Borden  8,  37 


363,  364,  365,  369 
Fanning  v.  Cliadwick       278,  279,  281, 

285 

Fanshawe  v.  Lane  535 

Farina  v.  Silverlock  265 

Farlow,  Ex  parte  474 

Farmer  v.  Bissell  287 

V.  Davies  553 

Farmer's  Bank  of  Mo.  v.  Bajdess     213 

V.  Clark         188 

V.  Green       418 

Farmer's  Ins.  Co.  v.  Ross  44 

Farnham  i\  Brooks  515 

Farnum  i\  Boutelle  432 

Farr  f.  Johnson  258 


XXVI 


INDEX   TO    CASES    CITED. 


Farr  v.  Pearce    204,  265,  409,  444,  445 

V.  Smith  323,  555,  556 

Farraiit  v.  Olrnius  251 

Farrar  v.  Beswick    261,  323,  552,  555, 

556 

V.  Deflinne  416 

V.  Iltiti'liinson  112,175,210,211 

Farrer  v.  Grananl  24 

Fawcett  v.  Osborne  86 

V.  Whiteliouse  225 

Fay  V.  Davidson  44 

V.  Nol)le  43 

Fearns  v.  Young  447,  503 

Featiierstone  v.  Hunt  397,  425 

Featlierstoniiaugh  v.  Fenwick  226,  240, 

263,  382,  383,  394,  399,  401,  446, 473, 

507,  511,  524,  526 

Feiglej'^  r.  Sponeberger  97 

Felichv  V.  Hamilton  42,  46 

Fell,  Ex  parte    345,  34G,  351,  493,  496, 

497 

Fellows  V.  Wyman  388,  391,  392 

Fenn  v.  Craig  340 

V.  Harrison  217 

V.  Simpson  195 

Fennings  r.  Grenville  323,  556 

Fenton  v.  Holloway  29 

Fereday  v.  Hordern  42,  139,  142 

V.  Wightwick       36,  374,  446, 

505,  506,  507,  525 

Fereira  v.  Sayres  392 

Ferguson  u.  Bell  18 

Ferry  v.  Henry  521 

Fichthorn  v.  Beyer  180 

Fickett  V.  Swift  196 

Fidgeon  v.  Sharp  476,  493 

Field  V.  Carr  432 

V.  Clark  449 

V.  Crawford  and  Trs.  360 

V.  Holland  195 

V.  Sowle  25 

Fielden  v.  Laliens  201,  204 

Fife,  Ex  parte  175 

Figes,  Ex  parte  506 

V.  Cutler  13,  237 

Figgins  V.  Ward  196 

Figiitmaster  v.  Beasly  323 

Fiiley  v.  Phelps  126,  215 

Finekle  i'.  Stacy  47 

Finlay  v.  Stewart  274,  284 

Finney  i'.  Bedford  Com.  Ins.  Co.    335 

f.  Warren  Ins.  Co.  336 

First  Nat.  Bank  v.  Almy  42 

Fisher  v.  Bowles  66 

IK  Mowbray  18 

V.  Murray  166 

V.  Tayler  176 

V.  Tucker      178,  188,  189,  190, 

192,  510 

V.  Willing  571 

Fisk  V.  Copeland  196 

V.  Herrick         167,  353,  359,  360, 

449 


Fiske  V.  Foster 

474 

Fitch  V.  Hall 

85 

V.  Harrington 

480 

V.  Stamps 

196 

V.  Sutton 

567 

Flagg  V.  Upham 

203 

Flanagin  v.  Champion 

193,  194 

Fleming  v.  Dunbar 

178,  180,  181 

V.  M'Nair 

122 

Flemyng  r.  Hector 

37,  42 

Fletcher  v.  Dyche 

251 

V.  Pollard 

522 

Flood  V.  Yandes 

180 

Flower  v.  O'Conner 

447 

Floyd  V.  Wallace 

155 

Fogg  V.  Greene 

195 

t'.  Johnston         13,  296,  458,  459 

Foil  V.  McArthur  196 

Fole^'  V.  Robards  104 

Folk  V.  Wilson  105,  210 

Fonda  v.  Van  Home  18 

Foot  V.  Sabin  112,  216 

Forbes  v.  Marshall  128 

V.  Webster  287 

Ford  V.  Haft  179 

V.  Phillips  19 

Forde  v.  Herron  364,  377,  378 

Forkner  v.  Stuart  163 

Forman  v.  Homfray  299,  511,  512 

Forrester  v.  Bell  643 

Forster  v.  Hale  322 

Forsyth  v.  Hastings  19 

Fortitude,  Tlie  Ship  568 

Fortune  v.  Brazier  271,  276,  334 

Foster  v.  AUanson      280,  285,  510,  520 

V.  Andrews  200,  203 

V.  Barnes  372 

V.  Donald  241,  518 

1-.  Hall  104,  105 

V.  Jackson  173 

V.  Lawson  337,  338,  339 

V.  U.  S.  Ins.  Co.  175,  570 

Foster's  Appeal  371 

Foute  V.  Bacon  190 

Fowke  V.  Bowie  427 

Fowie  V.  Harrington  391 

Fowler  v.  Bailey  364 

V.  Ludwig  111,  486,  567 

Fox  V.  Clifton     7,  12,  14,  31,  131,  1.33, 

161,  170,  271,  546,  547 

V.  Hanbury   2,  160,  163,  165,  167, 

324,  343,461,  4()9,  470,472, 

473,  476,  480,  525 

V.  Norton  180 

V.   Tlie  Lodemia  659 

Frances,  The  556 

P>ancis  v.  Smith  434 

Francis,  W.  W.  In  re  67 

Fiaii Cisco  V.  Fitch  269 

Frank  v.  Branch  365 

Frankland  v.  M'Gusty     112,  113,  205, 

207 

Franklin,  The  27 


INDEX   TO   CASES    CITED. 


XXVll 


Franklin   v.  Tlrownlow 
V.  Hosier 
V.  T{f)l)inson 
)•.  Tlionias 
Franklin  Bank  v.  Hooper 
Franks,  Ex  pnrfe 

V.  De  Pienne 
Frazer  v.  Marsh 
Frederic!,  Tlie 
Freeland  v.  Cocke 
V.  Heron 
V.  Stansfield 
Freeman,  Ex  parte  149, 

V.  Bloomfield 
V.  Carliart 
V.  Carpenter 
V.  Fairlie 
V.  Orzer 
V.  Boss 
V.  Smitli 
V.  Stewart 
Freeman's  Bank  i\  Bollins 
Freli^h  v.  Miller 
Frencli  v.  Backhouse 

V.  Chase  360, 

V.  Fenn 

V.  Price  60,  144, 


V.  Bowe 
V.  Styrinj; 
Frentress  ;•.  Marble 
Fridge  v.  Tlie  State 
Friese  ;•.  Iileson 
Frigerio  ?•.  Crottes 
Frink  i'.  Byan 
Frisbie  v.  Larned 
Fromme  v.  Fromme 
Fromont  ".  Coupland 
Frost  V.  Moulton 

V.  Oliver 
Fry,  Ex  parte 

V.  Bennett 
Fullagar  ?•.  Clark 
Fulton  V.  Williams 
Furber  v.  Carter 
Furlong  V.  Bartlett 
Furnival  v.  Weston 


248 


55 


149, 


174, 


474 

569 

229,  394 

309 

427 

23 

24 

552,  569 

77 

516 

520 

318,  472 

435,  493, 

502 

58 

180 

208 

155 

24 

212 

13 

603 

424 

53 

570 

449,  501 

503 

548,  551, 

567 

193 

55,  271 

110 

18 

44 

524 

280, 284 

111,  486 

163 

280,  520 

383 

652,  569 

435,  493 

339 

515 

289 

66 

324 

175,  325 


G. 


Gabriel  v.  Fvill 

7 

Gage  V.  Rollins 

329 

Gainsborough  i-.  Stork 

233,  242 

513 

Galbraith  v.  Gedge 

372, 

873 

V.  Moore 

273 

Gale  V.  Leckie 

237 

271 

V.  Miller 

103, 

194 

V.  Reed 

410 

Gallatin  r.  The  Pilot 

554 

Galsworthy  i'.  Strutt 

251, 

252 

Gait  V.  Cailand 

110, 

510 

Galway  v.  Matthew    97,  126,  149, 
397, 

V.  Smith 

V.  Smithson 
Gamble  v.  Grimes 
Gano  V.  Samuel 
Gansevoort  v.  Williams   112, 


216, 
113, 
204, 
214, 
14 


553 


455, 


176, 

381, 
334. 


Ganson  v.  Lathrop 
Gardiner  v.  Childs 

V.  Smith 
Gardner  v.  Cleveland  550, 551 

V.  M'Mahon 
Gardom,  Ex  jiarte 
Garden  ;;.  Slowden 
Garland,  Ex  parte      147,  454, 

V.  Agee 

V.  Davidson 

V.  Jacomb 

t'.  Noble 
Garrard  v.  Harding 
Garretson  v.  Weaver  312,  314, 
Garrett  v.  Handley     175,  329, 
V.  Miss.  &  Ala.  R.  Co. 
V.  Taylor 
Garvin  v.  Paul 
Gass  V.  Stinson 
Gates  V.  Graham 
V.  Pollock 
Gay  V.  Bowen 

V.  Johnson 
Gavlord  v.  ImhofF 
Geddes  v.  Wallace     59,  132,  234, 

Geery  v.  Cockroft 
Cellar,  Ex  parte  52,  62, 

General  Smith,  The  568, 

George  v.  Clagett 
Geortner  i-. Trustees,  &c.  314, 

Gerard  v.  Basse  178, 

Gering,  Ex  parte 

German  Mining  Co.,  In  re        229, 
Gcrvais  v.  Edwards 
Getchell  v.  Foster 
Gibbons  v.  Wilcox       77,  145,  148, 
Gibbs  V.  Brj-ant 
V.  Merrill 

r.  The  Two  Friends 
Gibson  v.  Lupton  46,  60,  104, 

V.  Minet 

V.  Moore  273, 

V.  Stevens      146,  337,  343, 

i\  Stone 

V.  Warden 
Giddings  v.  Palmer 
Giffin  V.  Ashby 
Gilbank  v.  Stephenson 
Gilbert  v.  Dickerson  323, 

Gilderslceve  v.  Mahony 
Gilfillan  v.  Henderson 
Gill  V.  Gever 

V.  Kuhn  58,  132, 

V.  M.  &  L.  R.  R. 


214, 
411 
128 

98 
207 
233 
203, 
216 
349 
113 

11 
563 
190 
172 
9 
505 
192 
178 

99 
338 
542 
459 
335 
308 
331 
853 
432 
180 
325 
192 

23 
494 
287, 
519 
210 
165 
569 
291 
391 
179 
506 
230 
298 

44 
194 

(55 

23 
572 
147 
485 
283 
359 

86 
178 
346 
187 

44 
556 
212 

17 
249 
282 

44 


XXVlll 


INDEX   TO    CASES    CITED. 


Gillespie  v.  Hamilton  438 

Gillett  V.  Hull  510 

V.  Thornton  234 

Gillj^  V.  Singleton  196 

Gilmore  v.  iWnvk  45,  159,  168,  546 

r.  Biissey  567 

Gilpin  I'.  Enderbey  42,  58,  142 

V.  Temple  195 

Gitcliell  V.  Ileald  188 

Given  V.  Albert  63,  148,  447 

Glascock  V.  Smith  391 

Glassington  v.  Thwaites    63,  224,  227, 
228,  244,  249,  253,  804,  305,  313,  512 
Glassop  V.  Colman  18,  135,  292 

Gleason  v.  Clark  193 

V.  White  460 

Glover  v.  Austin  337,  348,  552 

V.  Tuck  237,  275 

Giyn  V.  Caulfield  521 

Goble  V.  Howard  278 

Goddard  v.  Bulow  443 

V.  Hodges      12,  160,  271,  545 
V.  Ingram  187,  188,  192 

V.  Lyman  328 

V.  Pratt       6,  30,  55,  385,  412, 
416,  419 
Godfrey  v.  Browning  438 

I'.  RIacanlev  419 

V.  Turnbuli  411,  419 

Goesele  v.  Bimeler  38 

Gold  V.  Canbarn  306,  517 

Goniersall  v.  Gomersall  268 

Good,  Ex  /Kirte  44 

V.  Blewitt  558 

Goodburn  r.  Stevens  361,  372,  373 

Goode  V.  Harrison  18,  20,  123,  134 

V.  Linecum  175 

V.  McCartney  59,  209,  210,  293 
Goodenow  i\  Tyler  567 

Gooding  v.  Morgan  486 

Goodman,  E.r  jmrle  483 

V.  Whitcomb  228,  297,  302, 
304,  312,  314,  315,  451, 
459,  586 
V.  White  100,  173 

Goodnow  V.  Smith  179 

Goodsell  V.  Myers  19 

Goodtitle  '-'.  Woodward  197 

Gordon  v.  Buchanan  175 

V.Ellis  211,291,293 

V.  Freeman  396,  400 

V.  Gordon  513 

V.  Kennedy  345 

Gorham  v.  Tliompson  413,  418 

Gorman  v.  Russell  541 

Goss  V.  Dufresnov  502 

V.  N.  Y.  &  P.  R.  R.  Co.  64 

Gough  V.  Davies  397,  425 

Gould  V.  Gould  261,  552 

V.  Horner  401 

V.  Stanton  559,  563,  669 

Goulding,  Ex  parte  111,  205 

V.  Bain  313,  316 


Goule  V.  Hayward  55 

Gouthwaite  v.  Duckworth  62, 117, 118, 

256 

Govett  V.  Radnidge  157 

Gcwan  v.  Foster  553 

V.  Jackson  196 

V.  Jeffries      314,  815,  316,  317, 

320,  381,  459,  461,  469 

Gowdy  V.  Gillam  190 

Gower  v.  Saltmarsh  252 

Grace  v.  Shurter  447 

V.  Smith    41,  67,  69,  73,  78,  136, 

137,  138,  140,  141,  142 

Graeff  v.  Ilitchman  63,  105,  213 

Grafton  v.  United  States  65 

Grafton  Bank  v.  Moore  194 

Graham  v.  Harris  288 

V.  Holt  280,  283 

i;.  Hope  413,419 

V.  Robertson       272,  273,  284, 

287,  475 

V.  Wichels  395 

Gram  v.  Cad  well  96,  112,  210 

V.  Seton  181,  182 

Grant,  In  re  489 

i;.  Hawkes  200,211,233 

V.  Jackson  194,  195 

V.  Watts  13 

Grasselli  v.  Lowden  410 

Gratz  V.  Bayard        159,  224,  304,  319, 

439,  458 

Graves  v.  Boston  Marine  Ins.  Co. 

175,  336 

V.  Kellenberger  201 

V.  \\Qy  495 

V.  Merry  411,  412 

V.  Sawcer      323,  548,  556,  557, 

562 

Gray,  Ex  parte  491 

V.  Brown  173 

V.  Chriswell  848 

V.  Cropper  151 

V.  Crosby  251 

V.  Gibson  536,  640 

V.  Hodgson  194 

V.  Palmer  363,  368,  372 

V.  Portland  Bank  250 

V.  Ward  100 

V.  Washington  513 

V.  Wilson  248 

Grazebrook,  Ex  parte  479 

V.  M'Creedie  179 

Greatrix  v.  Greatrix  305 

Greeley  v.  Wyeth     112,  170,  210,  211, 

293,  330 

Green  v.  Barrett  13,  296,  457 

V.  Beals  178,  179 

V.  Beesley  41,  55 

V.  Bostwick  321 

V.  Bradfield  493 

V.  Briggs  548,  551,  563,  564 

V.  Chapman  288,  325 

V.  Deakin  111,  205 


INDEX    TO    CASES    CITED. 


XXIX 


Green  v.  Greenbank  158 

V.  Tanner  105,  '218 

V.  Waring  408 

Greene  v.  Greene      167,  343,  366,  372, 

573 
Greenleaf  I'.  Quincey  189,  192 

Greensliide  v.  Dower  yO,  176 

Gregg  V.  IJrower  '270 

V.  James  173 

Gre^g   Township   v.  Half-Moon 

Townsiiip  56 

Gregory  v.  Paul  24 

V.  Bailey  202 

V.  Gregory  515 

V.  Pierce  24 

Gregory's  Ex'rs  v.  Forrester  514 

Grellier  v.  Neale  2'.)1 

Gribble,  Ex  paite  663 

Gridley  v.  Dole  274,286,  510 

Grieff  v.  Boudousquie  61 

Grier  v.  Hood  17'J 

Griffin  v.  Doe  7 

Griffith  V.  Buck  346,  351 

V.  Butluin  55,  63,  118 

V.  Chew  2»8,  325 

V.  Wilhing  510 

Grigsliy  v.  Ranee  274 

Grill.  Ex  pnrie  500 

Grinau  v.  Baton  Rouge  Mills  Co.  415, 

418 

Griswold  v.  Haven  lUO 

V.  Waddinuton        12,  27,  '28, 

160,  3-27,  438,  461,  463, 

464,  4Gy,  504,  546 

Grosvenor,  Ex  parte  506 

V.  Lloyd  63,  416 

Grove  v.  Dubois  336 

Grover  v.  Hall  516 

r.  Hugell  308 

Grozier  v.  Atwood  81 

Grund  v.  Van  Vlack  150 

Guidon  v.  Robson      66,  132,  134,  135, 

2y3,  334,  4y5 

Guild  V.  Welch  103 

Guillen  V.  Peterson  155,  198 

Gulick  V.  Gulick  278,  280 

Gunter  v.  Williams  109 

Gurney,  Ex  parte  496 

Guyther  v.  Pettijolin  323 

Gwinn  v.  Rooker  181 

Gyger's  Ajjpeal  230 


H. 


Habershon  v.  Blurton      358,  385,  400, 

462 
475 
193 
194 
156 
203 
291 


189, 


Hacker  v.  Shepherd 
Hackle}'  v.  Patrick 
Haddock  v.  Crocheron 
Hadfield  v.  Jameson  63,  151, 

Hagar  v.  Mounts  112, 

V.  ytone 


Hagedorn  v.  Oliverson      335,  557,  570 
Haguart  v.  Morgan  248 

Haggerty  i-.  Taylor  536,  537 

Hague  V.  RoUeston  160,  461,  469,  471, 

483 

Haldeman  r.  Bank  of  Middletown  '202 

Halderman  v.  Halderman  283 

Hale  V.  Gerrisli  19 

V.  Hale  313,  314,  459 

V.  Hurrie  368,  378 

Halhed  v.  Marke  513 

Halket,  Ex  parte  550 

Hall,  Ex  parte  174,  482,  483 

V.  Baiirbridge  178 

i;.  Digby  54 

V.  Franklin  16 

V.  Hall      314,  345,  403,  448,  459, 

460 

V.  Lanning  175,  178,  194 

t'.  Leigh  46 

V.  Smith  128,  149,  214 

V.  Stewart  275,  510 

I'.  Wood  349 

Hallack  v.  Marcli  176 

Hallett  V.  Cumston  67 

V.  Dowdall  543 

V.  Hallett  522 

Halliday  v.  Do^gett  329,  334,  335 

V.  Ward  186 

Hallifax,  Ex  parte  44,  496 

Halls  V.  Coe  175,  210 

Halpenny  v.  Pennock  178 

Halsehara  v.  Young  217 

Halsey  v.  Fairbanks  325 

V.  Norton  469 

V.  Whitney  180,  182 

Halstead  v.  Shepard         163,  164,  209, 

295 

Halsted  v.  Shmelzel  55,  280 

Haly  V.  Goodson  558,  559 

Hambidge  v.  De  La  Croue'e      176,  179 

Hamblin  v.  Dinneford  298 

W?L\nev,  Ex  parte  484 

Hamilton  v.  Benbury  427 

V.  Cummings  295,  308 

V.  Hamilton  280,  510 

V.  Seaman  389,  391 

V.  Summers  193,  '201 

Ilammatt  i".  Wyraan  394 

Hammil  v.  Hammil  314,  420 

Hamraill  v.  Parvis  217 

V.  Stokes  296,  457 

Hamraon  v.  Roll  173 

Hammond  v.  Douglas      263,  443,  445, 

447,  503 

V.  Hammond  269  , 

Hamper,  Ex  parte      49,  60,  67,  74,  92, 

142,  -291,  501,  508 

Hand  v.  Armstrong  230 

Hantfr.  Howard  8,  37'2,  377,  378 

Hankey  v.  Garrett  155,  492 

Hanning  t'.  Ferrers  494 

Hanson  v.  E.  &  N.  A.  R.  R.  Co.      572 


XXX 


INDEX    TO    CASES    CITED. 


Harding  v.  Foxcroft    46 

,  148,  548,  551 

Haslet  V.  Street 

174 

V.  Glover 

313,  314 

Hasiett  V.  Witherspoon 

385 

Hardy  v.  Sproule 

551,  554,  565 

Hasseis  v.  Sim|)son 

476 

V.  Walters 

18 

Hastings  v.  Hopkinson 

538 

Hare,  Ex  parte 

493 

Hatch  V.  Crawford 

181 

V.  Waring 

54() 

Hatcher  v.  Seaton 

275 

Hargrave  v.  Conroy 

66,  71 

Hathaway  v.  Haskell! 

188 

Hargreaves,  Ex  parte 

480,  502 

llaughley  r.  Strickler 

195 

Hargroves  v.  Cooke 

427 

Haven  v.  White 

288 

Harman  v.  Johnson 

100 

Havens  i».  Hussey 

166 

Harper  v.  Fox 

176,  179 

Haviiand  v.  Chace 

532 

V.  Lamping 

155,  427,  437 

Hawes  r.  Diinton 

200 

V.  Kaj'inond 

546,  547 

V.  Tillinghast 

60 

V.  Wrigley 

201 

Hawken  v.  Bourne       99 

,170 

172,  233 

Harrington  v.  Higham 

176,  177 

Hawkins  i'.  Appleby 

150 

Harris,  Ex  parte   96,  97, 

104,  393,  492, 

V.  Hawkins 

387 

494,  500,  503 

Hawkshaw  v.  Parkins 

180 

182,  309 

V.  Farwell     111, 

348,  397,  422, 

llawley  v.  Cramer 

292,  475 

424,  425,  485 

V.  Keeler 

44 

V.  Lindsay    110, 

421,  423,  425, 

Hawtayne  v.  Bourne 

99 

487 

Hay,  Ex  parte            148 

149 

488,  491 

V.  Murray 

535 

V.  P'airbairn 

496,  571 

V.  Nortii  Devon  R.  Co.         31)4 

V.  Mair 

416 

V.  Pollard 

367 

Hay  den,  Ex  parte 

348 

V.  Wall 

19 

Hayes  v.  Bement 

533 

534,  535 

V.  Wilson 

194 

V.  Flowers 

275 

Harrison,  Ex  parte   548, 

552,  554,  563, 

V.  Heyer          166 

312 

314,  534 

504 

V.  Reese 

511 

V.  Armitage 

299,  300,  312, 

Haythorn  v.  Lawson 

338,  339 

459,511,  612 

Haj'ward  v.  P'rench 

103,  210 

V.  Close 

173 

Haywood  v.  Harmon 

196,  420 

V.  Devington 

339 

Hazard  v.  Hazard 

59,67 

V.  Fitzlienry 

135,  292 

Heald  v.  Warren 

111 

V.  Gardner 

262,  306,  445 

Heane  v.  Rogers 

495 

V.  Heatliorn 

452,  515,  547 

Heap  V.  Dobson 

201 

V.  Jackson 

174,  178,  180, 

Heard  v.  Bowers 

251 

182,  199 

Heart  v.  Rankin 

365 

V.  S  terry   163, 

165,  166,  183, 

Heartt  v.  Corning      242, 

513, 

520,  522 

475,  481,  483 

Heath,  Ex  parte 

496 

V.  Ten  nan  t 

381,  458,467 

V.  Hall 

476 

Hart  V.  Alexander    110, 

397,  413,  423, 

V.  Hubbard 

323,  556 

424,  426 

,  485,  487,  488 

V.  Percival 

397 

V.  Clarke 

317,  403 

V.  Samson       111, 

195, 

211,  385, 

V.  Fitzgerald 

337 

400, 

416,  468 

V.  Palmer 

196 

Heathcote  v.  Hulme 

155,  443 

V.  Tomlinson 

434 

Heaton,  Ex  parte 

155 

V.  Withers          110 

178,  179,  180 

Heckert  v.  Fegely 

85,  144 

Hartley  v.  Kirlin 

434 

Heckman  v.  Messinger 

482 

V.  Wharton 

19 

Hedderle}',  Ex  parte 

489 

Hartley's  Case 

77 

Hedge's  Appeal 

44 

Hartman  v.  Woehr 

384 

Hediey  v.  Bainbridge 

100 

Hartness  v.  'J'hompson 

23 

Hefferman  v.  Brenham 

36 

Hartridge  v.  Rockwell 

310 

Heimstreet  v.  Howland 

89,92 

Hartung  v.  Siccardi 

210 

Helme  v.  Smith        271, 

273, 

548,  551, 

Hartz  V.  Schrader     807, 

311,  312,  319, 

552,  569 

442 

Helsby  v.  Mcars 

172,  434 

Harvey  v.  Child 

67 

Helton  V.  Granville 

311 

V.  Crickett  269, 

461,  469,  471, 

Henderson,  Ex  parte 

22 

476 

V.  Harbee 

180 

V.  Varney     242 

295,  315,  50!) 

V.  Hudson 

8 

Harwood  v.  Edwards 

174 

V.  JVIayhew 

566 

Haskell  v.  Adams 

279,  287 

V.  McDuffie 

569 

Haskins  v.  Warren 

67 

V.  Wild  173, 

175, 

210,  211 

INDEX   TO    CASES   CITED. 


XXXI 


Ileiulrick  v.  Gunn  63 
Henecy,  Ex  parte  473 
Henley  v.  Soper         247,  278,  281,  288 
Ileiin  V.  Walcli   303,  304,  312,  314,  458 
Heniiessy  v.  Western  Bank  183 
Henniker  v.  Wigg  431,  433 
Henry  v.  Birch  459 
V.  Jackson  543 
Hepburn  r.  Curts  289 
Heran  v.  Hall  51 
Herbert  v.  llanriftfk  181 
Herberton  r.  Jepliersnn  393 
Hcrcy  v.  Birch  236 
Herfrnian  c.  Dettlebach  310 
Herkimer,  The  55 
Herrick  v.  Ames  513 
Herries  v.  Jamieson  273,  286,  350,  421 
Herrin  v.  Katon  323,  556 
Heshani,  Ji.r  parte  479,  480,  501 
Hesketii  >\  Blanchard  60,  74,  273 
Hess  V.  Werts  541,  543,  544 
Hester  v.  Lumpkin  209 
Hewes  v.  Bay  ley  329 
Hewett  V.  Buck  5V0 
Hewitt  V.  Sturdevant  548,  550,  551, 
563,  564 
Heyden,  Ex  parte  499 
V.  Heyden  342,  353 
Heylioe  v.  Burge  6,  79 
Hey  wood  v.  Watson  211 
V.  Wingate  326 
Hiard  v.  Bigg  104 
Hibbert  v.  Hibbert  13,  235 
V.  Martin  336 
Hichens  v.  Congreve  325 
Hickes  v.  Cook  515 
Hickman  v.  Cox     57, 77,  80,  87,  90, 146 
V.  Runkle  202 
I'.  Reineking  112,  203 
Hicks  V.  Cram                31,  32,  120,  132 
Hickson  v.  Ayhvard  516,  517 
Higginbotham  v.  Holme  473 
Higgins  V.  Packard  567 
V.  Thomas  323 
Higginson  v.  Air  319 
V.  Fabre  517 
RiW,  Ex  parte  473,491 
V.  Burnliam  508 
V.  Holli8ter  248 
V.  Manchester  &  Salford  Water- 
Works  Co.  546 
V.  Marsh  325 
V.  McPherson  289,  326 
V.  Southerland  428 
V.  Voorhies  63,  111,  171 
V.  Wiggin           210,  343,  352,  359 
Hilliker  v.  Loup  292 
Hills  (;.  Bailey  277 
V.  McRae  348 
V.  Nash  301 
V.  Ross  174 
Hilton  V.  Eckersley  410 
Hinds  V.  Terry  323 


Hindy  v.  Margarity  19 

Hine  v.  Lart  265 

nine.  The,  v.  Trevor  568 

Hinkie  o.  Reid  284 

Rinlon,  Ex  parte  473,491 

V.  Law  550,  551 

Hiseock  v.  Philips  365 

Ilitclicock  V.  St.  John  166 

Ilitchings  v.  Ellis  61 

llite  u.  llite  394 

Hoag  V.  McGinnis  251 

Hoare  v.  Allen  28 

V.  Clement  569 
V.  Dawes        33,  41,  44,  62,  105, 
132,  145,  291 

Hobart  v.  Andrews  516 

V.  Howard  421 

Hobbs  V.  Memphis  Ins.  Co.  336 

V.  Wilson  409 

Hoby  V.  Roebuck  395,  437 

Hodenpyl  v.  Vinnerhold  196 

Hodges  V.  Dawes  85 

V.  Harris  166 

V.  Holenian  167,  503 
Hodgkinson,  Ex  parte   48,  76,  11 1,  148, 
149,  174,  290,  488,  501 

Hodgnian  v.  Smith  81 

Hodgson,  Ex  parte  348,  473,  522 

V.  Butts  571 

V.  Murray  308 

V.  Temple  9 

Hodsden  v.  Staple  496 

Hoe  V.  Richards  515 

Hoffman  f.  Duncan  315,  318 

V.  Pitt  496 

Hogaboom  v.  Herrick  424 

Hogan  V.  Reynolds  172,  176 

Hogg  V.  Ellis  535,  536 

Hogle  V.  Low  305 

Hoi  brook  v.  Wight  156 

Holcroft  V.  Hoggins  104 

Holden  v.  M'Makin  265,  316,  444 

V.  Peace  224 

Holderness  v.  Shackles  167,  351,  503, 
506,  551,  563 

Holdredge  v.  Gwynne  113 

Holdswortb,  Ex  parte  147 

Holland  v.  Drake  166 

V.  Fuller  364,  372 

V.  Holland  516 

V.  Leed  332 

V.  Weld  331 

Hollidav  v.  Cumsell  323 

Hollifield  V.  White  44 

Holloway  v.  Brinkley  -        44 

Hohnan  v.  Johnson  11 

Holm  V.  Hammond  93 

Holme  V.  (ireen  186 

Holmes  v.  Blogg  18,  20 

V.  Burton  100,  104 

V.  Hawes  346,  351 
V.  lliggins        39,  52,  229,  268, 
271,  526,  541,  545 


XXXll 


INDEX   TO    CASES   CITED. 


Holmes  v.  Mentze 

V.  Old  Colony  R.  R.  Co. 

V.  Porter 

V.  United  Ins.  Co. 

V.  Williamson      273,  285, 

Holt  V.  Kernodle 

V.  Ward 
Holyoke  v.  Mayo 
Homer  r.  Wood         202,  211,  289, 


Homfray  v.  Fotliergill 

234 

Ilonore  c.  Colmesnil 

224, 

229, 

448 

524 

Hood  I'.  Acton           212 

305, 

307, 

Hook  V.  Stone 

Ilookliam  v.  Pottage 

Hoop,  The 

Hooper  V.  Lusby 

175 

Hope  V.  Cust              111, 

205, 

207, 

Hopkins  v.  Banks 

189 

V.  Cliittenden 

V.  Porsyth 

V.  Smith 

40 

V.  Watt 

Hopkinson  v.  Smith 

Horbach  v.  Huey 

329 

Horn  V.  Baker 

493 

V.  Gilijin 

557 

562 

Home  V.  Clarkson 

Horsley  v.  Rush 

Horton  i\  Chid 

V.  Soyer 

Horton's  Appeal 

160 

168 

Ilosack  V.  liogers 

173 

Hoskins  v.  Johnson 

r.  SI  ay  ton 

Hotchkiss  V.  English 

Houghton,  Ex  jiarte 

493 

V.  Houghton 

864 

872 

Hourguebic  v.  Girard 

Houseal  &  Smith's  Appeal 

How  V.  Kane 

65, 

Howard,  /*(  re 

V.  Cobb 

V.  Priest       864 

372 

373 

Howe  V.  Thayer       380, 

406, 

414, 

Howell  v.  Adams 
V.  Brodie 
V.  Harvey 


12,  13 

13,  296,  381, 

457,  458 


V.  Howell 
V.  Reynolds 
Howland,  In  re 

Hoxie  V.  Carr    345,  364,  365,  366, 
371 
Hubbard,  Er  parte 

V.  Callahan 
V.  Curtis 
V.  Guild 
Hubbell  V.  Woolf 


330 


343,  346 
318,  319 


352 
17, 

2,  85 

132 

45 

286, 

287 

81 

21 

278 

293, 
294 

,  521 
261, 

,  552 

,  340 

166 

263 

27 

,  557 

,217 

,  193 
230 
548 

,  148 

225 

17 

,  331 

,  496 

,  568 
336 
180 
108 
177 

,400 

,  517 
340 
653 
201 

,496 

,  374 
280 
481 

,  109 

67 

195 

,374 
418, 
419 
413 

,271 
401, 

,459 
366 
337 
494 
367, 

,503 
482 
230 

,  349 
472 
213 


Hubert  v.  Nelson 

Hudson  V.  Barrett         301, 

Huey  V.  Horbach 

Huggett  i\  Montgomery 

Huglies,  Ex  jKirta 

V.  Ellison  166; 

V.  Morris 
V.  Wheeler 
Hull  V.  Garner 
Human  v.  Cuniffe 
Hume  V.  Bolland  154 

Humphries  v.  Chastain 
V.  McCraw 
Hunsden  v.  Cheyney 
Hunt  V.  Benson  864, 

V.  Bridgham  188, 

V.  Chapin 
V.  Clark 
V.  Gookin 
V.  Hall    , 
V.  Morris 

V.  Royal  Ex.  Ass.  Co. 
V.  Waterman  846 

Hunter,  Ex  parte       104,  213,  478, 
499; 
V.  Galliers 
V.  Rice 
Huntington  v.  Potter 
Hurd  V.  Darling  323, 

V.  Haggerty 
Hnshand,  Ex  parte  491,498, 

Hussey  l\  Allen 

i\  Christie 
V.  Dole 
V.  Jewett 
Hutchins  r.  Bank  of  Tenn.     412, 


V.  Hope 

V.  Hudson 

V.  Sims 

V.  Turner 
Hutchinson  v.  Smith 

V.  Whitfield 
Hutton  V.  Eyre 
Hyat  V.  Hare 
Hyde  v.  Brashear 

V.  Stone    323,  324,  339,  555 
Hynes  v.  Stewart  13, 


172 

413 


173,  272 


200 
512 
330 
157 
506 
180 
550 
486 
179 
184 

,  155 
391 
439 
494 
365 
424 
99 
463 
610 
172 
284 
196 
351 

493, 
502 
473 
497 
393 
656 
202 
499 
566 
663 
475 
21 

415, 
419 
514 
415 
415 
157 
155 
385 
287 
163 
447 

,556 
296 


Ibbotson  V.  Elam 
Iddings  V.  Bruen 
Ide  V.  Ingraham 
Ilsley  V.  Jewett 
Inhusch  f.  Farwell 
Indian  Chief,  The 
Ingliss  V.  Grant 
Ingraham  v.  Foster 
Innes  v.  Lansing 

V.  Stephenson 
Irby  V.  Graham 


234,  521 

321 

192,  390 

188,  486,  567 

35 

224 

474 

13,  296 

442,  533 

172 

449 


Irl)y  V.  Vining  414 

Irvine  v.  Forbes  43,  219,  545 

Irving  V.  Excelsior  Fire  Ins.  Co.       51, 
175,  336 
V.  Young  5"iO 

Irwin  V.  Conlilin  66 

Isler  V.  Bilker  423,  424,  466 

Ives  V.  Miller  271,  272,  274 


Jacaud  v.  French 

Jackson,  ^.r  parte      148,149,435, 

In  re 

V.  Alexander 

V.  Anderson 

V.  Cator 

V.  Clynier 

V.  Faiibank 

17.  Jackson  53,  54, 

V.  Mayo 

V.  Porter 

V.  Kobinson         46,  148, 

V.  Sedgwick       234,  238, 
302,  503, 
V.  Sheldon 

V.  Stanford  180, 

V.  Stopherd  274,  281,282. 
V.  Todd 
Jacky  V.  Butler  342, 

Jacobs  V.  Fatlierstone 

V.  McBee 
Jacobsen  v.  Hennekenius  31, 

Jacobson  v.  Williams 
Jacquin  r.  Buisson     319,  442,  531, 
Jrtffray  v.  Frebain 
Jaggers  i'.  Binnings  196, 

James  v.  Bixby  554,  565. 

I'.  Bostwick  109^ 

V.  Woodruff 
Janes  v.  Whitbread  57, 

Jaques  v.  Hulit 

V.  Marquand  104,  105,  155, 
Jarvis  v.  Brooks         349,  364,  378, 
V.  Hyer 
V.  Feck 
Jefferson,  Tiie 
Jefi'erson  Ins.  Co.  v.  Cotheal 


Jeffreys  v.  Small 

1 

362, 

441 

V.  Smith 

36, 

317, 

382, 

400, 

546 

Jell  V.  Douglass 

Jenkins  v.  JSlizard 

414 

Jennings  v.  Estes 

133 

V.  Griffiths 

552, 

553, 

566 

V.  Randall 

Jennison  v.  Hapgooc 

Jepson,  Ex  }>ni-te 

Jerusalem,  The 

Jervis  v.  White 

307, 

340 

173 

43(), 
486 
17 
292 
323 
491 
481 
186 
441 
21 
181 

548, 
551 

242, 
519 
533 
367 
510 
152 
353 
24 
107 
322 
483 
536 
22 
552 
566 
510 
546 
146 
280 
213 
482 
352 
410 
504 
335 
548 

385, 
547 
329 
419 
195 
569 
158 
505 
484 
568 
518 


SES    CITED. 

XXXlll 

Jessup  V.  Cook 

224,  520 

Jestons  V.  Brooke 

141,  142 

Jevvett,  In  re                  60, 

116, 

469,  475 

Jewson  V.  Moulson 

483 

Johan  and  Sigmuud,  The 

562 

John,  The 

559 

Johns,  Ex  parte 

501 

V.  Battins 

181 

Johnson  v.  Bcardslee 

188 

V.  Boone 

430 

V.  Byerly 

152 

V.  Curtis 

516 

V.  Evans       352, 

353, 

385,  400 

V.  Hudson 

9 

V.  McDonald 

539 

V.  Miller 

85 

V.  Peck 

174,  211 

V.  Shrewsbury, 

Sbc.E 

.  Co.  298 

V.  Totten 

413,  420 

Johnson's  Executors  v.  Ketch 

um     513 

Johnston  v.  Dutton 

97, 

219,  220 

I'.  Freer 

324 

V.  Warden 

104,  195 

Jonau  V.  Blanchard 

533 

Jones,  Ex  parte 

484, 

493,  496 

V.  Bailey 

176,  178 

V.  Blum 

566 

V.  Booth 

112,  203 

V.  Brown 

323 

V.  Caperton 

36 

V.  Clayton 

350 

V.  Dwyer 

496 

V.  Gates 

329 

V.  Harraden 

273 

V.  Herbert 

174,  175 

V.  How  land 

493 

V.  Jackson 

1.57 

V.  Jones 

261,  480 

V.  Latimer 

516 

V.  Lees 

410 

V.  ^Nlars 

214 

V.  Maund 

427 

r.  McMichael 

8,  438 

V.  Morgan 

295 

V.  Neale 

364,  372 

V.  Noy 

464,  465 

V.  Parsons 

168 

V.  Perry 

308 

V.  Phoenix  Bank 

21 

V.  Turk            345 

34G, 

351,  3.53 

V.  United  States 

432 

V.  Yates  205,  209, 

211, 

288,  293, 

294, 

295,  458 

Jonge  Pieter,  The 

27 

Jonge  Tobias,  The 

552,  554 

Jons  V.  Perchard 

37 

Jordan  v.  Lewis 

251 

V.  Wilkins 

96 

Josephs  V.  Pebrer 

542 

546,  547 

Josiyn  V.  Smith 

188,  189 

Joy  V.  Campbell 

497 

Joyce  I'.  Williams 

203 

Judd  V.  Gibbs 

483 

XXXIV 


INDEX   TO    CASES    CITED. 


Jndfl  ?■.  Harris 
Judge  V.  Braswall 
Judson  V.  Adams 
V.  Gibbons 
Julia,  Tlie 
Julio  V.  Injialls 
Justin  V.  Ballam 


270 

99 

84 

28 

27,  28,  327 

8 

569 


K. 


Kaiser  v.  Wilhelm  73 

Kane  v.  Scofield  199 

Karason,  Tlie  572 

Kartliaus  v.  Ferrer  17G 

Kaskaskia  Bridge  Co.  v.  Shannon  106 

Katsch  V.  Slienck  314,  508 

Kawshaw  v.  Kawshaw  25 

Kay  V.  DePlenne  24 

Keane  v.  Boycott  18 

V.  Fisher  292 

r.  Jolinsoa  198 

Keasley  v.  Codd  545 

Keating  v.  Marsh  154,  155 

Ke(iie,^Er  parte  486,487 

Keene  v.  Harris  265 

Keene's  Executors,  In  re  26,  162 

Keesley  v.  Cadd  541 

Keith  V.  Fink  493 

Kelby  v.  Steel  272 

Kell  r.  Nainby             23.  134,  135,  292 

Kelley  v.  Greenleaf  209,  224,  229,  231, 

295,  394 

V.  Hurlburt  33,  63,  415 

V.  Sanborn  190 

Kellogg  V.  Fancher  210 

V.  Griswold  59 

Kelly  V.  Eckford  312 

r.  Kanffman  285,  287 

Kelshaw  v.  Jukes  44 

Kenible  v.  Farren  251,  252 

I'.  Kean  298,  299 

Kemeys  v.  Richards  203 

Kemp"  17.  Camley  166 

V.  Coffin  391 

Kendall,  Ex  parte  345,  348,  485, 488,  506 

V.  Rider  364 

Kendrick  v.  CampbeU  189,  192 

V.  Tarbell  126,  215 

Kennebec  Co.  v.  Augusta  Ins.  & 

Banking  Co.  175 

Kennedy  v.  Bohannon  416 

V.  Kennedy  381,  459,  512 

V.  Lee          262,  263,  409,  445 

V.  M'Fadon  284,  286 

Kenney  v.  Atwater  413 

Kensington,  Ex  parte  332,  348 

Kerr  v.  Hawthorne  450 

V.  Potter  58 

Kerridge  v.  Hesse  434 

Kershaw  v.  Matthews  314,  439,  452 

V.  Kelsey  27 

Ketcham  v.  Clark  159, 168,411,412,  414 

Ketchum  v.  Durkee  104,  433,  442 


Kibbler  v.  De  Forrest  216 

Kidckr  r.  Page  210 

Kiddwelly  Canal  Co.  v.  Raby  545 

Kieran  v.  Saunders  135 

Kiffin  V.  Willis  157 

Kilby  V.  Wilson  153 

Kilgore  v.  Powers  230 

Kiigour  V.  Finlyson  411,  413 

Killam  v.  Preston       280,  282,  283,  520 
Kimball  i".  Hamilton  Fire  Ins.  Co.  166 
V.  Walker  103 

V.  Whitney  448 

Kimberly  v.  Jenning  298 

Kimbro  v.  Bullitt  99 

King,  Ex  parte  477,  500,  501,  502 

V.  Accumulative  Assurance 


Co. 
V.  Dodd 
V.  Faber 
V.  Hamilton 
V.  Hoare 
V.  Lowry 
V.  Rock 
V.  Sanderson 
V.  Smith 
i".  Weeks 
Kingman  v.  S^jurr 


541, 
112, 


Kinkead,  In  re 
Kinloch  v.  Hamlin 
Kinnersley  v.  Mussen 
Kiiisler  i'.  Pope 
Kinsman  v.  Barker 
V.  Dullam 
Kirby,  Ex  parte 
V.  Cannon 
V.  Carr 
V.  Cogswell 
V.  Hewitt 
V.  IngersoU 
Kirk  V.  Blurton 
V.  Hiatt 
V.  Hodgson 
Kirkley  v.  Hodgson 
Kirkman  v.  Booth 

V.  Newstead 
V.  Snodgrass 
Kirkpatrick  v.  TurnbuU 
Kirwan  v.  Kirwan     110,  111, 


383 

544 

203 

229 

108 

551,  553,  554,  567 

481 

481 

173,  39-3,  196 

365 

11,  12,  159,  160, 

162,  168,  546 

25 


Kitchen  v.  Bank 

V.  Bartsch 
Kleine  v.  Shanks 
Kline  v.  Beebe 
Knapp  V.  McBride 
Knebell  v.  White 
Knerr  v.  Hoffman 
Knight  V.  Earl  of  Plymouth 
V.  Marjoribanks 


510 
179 
111 

516 
127 

112,  206 
23 

464, 465 

200,  329 
195 
166 
128 

190,  193 
219 
496 
456 
331 
413 
164 

597,  421, 

426,  435,  485,  487 

230 

471 

372 

21 

202,  438 

299,  300,  512 

353 

456 

225 


Knott  V.  Morgan  265.  340 

Knowles  v.  Haughton  10,  301,  511,  512 
Knowlton  v.  Reed  439 

Knox  V.  Campbell  548,  551 


INDEX   TO    CASES    CITED. 


XXXV 


Knox  I'.  Simmons 

481 

Koliler  V.  Smith 

234 

Kramer  v.  Artiiurs 

37,  378 

Krebs  v.  O'Grady 

24 

Krueger,  In  re 

134,  397,  409 

Kyle  ('.  Kyle 

522 

!,'.  Roberts 

510 

Lacey,  Ex  parte 

Lacliaise  i'.  Marks      532,  535,  537 

Laciiomette  v.  Tliomas     189,  532, 


Lacy  V.  Le  Bruce 
V.  McXeile 
V.  Walcott 
V.  Waring 
Ladbroke,  Ex  parte 
Ladd  V.  Griswold 
Lafon  I'.  Chitm 
Laforest,  Ex  parte 
Lagow  V.  Patterson 
Lake  v.  Gibson 
Lallande  v.  McRae 
Lamalere  v.  Caze 
Lamb  v.  Durant 


325 

172,  192 

212, 


258, 


278,  280,  282, 
163,  548,  549, 
551,  552 


V.  Grover 
Lambden  v.  Sharp 
Lambert's  Case 
Lambeth  v.  Vawter 
Lancaster  Bank  v.  Negley 
Lancaster  Canal  Co.,  Ex  parte 
Lanckton  v.  Wolcott 


Lane,  Ex  parte 
V.  Felt 
V.  Tyler 
V.  Williams 

Lang  V.  Keppell 
V.  Waring 

Langan  v.  Hewett 
Langdale,  Ex  parte 


487, 


199, 


216,  3G8,  372, 

375, 

96 

42,  75,  132, 


Lange  v.  Kennedy 
Langer  v.  Kennedy 
Langham  v.  Bewett 
Lanier  v.  McCabe 
Lansdale  v.  Brashear 
Lansing  v.  Gaine       100,  113,  202, 
411,413 

V.  M'Killup 

V.  Ten  Eyck 
Lapham  v.  Green 
Larazzabel  v.  Gorbea 
Larch,  The 
Lascaridi  v.  Gurney 
Lash  V.  Lambert 
Latham  v.  Kenniston 
Laugher  v.  Pointer 
Laughlin  v.  Loring's  Adm 


100,  112 


174,  196, 

99, 

292, 

552,  563, 


195, 


515 
538 

536, 
537 
326 
196 
474 
364 
491 
345 
104 
491 
179 
441 
103 
520 

550, 
556 
51 
181 
163 
193 
372 
546 
489 
491 
360 
278 
201 
447 

373, 
376 

,216 

322, 
495 
194 
411 
23 
203 
36 

391, 
526 
420 
112 
334 
504 
570 
7 
230 
273 
156 
439 


Laverty  v.  Burr         112,  202,  204,  216 

Law  V.  Cross  227 

V.  Ford  163,  316,  317,  319 

Lawes,  Ex  parte  234 

Lawless  v.  Mansfield  517 

Lawrence,  Ex  parte  496 

V.  Clark  286 

r.  Dale  175 

V.  Sebor  336 

V.  Taylor  163,  183 

V.  Trustees  of  Orphan 

House 

Lawson  v.  Lovejoy 

V.  Morgan 

Laycock,  Ex  parte 

Layfield's  Case 

Lay  ton.  Ex  parte 

V.  Hastings 
Lea  r.  Guice 


Leach  v.  Church 

V.  Leach 
Leaf,  Ex  parte 
V.  Coles 
Leake  v.  Craddock 
Lean  v.  Schutz 
Leane  v.  Bray 
Leavitt  v.  Peck 
Lea}' craft  v.  Dempsey 
Lechmere  v.  Fletcher 
Leddo  V.  Hughes 
Lee,  In  re 

V.  Bennett 

V.  Gibbons 

V.  Lashbrooke 

V.  Onstott 
Lee's  Admr.  v.  Reed 
Leeds  &  Thirsk  R.  R.  Co 

ley 
Lees,  Ex  parte 

V.  Laforest 
Le  Faun  v.  Macolmson 
Lafavour  v.  Yandes 
Lefever  v.  Underwood 
Lefevre  v.  Boyle 
Lefevre's  Appeal 
Legge  V.  Harlock 
Leggett  V.  Hyde 
Leigh  V.  Everhart 
Leighton  v.  Wales 
Leonard  v.  Huntington 


349 

18,  19 

305,  310,  311,  312- 

484 

97 

291 

179,  180 

63,  99,  196 

440 

226,  394,  446,  525 

412 

464 

1 

23 

157 

96,  97,  98,  134 

516 

108,  41,0 

568 

^    483 

25 

3^4 

229,  261,  394 

180 

513 

Fearn- 

21 

22 

893 

338,  339 

190,  193 

223 

333 

7 

251 

67,  75,  92 

308 

251 

550,  565,  566 


Le  Roy  v.  Johnson   104,  125,  126,  200, 
212,  255,  411 


Leslie  v.  Wiley 
Lessig  V.  Langton 
Levally  v.  Ellis 
Leveck  v.  Shaftoe 
Lever  v.  Fletcher 
Leverson  v.  Lane 
Levett,  Ex  parte 
Levy  V.  Cadet 
Levy  V.  Pjne 
Lewis  V.  Ciiapman 
V.  Conrad 


152 
312 
480 
292 
11 

112,  204 
521 

190,  193 
100 

338,  339 
480 


XXXVl 


INDEX   TO    CASES    CITED. 


Lewis  V.  Greicler  44,  51 

V.  Laiigdon    2G3,  265,  308,  444, 

445 

V.  Lee  24 

V.  MofFett  230 

V.  Pead  513 

V.  Reilly  887 

V.  Westner  103 

Liddiard,  Ex  parte  110,  487 

Liddle,  Ex  parte  201,  491,  49D 

Lightfoot  V.  Heron  20 

Lightoller,  In  re  480 

Lillard  i\  Turner  25 

Lilly  V.  Kroesen  516 

Lime  Rock  Bank  v.  Phetteplace      365 

Linie  Rock  Ins.  Co.  v.  Treat  201 

Linipus  V.  London  Omnibus  Co.      572 

Lindsey  i'.  PMminston  31 

Linford  v.  Linford  481 

Liiigard  v.  Bromley  287 

Lingen  v.  Simpson   167,  297,  351,  492, 

507 

Lintner  v.  Milliken  44 

Linton  r.  Hurley  152 

LTn  vincible  572 

Litchfield,  In  re  478 

Littell  V.  Fitch  202 

Little  V.  Snedecor  865 

Littlewood  v.  Caldwell      312,  458,  521 

Livermm-e  v.  Rand  432 

Livingston  v.  Cox  36 

V.  Hastie         112,  202,  203, 

526 

V.  Lynch  222,  545 

V.  RadcUff  110 

V.  Ralli  177,  247,  248 

V.  Roosevelt      39,  100,  101, 

112,  163,  175,  199,  200, 

201,  202,  212,  526 

Lloyd,  Ex  parte  164 

V.  Archbowle  33,  292,  501 

V.  Ashby  64,  201 

V.  Bellis  156 

V.  Loaring  219,  545 

V.  Passingham  513 

V.  Tliomas  194 

Lobb,  Ex  parte  148,  149,  486,  488 

Locke  ('.  Stearns  150,  152,  156 

Lockvvood  V.  Comstock  388,  391 

Lockyer  v.  Savage  473 

Lodge,  Ex  parte  492,  494,  500 

V.  Dicas  110,  397,  421,  422,  475, 

485,  487,  488 

Loeschield  v.  Hatfield  440 

Loescliigk  v.  Addison  440 

Logan  V.  Bond  104 

V.  Mason  432 

Lomas  v.  Bradshaw  274 

London  Ass.  Co.  v.  Bold  333 

Long  V.  Carter  216,  217 

V.  Majestre  227,  306 

V.  Story  388,  391 

Longman  v.  Pole       151,  211,  294,  340 


Loorais  V.  Marshall  44, 83,  85, 87,  90, 91 

V.  McKennie  459 

V.  Pierson  174 

Lord  V.  Baldwin        292,  360,  449,  501 

V.  Proctor  73 

Loring  v.  Brackett  174 

Loscombe  v.  Russell         299,  300,  304, 

458,  460,  512 

Lothrop  V.  Wightman  483 

Lottimer  v.  Lord  820 

Love  V.  Moynehan  24 

Lovejoy  i'.  Bowers  167,  350 

V.  Spofford  397,  413 

Lovelace's  Case  180 

Lovell  0.  Hicks  151,  265 

Lowe  V.  Farlie  515 

V.  Miller  823 

V.  Peers  251 

Lowery  v.  Drew  181 

Lowndes  v.  Taylor  309 

Lowry  v.  Brooke  42,  49,  59 

Lowther  v.  Chappell  190 

Loyd  V.  Freshfield    103,  104,  172,  175, 

213 

Lucas  V.  Bank  of  Darien  175,  183,  413, 

419,420 

V.  Beach  271,  545 

V.  De  la  Cour  196 

V.  Laws  343,  353 

V.  Sanders  179,  181 

Ludlow  V.  Cooper  87,  363,  372 

V.  Simond  180 

Ludwick  V.  Huntsenger  230 

Luke  V.  Gibson  548 

Lumberman's  Bank  v.  Pratt  390 

Lumley  v.  Wagner  298 

Lunt  V.  Stevens  173 

Lupton  V.  Janney  514 

Lusk  V.  Smith  391 

Lyles  V.  Styles  163,  224 

Lyman  v.  Lyman  39,  231 

Lynch  v.  Bitling  242,  514 

Lyndon  v.  Gorham    343,  353,  359,  860' 

Lyon  V.  Haines  38^ 

Lysagt  V.  Walker  431 

Lyster  v.  Dolland  441 

Lythe  v.  Ault  422,  485,  487 


M. 


McAlister  v.  Montgomery  373 

M'Arthur  v.  Bloom  24 

V.  Ladd  59,  180,  275 

McBride  v.  Hagan     178,  179,  182,  325 

V.  Protection  Ins.  Co.         133 

McCalmont  v.  Rankin  550 

McCart  v.  Lewis  181 

V.  Nixon  447 

McCauley  v.  Cleveland  60 

M'Cauley  v.  M'Farlane  492,  500 

McClelland  v.  Remsen  165 

Mackay  v.  Bloodgood  180 


INDEX   TO    CASES    CITED. 


XXXVll 


Mackellar  v.  Wallace  513 

Mackenzie  v.  Pooley  566 

Mackintosh  v.  Mitcheson  568 

Machie  v.  Sutherland  128,  214 

McCliin<r  r.  Capehart  509 

M'Coll  V.  Oliver  278,  281 

McComhe  u.  Duneh  481 

McConkf.v  V.  Hojrers  289 

McConneil  v.  McConnell  475 

V.  Hector  28,  327 

McCord  V.  Field  99 

McCormick's  Appeal  377,  480 

McCowin  V.  Ciihbison  194 

McCracken  r.  Ware  315,  316 

M'Crillis  V.  How  18 
McCuUoh  V.  Dashiell  345, 349, 448, 440, 
483,  503 

M'CuIlough  V.  Sommcrville  163,  166, 

183 

M'Cutchin  v.  Bankston  194,  19G 

M'Derniot  r.  Laurence  366,  378 

M'Donald  v.  Efifrleston  181 

17.  Millaudon  63,  80 

M'Dowall  V.  Wood  24 

M'Fadden  r.  Hunt  289 

M'Farlanil  v.  Crary  161 

McGae,  Ex  parte  332 

McGar  v.  Drake  105 

McGaw  V.  Marshall  18 

McGill  V.  Brown  545 

M'Ginn  v.  Shaeffer  21 
McGowan  v.  Bank  of  Kentucky      199 

r.  McGowan  263 

McGraw  v.  Pulling  6,  238 

M'Gregor  v.  Bainbridge  261 

V.  Cleveland  99 

V.  Ellis  163 

McGuire  i-.  Ramsay  364 

Mclntire  i'.  McLaurin  328 

V.  Oliver  189 

M'Ireatli  i\  Margetson  224 

M'lver  V.  Htiinble      132,  148,  419,  495 

McKacy  v.  Hebb  511 

McKee  v.  Bank  of  Mt.  Pleasant     109, 

178. 179 

I'.  Stroup  173, 175,  210 

McKenna  v.  George  569 

McKenzie  v.  Garrison  476 

V.  Nevius  432 

Mc Kinney  v.  Alvis  485 

V.  Brisihts  203 

McKnight  v.  McCutchers  269 

V.  Ratcliff  151,  533 

McKowen  v.  ]MoGuire  4-10 

McLanalian  v.  EUery  330 

McLane  ;-'.  Abrams  230 

McLean,  In  re  349,  480 
McLellan  v.  Cumlierland  Bank        173 

McMaster  v.  Vernon  108 

M'Minn  i'.  Richnionds  18 

McMuUan  v.  Mackenzie  132 

M'Nair  v.  Fleming  201,  215 

V.  Piatt  210 


McNaughten  v.  Partridge        107,  108, 

109,  178,  181,  510 

McXeely  v.  Haynes  150 

M'Neill  V.  Reid  13,  237 

McNutt  V.  Straj-horn  166 

McPherson  v.  Rathbone  133,  194 

Mcl^ae  V.  McKenzie  299,  512 

McWhorter  v.  McMahan  180,  183 

Mabbett  V.  White  106 

Machell,  Ex  parte  482,  553 

V.  Kinnear  334 

Macy  I'.  Combs  86 

V.  DeWolf      548,  550,  551,  554, 

563- 

Maddeford  v.  Austwick  225,  229 

Maddox  i'.  Dent  517 

V.  Goddard  556 

Madgwick  v.  Wimble  316,  319 

Madison  County  Bank  v.  Gould     532, 

533,  538,  539 

Magill  y.  Menie  412,413 

Mainwaring  v.  Newman  288,  325 

Mair  v.  Glennie  48,  59,  77,  571 

Maise  v.  Garner  308 

Major  V.  Hawkes  396 

Maley  v.  Newman  468 

Maltby  v.  N.  W.  Va.  R.  Co.  102 

Manahan  v.  Gibbons  272 

Manck  v.  Manck  365 

Manderston  v.  Robertson  186 

Mandeville  v.  Mandeville  42 

Maneely  v.  McGee  486,  567 

Manhattan  Co.  v.  Ledyard  199 

Manhattan  Brass  Co.  v.  Sears     67,  75 

Mann  v.  Connell  381 

V.  Locke  190,  192 

Manning  v.  Hays  202 

V.  Wadsvrorth  236,  237,  271, 

275 

Mansfield  v.  Watson  29 

Mant  ?•.  Mainwaring  194 

Manuf.  &  Mech.  Bank  v.  Gore         152 

V.  Winshipl29, 

130,  202 

March  v.  N.  W.  Ins.  Co.  44 

Marengo,  The  559,  560 

Margaret,  The  559,  561 

Marietta  Iron  Works  v.  Lattimer    230 

Marine  Bank  v.  Ogden  30 

Marine  Co.  v.  Carver  113 

Marion,  The  Schooner  568 

Mariott  v.  Shaw  342 

Markham  v.  Jones  120 

V.  Markham  25 

V.  Merrett        363,  366,  367, 

371,  373 

Marlett  v.  Jackman  4-38,  439,  442,  449 

Marquand  v.  N.  Y.  Manuf.  Co.  12,  1-59, 

160,  101,  168,  400,  462, 

469,  471,  472,  546,  547 

V.  Webb  565.  566 

Marsh  v.  Gold  36,  175 

V.  Hutchinson  23,  24 


xxxvni 


INDEX   TO    CASES   CITED, 


Marsh  I'.  Keating 

154 

Mears  v.  Serocold 

178 

.    V.  Ward 

14!) 

Mebaue  v   Mebane 

516 

Marsh's  Appeal 

223,  280 

Mechanics'  Bank  v.  Fost 

er 

108,  211 

Marshall  v.  Colman  126, 

254, 

275,  803, 

V.  Hild 

reth 

391 

304,  307, 

458, 

459,  510, 

V.  Seton 

475 

512 

Medbury  v.  Watson 

331, 

337,  338 

V.  Johnson 

243 

Mecch  V.  Allen 

349 

V.  Lambeth 

537,  538 

Meggett  V.  Finney 

189,  190 

I'.  Marshall 

382 

Melioruclii  v.  Royal  Ex. 

Ass. 

Co.    517 

V.  Morum 

572 

Melledge  v.  Boston  Iron 

Co. 

111,567 

V.  Rut  ton 

28 

Mellen  v.  Whipple 

335 

Marten  i;.  Van  Schaick 

264, 

315,  316, 

Mellersh  v.  Keen 

403,  465 

817 

Melville  v.  Brown 

449 

Martin  v.  Brydges 

187 

Menagh  v.  Wiiitwell 

353 

V.  Kirk 

- 

380,  S91 

Menkins  v.  Lightner 

29 

V.  Mayo 

19,21 

Mercantile  Bank  v.  Cox 

63,  129 

V.  Koot 

188,  195 

^lerccin  v.  Andros 

203,  204 

V.  Tlirasher 

176, 177 

Mercer  v.  Toler 

193 

V.  "Walton 

388,418 

Merrick  v.  Avery 

568 

Marvin  v.  TrunibuU 

865 

V.  Brainard 

400 

Marzetti  v.  Wiliianis 

158 

Merrill  v.  Bartlett     548, 

552, 

553,  563, 

Mason  v.  Connell  12, 160 

175 

,  404,  546 

564 

V.  EUlred 

65 

Merrit  v.  Pollys 

413,  418 

V.  Hackett 

67 

Merritt  v.  Walsh 

549,  5e50 

I".  Jouett 

173 

V.  Williams 

413 

V.  Potter 

59,89 

Merryweather  v.  Nixon 

278 

286,  287 

V.  Wickersham 

111 

Mersereau  v.  Norton 

323,  556 

V.  Wriglit 

18 

Mershon  v.  Hobensack 

132 

Masson,  Er  parte 

491 

Merwin  v.  Sliailer 

568 

Master  i'.  Kirton        805, 

307, 

884,  459 

Metcalf  V.  Bruin 

833 

Mathews  v.  Felch 

182,  133 

V.  Fonts 

889 

Mathewson  v.  Clarke  12, 

160 

168,  547 

V.  Redman 

8 

Matlock  V.  Matlock  343, 

345 

864,  366, 
872 

V.  Royal  Exch. 

Ass. 

Co.  6,  55, 
164,  322 

Matthews,  Ex  parte    66, 

132, 

290,501, 

Metcalfe  v.  Rycroft 

178 

180,  333 

571 

Metropolitan  Saloon  Omnibus  Co. 

V.  Dare 

411 

V.  Hawkins 

840 

V.  Wallyn 

517 

Meux  V.  Humplirey 

174,  214 

Maude  v.  Eodes 

459 

Meyer  v.  Larkin 

104 

Mauldin  v.  Branch  Bank 

112,  208, 

V.  Sharpe 

48 

212 

216,  412 

Mifflin  V.  Smith       39,  40,  63, 

104,  126, 

Maund  v.  Allies 

516 

129 

239,  446 

Mawman  v.  Gillett 

81,  292 

Milbank  v.  Revett 

313, 314 

Mawson  v.  Blane 

19 

Milburn  v.  Codd         268 

272 

286,  545 

Max  V.  Roberts 

157,  158 

V.  Guyther 

548,  558 

Maxwell  v.  Day 

110 

Miles  V.  Thomas        224 

304 

899,  512 

V.  Deare 

486 

Miliar  v.  Craig 

517,  522 

V.  Jameson 

287 

Millard  v.  Hewlett 

19 

V.  Port  Tennant  Co 

394 

Miller  v.  Andres 

290.  510 

May  V.  Chapman 

205,  213 

V.  Bartlett 

80,  145 

V.  Clark 

395 

V.  Consolidation  Bank 

215 

Mayberry  v.  Bainton 

217 

V.  Douglass 

212 

V.  Willoughby 

190 

V.  Estill 

345 

346,  351 

Mayer  v.  Clark 

346 

V.  Fenton 

287 

Mayhew  v.  Eames 

196 

V.  Hines 

100 

112,  202 

V.  Herrick   823, 339 

852,  853, 

V.  Hughes 

80 

555,  556 

V.  Jones 

440 

Maymott  i'.  Maymott 

230 

V.  Manice          64 

104 

172,  201 

Maynard  v.  Pellows 

201 

V.  Neimerisk 

193 

Mead  v.  Tnmlinson 

105,106 

V.  Price 

61 

V.  Wheeler 

251 

V.  Sims 

21 

Meaghan,  //;    re 

473 

V.  Thompson 

200 

Meaher  i-.  Cox  7,  44, 160 

,161 

,381,437 

V.  Thorn 

325,  326 

INDEX   TO   CASES   CITED. 


XXXIX 


Miller  v.  Wornack's  Adra's 

516 

Millerd  v.  Tliorn 

110 

Millikin  v.  Gardner 

516 

V.  Loring 

390 

Mills  V.  Argall 

107, 

538 

V.  Barber 

163 

165, 

178 

V.  Boyd 

487 

V.  Hansoa 

518 

V.  Hyde 

569 

V.  Osborne 

247 

Miln  V.  Spinola 

566 

571 

Milne  v.  Bartlet 

463, 

466 

V.  Moreton 

475 

Milnes  v.  Cowley 

513 

Milton  V.  Moslier 

104 

183 

Miner  v.  Downer 

121 

V.  Pierce 

210 

Minnit  v.  Wliinnery 

97 

393 

413 

Minor  v.  Gaw 

210 

211 

Miser  v.  Trovinger 

196 

Mitchell,  Ex  jiarte 

174 

V.  Cockburne 

10 

V.  Dall            33, 

292 

416 

427 

V.  Harris 

248 

V.  Ostrom 

193 

391 

V.  Keed 

226 

V.  Reynolds 

410 

V.  Roulstone 

195 

V.  Tarbutt 

156, 

157 

17.  Williams 

156 

Mitcheson  v.  Oliver 

554 

565 

566 

Mitchum  v.  Bank  of  Kentucky 

412 

Moale  I'.  Hollins 

65, 

107 

Moddewell  v.  Keever 

11, 

159, 

160, 

168 

546 

Moderwell  v.  Mullison 

378 

Modisett  V.  Liiidley 

180 

Moffat  V.  Farquliarson 

553, 

558 

V.  Moffat 

66 

509 

V.  Van  Milligen 

288 

325 

Mohawk  &  Hudson  R.  R.  C 

0.    V. 

Niles 

55 

Moline  Co.  )•.  Webster 

481 

MoUer  v.  Lambert 

333 

Molony  i;.  Davis 

271 

Molwo  V.  Court  of  Ward 

s 

67 

Moneypenny  v.  Hartlani 

545 

Monkhouse  v.  Hay 

496 

Monroe  v.  Conner 

98 

381 

I'.  Ezzell 

292 

Montagu  v.  Smith 

333 

Montague  v.  Reakert 

194 

Montgomery,  Ex  parte 

506 

525 

V.  Boone 

178, 

184 

Montjoys  ?'.  Holden 

324 

Moody  V.  Buck 

557 

V.  Payne       309, 

310, 

343, 

352, 

461 

480 

V.  Ratliburn 

7 

Mooers  v.  White 

514 

Moon  V.  Story 

443 

Moore,  Ex  parte 

479 

V.  Bare 

108 

Moore  v.  Gano 

289 

V.  Hill 

330 

V.  Lack  man 

194 

V.  Sample 

310 

V.  Smith 

60,89 

Moran  v.  Palmer 

364 

Moravia  v.  Levy 

278 

280,  521 

Moreau  v.  Saffiirans 

364,  366 

Moredon  v.  Wyer 

174 

Moreton  v.  Hardern 

156,  157 

Morgan,  Ex  parte 

174 

V.  His  Creditors 

349,  448 

V.  Richardson 

179 

V.  Stearns 

67 

Morin  v.  Martin 

269,  287 

Morisset  v.  King 

141, 142 

Moritz  V.  Peebles 

244,  299 

iMorley  v.  Gaisford 

157 

Morris  v.  Allen 

224,  231 

V.  Barrett 

364 

305,  366 

V.  Colman 

243 

298,  299 

V.  Harrison 

452 

454,  520 

V.  Jones 

179 

V.  Keasly 

372,  374 

Morrison  v.  At  well 

164 

V.  Blodgett 

167, 

310,  343, 

351 

352 

358,  359 

V.  Cole 

44 

V.  Kuntz 

349 

V.  Stockwell 

274 

Morrow  i-.  Riley 

282,  510 

V.  Saunders 

237 

Morse  v.  BeUows 

182,  392 

V.  AVilson 

141, 142 

Morton  v.  Croghan 

23 

V.  Webb 

292 

Moser  v.  Libenguth 

110 

Moss  V.  Jerome 

66 

V.  McCall 

230 

V.  McCullough 

65 

Motley  V.  Dounman 

340 

V.  Jones 

59 

Motteux  V.  St.  Aubin 

179 

Moule,  Ex  parte 

22 

Moult,  Ex  parte         448, 

491, 

498,  499 

Mountstephen  v.  Brooke 

175 

Mowatt  V.  Howland 

413 

Mudd  V.  Bast 

34 

Muldon  V.  Whitlock  111. 

554 

565,  566 

Mulford  V.  Griffin 

414 

Mulhollan  v.  Eaton 

617 

MuUany  v.  Kerman 

62 

Mullett  V.  Hook 

291 

Mumford  v.  McKay 

386 

V.  Murray 

483 

V.  Nicoll         39 

,99, 

548,  550, 

551,  552, 

554, 

563,  564 

Munroe  v.  Cooper 

212 

V.  Ezzell 

334 

Murdock  v.  Chenango,  &e.  Co.        336 

Murphy,  In  re 

473 

Murray  v.  Bogert       11, 

159, 

278,  287, 
546 

xl 


INDEX   TO    CASES    CITED. 


Murray  v.  Col.  Ins.  Co. 

336 

r.  Mumford 

324 

447,  450 

I'.  Murray    167, 

343, 

848,  349, 

442.  472, 

473, 

475,  482. 
503 

V.  Richards 

14 

V.  Somerville 

104 

V.  Toland 

520 

Murrill  v.  Neill 

349,  483 

Muse  V.  Donelson 

190 

Musgrave  v.  Drake 

113,211 

Musier  v.  Trumpour 

44,  283 

Musson  V.  Fales 

569 

V.  May 

450 

Mutual   Beuefit   Life   Ins.    Co.  v. 

Hildyard 

27 

Mutual  Institution  v.  Ensliu 

388 

Muzzy  V.  Wiiitney 

58 

Myatts  V.  Ball 

194 

Myers  v.  Edge 

332 

V.  Huggins 

389 

V.  Smith 

349,  395 

V.  Willis 

566,  571 

V.  Winn 

272 

Myrick  v.  Dame 

289 

N. 


Nail  V.  Mclntyre 

209, 

293 

Napier  v.  Catron        179, 

180, 

181, 

510 

r.  M'Leod 

182, 

393 

National  Bank  v.  Norton 

193, 

389, 

391, 

415, 

420 

V.  Sprague 

365, 

493 

National  Exc.  Co.  v.  Drew 

150, 

156 

Natusch  V.  Irving       197, 

222, 

239, 

304 

Nay  lor,  Jn  re 

479 

Neale  v.  Turton 

274, 

289, 

545 

Nedliam's  Case 

173 

Nelson,  Ex  parte 

23 

V.  Lloyd 

194 

Nerot  V.  Burn  and 

400, 

462, 

506 

Ness  V.  Angas 

26 

162 

Nestor,  The  Brig 

569 

Newall  i:  Hussey 

486 

Ne wherry  v.  Colvin 

158 

Newhiggin  v.  Piilans 

24 

Newbran  v.  Snider 

51 

New  Draper,  The 

559, 

560 

562 

Newell  V.  Humphrey 

444, 

450 

V.  Hussey 

567 

!'.  Townsend 

309 

New  Hampshire  Mut.  F. 

Ins 

Co. 

V.  Noyes 

21 

Newland  ;;.  Tate 

160, 

229, 

394 

Newman  v.  Baker 

99 

V.  Barley 

449 

r.  Bean 

60 

343 

352 

V.  Milner 

308 

V.  Payne 

517 

Newmarch  v.  Clay     111 

427 

431 

432 

Newsome  v.  Coles 

134 

411 

419 

Newton  v.  Belcher  434 

New  York  Fire  Ins.  Co.  v.  Ben- 
nett 103,  212,  216 
New  York  Life  Ins.  Co.  v.  Stat- 

hani 
Nicholls  V.  Dowding 
Nichols  V.  Anguera 
V.  Cheairs 
V.  Hughes 
Nicholson  v.  Bicketts 
V.  Jane  way 
NicoU  I'.  Glennie 


V.  Mumford 


Niday  r.  Harvey 
NieliofT  V.  Dudley 
Nightingale  v.  Scaramell 
Nims  V.  Bigelow 
Nisbet  V.  Patton 
Niven  v.  Spickerman 
Nixon  V.  Nash 
Noble  V.  Bates 

V.  M'Clintock 
Nockels  V.  Crosby 
Noel  V.  Bowman 
Nokes,  Ex  parte 

V.  Leppings 
Nolte,  Ex  parte 
Noonan  v.  McNab 

V.  Iluddleston 
Norfolk,  Ex  parte 
Norment  v.  Hull 

V.  Johnson 
Norris  v.  Vernon 
North  V.  Bloss 
North  British  Bank  t 


27 

194,  196 

05 

64,  65,  111,  233 

175 

475 

222,  350 

156 

12,  160,  107,  169, 
547,  550,  552,  564 
109 
51 
337 
278 
156 
275,  276,  285 
481 
410 
112,  203 
271,  458,  467 
273 


401 

517 

217,  485 

234 

511 

290,  500 

59 

210 

168 

33 

Collins  232,243 


North  Penn.  Coal  Co.'s  A])peal       364 
North  River  Bank  v.  Aymar  212 

V.  Stewart  349 

Northwestern  R.  R.  Co.  v.  M'Mi- 

chael  21 

Norton  v.  Seymour  126,  215 

Norway  v.  Rowe       311,  314,  317,  458, 

459 
Norwich  Nav.  Co.  v.  Theobald  419 
Nostra  Signora  de  los  Dolores         572 


Notley,  Ex  parte 
Nott  V.  Downing 
Nourse  v.  Prime 
Noyes  i'.  Blakeman 
V.  Brumaux 
V.  Cushman 
V.  Sawyer 
Nugent  i>.  Locke 
Nunnely  v.  Doherty 
Nutting,  Ex  parte 
V.  Colt 


Oakeley  v.  Pasheller 
Oakley  v.  Aspinwall 


271,  275 

197,  413 

516 

25 

195 

45 

475 

269,  457,  510 

178 

497 

59 


110,  424,  488 
63,  142 


INDEX   TO    CASES    CITED. 


xli 


O'Brien  v.  Ciirrie 

22 

Page  r 

.  Cox 

159 

O'Coiiner  v.  Stark 

512 

V 

Fry 

336 

Odionie  v.  Lylord 

323 

V 

McCrea 

304 

V.  Maxcy 

196 

V 

Wolcott 

437 

Ogden  V.  Astor     49,  59 

442, 

443, 447, 

Pahlman  v.  Graves 

481 

514,  516 

Paine 

;.  Thatcher 

230,  276,  394 

V.  Kip 

310 

Palmer  v.  Dodge 

388,  391 

V.  Saunders 

474 

V.  Elliot 

63 

Ogilby,  J'Jx  parte 

477 

V.  Justice  Assurance  Soc.   180 

Ogilvy,  J'Jx  parte 

477,  502 

V.  Myers 

164 

Ogle,  Ex  parte 

500,  502 

V.  Piiikham 

124 

V.  Barnes 

157 

V.  Stephens 

126,  128 

V.  Eagle  Ins.  Co. 

549 

V.  Tyler 

511 

V.  Wraugliam 

570 

Park  V 

Ballentine 

47& 

OliI  V.  Eagle  Ins.  Co. 

550,  552 

V 

Wooten's  Ex. 

411 

Olcott  V.  AVing 

37 

Parker 

Ex  parte 

500 

Oldaker  v.  Lavender 

243, 

296,  457, 

V.  Barker 

21,  123,  495 

513,  521 

V.  Brewer 

194 

Olipliant  V.  IMattliews 

129,  130 

V.  Canfield 

44 

Oliver  v.  Burton 

334 

V.  Cousins 

111,  388,  391 

V.  Gray 

87 

V.  Fergus 

44,  67,  72 

V.  Greene 

549 

V.  Gossage 

247 

V.  Hamilton     312 

,  316 

317,  459 

V.  Gregg 

329 

V.  Palmer 

475 

V.  Jones 

11 

Olmsted  v.  Hill 

60 

V.  Jonte 

516 

O'Mealey  v.  Wilson 

28,  327 

V.  Macomber 

289,  826,  388, 

Onondaga  Co.  Bank  v.  De  Puy        172 

389,  391 

Ontario  Bank  v.  Muniford 

329 

V.  Merrill 

192 

Ord  V.  Parbal 

334 

V.  Morrell 

192 

Ordinary  r.  Wherry 

19 

V.  Muggridge 

476,  483,  503 

Orphan  Board  v.  Van  Eeenen         51B 

V.  Phillips 

390,  392 

Orr  V.  Churchill 

251 

I'.  Pistor        270 

,  300,  343,  480 

Orvis  V.  Kinihall 

19 

r.  Eamsbottora 

141,  479,  492 

Osborn  v.  McBride 

353 

Parkhurst  v.  Kinsman 

55,  265,  400 

V.  U.  S.  Bank 

195 

V.  Muir 

314 

Osborne  v.  Brennan 

46 

Parkin 

V.  Carruthers 

104,411,413, 

V.  Harper 

272 

414 

Osgood  V.  Spenser 

447 

V.  Fry 

545 

Osmond  i'.  Fitzroy 

513 

Parnell 

V.  Robinson 

226 

Ostrom  V.  Jacobs 

105,  195 

Parr,  Ex  parte 

484,  489 

Ottley  V.  Browne 

10 

Parry, 

Ex  parte         493, 

552,  554,  563, 

Ouston  V.  Hebden 

561 

564 

Overholt's  Appeal 

364 

Parsons  t'.  Crosby        31,  66,  135,  292, 

Overton  v.  Tozer 

179,  IgO 

495 

Oviatt  V.  Sage 

555,  557 

V.  Haywood 

234 

Owen  V.  Body 

57 

146,  455 

Patch  V.  Wheatland 

557 

V.  Bo  wen 

485 

Paterson  lu  Gandasequi 

565 

V.  Van  Aster 

214 

Patten 

V.  Garney 

150,  337,  338 

Owens  V.  Collins 

364,  365 

v.  Whitehead 

128 

V.  Davis 

548 

Patterson  ;•.  Blake 

364 

V.  Mackall 

147 

r.  Brewster 

37,  107,  349 

0 wings  V.  Low 

189,193 

V.  Chalmers 

548,  550,  551, 

Owston  r.  Ogle        233, 

285, 

548,  553, 
558 

552,  553, 

554,  565,  567, 
570 

Oxley,  Exports 

473 

V.  Choate 

189 

Oxnard  v.  Swanton 

24 

V.  Grace 

303,  368 

Ozeas  V.  Johnson 

278 

280,  521 

V.  !Maughan 
V.  Silliman 
V.  Ware 

178 
247 
241 

P. 

Pattison  v.  Blanchard 

55,  89,  208 

Pat ton 

V.  Schooner  Randolph         563, 

Page  V.  Brant 

291,  420 

564 

V.  Carpenter 

352,  359 

Payne 

V.  Hornby 

888 

xlii 


INDEX   TO    CASES    CITED. 


Payne  v.  Ive8 

V.  Matthews  349,  448, 

Peacock  r.  Cummings 

V.  Peacock   135,228,258, 

260,  311,  314,  322, 

388,  3'.)9,  401,  404, 

Teake,  Ex  parte        346,351,474, 

483,  492, 

Pearce  v.  Cliamberlain       12,  160, 

V.  Covert 

V.  Hennessy 

V.  Kearney 

t'.  Piper 

I'.  Wilkins 

V.  Williams 
Pearpoint  v.  Graliam  163,  166,  381 
Pearsall  v.  McCartney 
Pearson  v.  Keedy  345, 

i;.  Lord 

V.  Parker  329, 

V.  Skelton  297, 

V.  Williams 

Pease  v.  Hirst  187,  331, 

Pechell  V.  Watson 

Peck  V.  Fislier  364,  365, 

V.  Thomas 
Pecker  v.  Hall 
Pecks  V.  Ellis 
Peele,  Ex  parte 
PeirsoU  v.  Elliott 
Pellecat  v.  Angell 
Pemberton  v.  Oakes 
Penn  v.  Stone 

V.  Whitehead 
Pennell  v.  Defell 

Penniman  v.  Munson  55, 

Penn.  Ins.  Co.  v.  Murphy 
Penn.  &  Heading  R.   K.    Co.   v. 

Derby 
Penny  v.  Black 

V.  Martin  65, 

Pennypacker  v.  Umberger 
People  V.  Norton 
Peoria  M.  &  F.  Ins.  Co.  v.  Hall 


149,  174,  175 


432,  452, 
326, 


Perens  v.  Johnson 

Perham  v.  Raynal 

Perkins  v.  Hart 

Perminter  v.  Kelly 

Perrin  v.  Keene 

Perrine  v.  Hankinson 

Perring  v.  Hare 
V.  Hone 

Perrott  v.  Bryant 

Perry  ?>.  Butt 

V.  Jackson 
V.  Randolph 

Person  v.  Carter 

Peter  v.  Beverley 

Peters  v.  Anderson 
V.  Davis 
V.  Sandford 

Petrie  v.  Bury 


385,  393, 
185, 


480, 
126,  215, 

81, 

66, 

178, 

440, 
65, 


217 
,503 
218 
259, 
381, 
400 
480, 
493 
438, 
464 
395 
230 
108 
545 
97 
490 
,404 
493 
346 
336 
344 
563 
251 
334 
338 
372 
14 
897 
287 
205 
308 
11 
523 
354 
25 
432 
265 
543 

572 
261 
109 
426 
316 
557 
400 
186 
517 
323 
391 
144 
545 
541 
76 
210 
182 
132 
181 
486 
427 
447 
108 
833 


Petrikin  v.  Collier 
Pettee  v.  Appleton 
V.  Hannay 
V.  Lamotit 
Pettes  V.  Atkins 
Pettit  V.  Shepherd 
Pettyt  V.  Jameson 
Peyroux  v.  Howard 
Pfetfer  r.  Steiner 
Phebe,  The 
Phelps  V.  Brewer 
Philips  V.  Atkinson 
V.  Belden 
V.  Ledley 
■"  V.  Turner       229 
Phillips  V.  Clagett 
V.  Cook 
V.  Pennywit 
V.  Phillips     364, 
V.  Purington 
Philson  V.  Bamplield 
Phinsen  v.  Negley 
Phoenix  v.  Ingraham 
Piatt  V.  Williams 
Pickard  v.  Sears 
Pickering  v.  Holt 

V.  Pickering 
V.  Rugby 
Pierce  v.  Barnham 
I'.  Bryant 
V.  Cameron 
V.  Covert 
V.  Daniels 
V.  Fuller 
V.  Jackson      152, 

V.  Kearney 
V.  Pass 
V.  Stockwell 
V.  Tiernan 
V.  Tobey 
V.  Trigg  364 

V.  Whitley 
Pierson  v.  Hooker 

Pigott  V.  Bagley 
Pike  V.  Bacon 

V.  Warren 
Pillans  V.  Harkness 
Pilling  V.  Pilling 
Pim  /;.  Harris 
Pinckney  v.  Hall 

V.  Keyler 
V.  Wallace 
Pine,  Ex  parte 
Pinkerton,  Ex  parte 
Pinkett  v.  Wright 
Pipe  V.  Bateman 
Piper  ?j.  Smith 
Pirtle  ('.  Penn 
Pit  V.  Cholmondeley 
Pitcher  v.  Barrows     12, 


39,  384 

44,  78 

9 

152 

44 

308 

242,  302,  519 

569 

447 

572 

174 

319,  442 

516 

568 

,  230,  394,  522 

182,  325 

310,  853,  359 

335 

366,  374.  375 

194,  548,  551 

65 

202 

493 

163 

494 

179 

337 

312 

24 

532,  538 

110 

372 

223,  224 

410 

167,  202,  352, 

353,  449,  481 

65 

112,  113,  210 

175 

167,  503 

19 

,  372,  373,  446 

12 

163,  173,  182, 

325 

452,  453,  512 

180,  183 

188 

13,  2li6 

2  SO 

280 

1,  199 

104 

441 

500 

348 

645,  547 

544 

373 

301 

517 

826,  412,  418, 

419 


INDEX   TO    CASES   CITED. 


xliii 


Pitkin  v.  ritkin  454 

Pitt  V.  Pet  way  323 

I'.  Smith  29 

Pitts  V.  Mower  335 

V.  Waugh     65,  362,  363,  368,  369 

Place  V.  Sweetzer  310,  3-13 

Planclie  v.  Fletcher  11 

Piatt  V.  Ilalen  334 

Plowden,  Ex  jiarle  478 

Poimlexter  v.  Waddy  203,  434 

Pollard  V.  Stanton  42 

Pollock  V.  Williams  99 

Pomeroy  v.  Benton  513 

Pond  V.  Clark  230 

V.  Kimball  494 

Pontet  V.  Basingstoke  Canal  Co.     546 

Ponton  V.  Dunn  452 

Pool  V.  Delancy  271,  272,  274 

V.  Pratt  18 

Poor  V.  Carleton  311 

Pope  V.  Cole  448 

V.  Randolph  281,  283 

V.  Pisley  193,  412,  419 

V.  Salsman  511 

Popper  V.  Sclieider  459 

Porter  v.  Cumings  200,  214 

V.  M'Clure  45,  47,  551 

V.  Taylor  173,  325,  396 

V.  Wheeler  394 

Porthouse  v.  Parker""  196 

Portland  Bank  v.  Hyde     288,  290,  325 

V.  Stubbs  571 

Posey  V.  Bullitt  178 

Post  V.  Kimberly     39,  45,  99,  117,  256 

Postmaster-General  v.  Furbur  432 

Potomac,  The  Ship  227 

Pott,  Ex  parte  497 

V.  Eyton  42,  77,  89,  120 

Potter  V.  Gray  381,  383 

V.  McCoy  111,  180 

V.  Moses  56,  59 

Potts  V.  Bell  27 

V.  Waugh  37 

Powell  V.  Lay  ton  157,  158 

V.  Messer  202,  203 

V.  North  455 

V.  Waters  196,  420 

Pozzi  V.  Shipton  168 

Pratt  V.  Hutchinson  546,  547 

V.  Langdon  63,  67 

V.  Oliver  241 

V.  Peed  569 

V.  Tunno  568 

Prentiss  v.  Savage  474 

V.  Sinclair  411,  412,  413 

Prescott,  Ex  jxtrie  489 

President,  The  Brig  568 

Preston  u.  Strutton    274,  278,  282,  283 

Price  V.  Alexander  59,  181,  183 

V.  Green  251 

V.  Groom  57,  146 

V.  Hicks  365 

Prince  v.  Crawford  99 


Princeton  &  K.  Turnpike  Co.  v. 
Gulick  411, 

Pritchard  v.  Draper  173, 187,  188, 
195, 
Pritt  V.  Clay 
Proctor  V.  Moore 

V.  Sargent 
Protheroe  v.  Form  an 
Pruyn  v.  Milwaukie 
Pugh  V.  Currie  364,  365,  368,  373, 
Pullen  V.  Ready 
Purcell  V.  Cole 

Purdy  V.  Powers  211,  293, 

Pursley  v.  Ramsey  128, 

Purviance  v.  M'Clintee 

V.  Sutherland  181 

Putnam  i;.  Wise   42,  45,  144,  160, 


413 
192, 
396 
516 
474 
410 
309 
230 
376 
513 
515 
295 
411 
80 
,  183 
546, 
557 


Q. 


Queen  v.  Whitmarsh  43 

Quinbran  i'.  English  409 

Quine  v.  Quine  36,  55 

Quiner  v.  Marblehead  Social  Ins. 
Co.  163 


R. 


Raba  v.  Ryland  165 
Rackstraw  v.  Imber  280,  281,  520 
Radcliffe,  Executors  of,  v.  Wight- 
man  514 
Radenhurst  v.  Bates  276,  330 
Raine}^  v.  Nunse  481 
Rains  v.  McNairy  323 
Raleigh,  Ex  parte  62 
Ramey  v.  McBride  210 
Ramsbottora  v.  Duck  477 
V.  Parker  237 
Randall  v.  Randall  370 
Randel  v.  Chesapeake,  &c.  Canal 

Co.  248 

Randleson,  Ex  parte  10,  433 

Randolph  v.  Randolph  514 

Ransom  v.  Van  Deventer  477 

Rapid,  The  27,  327 

Rapp  V.  Latham  152 

Raw  V.  Pole  494 

V.  Potts  494 

Rawlinson  v.  Clarke  58 

linw sou,  Ex  parte  502 

Rawstone  v.  Gandell  825,  329 

]\ay  V.  Bogart  514 

Rayburn  v.  Day  567 

Raymond  v.  Cause  297 

V.  Putnam  250 
Raymond's  Case                  53,  159,  168 

Rayner  v.  Pearsall  514 

Read  a.  Bowers  311 

V.  White  485,  488 


xliv 


INDEX   TO    CASES    CITED. 


TJeade  v.  Bcntley  381,  383,  384 

Relier  v.  Coliunbus   Macli.  Man. 

Co.  116 

Redman  r.  Green  516 

Reece  v.  Iloyt  402 

Reed  v.  Boardman  427 

V.  lliissey  81 

V.  Murpliy  85 

V.  Norris  50.5 

V.  Upton  486,  567 

V.  White  111,  397,  423,  485,  488, 

566,  567 

Reese  v.  Bradford  345,  346,  351 

Reeve,  Ex  parte  492,  500,  502 

V.  Davis  552,  553,  509 

Reeves  v.  Ay  res  480 

Regden  v.  Pierce  505,  506,  525 

Regina  ».  Mallinson  322 

V.  Registrar  of  Joint-stock 

Companies  542 

V.  Wiiitmarsh  512 

Held,  Ex  parte  478,500,501 

V.  HoUinsliead       47,  50,  56,  169 

Reilly  v.  Smith  412 

Reimsdyk  v.  Kane     192,  194,  196,  200 

Remick  v.  Emig  440 

Remington  v.  Allen  67 

V.  Cummings  179 

Renfrew  v.  Pearce  113 

Renton  v.  Chaplain    312,  319,  400,  462 

Reppert  v.  Colvin  190 

Reuben  v.  Cohen  201 

Revens  v.  Davis  548,  553 

Rew  I'.  Pettet  187 

Rex  V.  Ahnon  156 

V.  Cole  22 

V.  Collector  of  the  Customs      548 

V.  Inhabitants  of  Hardwick      196 

V.  Marsh  156 

V.  Pearce  156 

V.  Philip  548 

V.  Topham  156 

V.  Webb  546,  547 

Reybold  v.  Dodd  229,  394 

Reynard  v.  Chase  17 

Reynolds  v.  Cleveland    39,  68,  99,  106 

V.  Hicks  86,  159 

V.  Mardis  230 

V.  Toppan  82,  84,  85,  91, 144, 

572 

V.  Ward  424 

Rhea  v.  Rhenner  24 

Rice  V.  Austin  81,  84, 144, 145,  343,  353 

V.  Barnard  372 

V.  Barrett  116 

i\  Shuman  7 

V.  Shute  475 

Rich  V.  Coe  553 

V.  Davis  212 

V.  Pikinton  157 

Richards  v.  Beauman  459 

V.  Daveis   299,  300,  312,  459, 

512 


Richards  v.  Dutch  475 

V.  Heather  447 

Richardson,  Ex  parte         454,  455,  505 

In  re  494,  501 

V.  Bank  of  England     241, 

269,  518 

V.  Boright  19,  21 

V.  Farmer  62 

V.  French  155 

V.  Hastings  459,  512 

V.  Hogg  532,  533 

V.  Larpent  394 

V.  Maine  Ins.  Co.  11 

V.  Moies  391 

V.  Tohey  472 

I'.  Wyatt  376 

V.  Wyman  488 

Richmond  v.  Pleapy  174,  211 

Richmond  Turnpike  Co.  v.  Van- 

derbilt  572 

Richter  v.  Poppenhuscn  147 

Ricketts  r.  Bennett  99 

Rider  v.  Wilcox  67 

Ridgeley  v.  Crandall  18 

V.  Carey  168,  503 

Ridgway  v.  Clare  34.3,  349,  448 

V.  Grant  275,  276 

V.  Philip     12.3,  132,  195,  196 

Ridgvvay's  Appeal  366,  378 

Ridley  v.  Plymouth,  &c.  Grinding 

and  Baking  Co.  543 

V.  Taylor       111,  112,  199,  203, 

204,  206,  208 

Rigden  y.  Pierce       446,473,507,511, 

525 

Ripley  V.  Colby  39,  52,  125 

V.  Waterworth  370 

Roach  V.  Perry  36,  229,  261 

Roache  v.  Pendergrast  272 

Robb  V.  Mudge  411,  487,  488 

Robbins  v.  Butler  541 

V.  Cutler  18 

V.  Eaton  19 

V.  Fuller  386 

V.  La  swell  86 

V.  Willard  194 

Robert  v.  Garnie  427 

Roberts  (;.  Anderson  311 

r.  Everhardt         36,312,313, 

315,  317 

V.  Fitler  271,  287 

V.  Hardy  28,  327 

V.  Johnson  152,  156 

V.  Kuffin  517 

V.  McCarty  366,  372 

V.  Spencer  413 

V.  Totten  156,  224,  242 

Robertson  v.  Lockie  465 

V.  Mills  203,  212 

V.  Smith  23,  65 

Robey  v.  Howard  39,  526 

Robinson,  Ex  parte  502 

In  re  ^11 


INDEX  TO   CASES   CITED. 


xlv 


Robinson  v.  Anderson 
V.  Crowder 
V.  Gleadow 
V.  Ilofnian 
V.  Mansfield 
V.  Marcliaiit 
V.  McDonnell 
V.  Mcintosh 

V.  Reynolds 
V.  Rudkins 
V.  Ta\l()r 
V.  Thompson 
V.  Wilkinson 
V.  Williams 
Robson  V.  Curtis 

V.  Drummond 

Rockwell  V.  Wilder 


249 

166,  183 

557,  502,  570 

175 

337 

339 

496 

1G6,  236,  271, 

533,  538 

24 

106 

391 

218 

64,  291,  397 

282 

273,  283 

291,  333,  334, 

335 

271,  272,  274, 

279,  284 

395 

849 

265 

517 


Rodgers  v.  INIaw 

V.  Meranda 
V.  >.'o\viil 

Rodney  v.  Hare  

Rodriguez  v.  Heffernan    160,  164,  167, 

169,  343,  547 

Rod  well  V.  Redge  291,  334 

Rogers  v.  Batchelor         112,  113,  163, 

164,168,175,203,205,209 

126,213 

18 

157 

346,  351,  462 

380 

269,  288,  325 

251 

298 


V.  Coit 
V.  Hurd 
V.  Inibleton 
V.  Nichols 
V.  Keed 
V.  Rogers 
Rolfe  V.  Peterson 
V.  Rolfe 


Rolleston  v.  Hibbert  550 

Rollins  V.  Stevens  216 

Rolston  V.  Click  216 

Romp,  The  171 

Roosevelt  v.  Mark  188 

Rootes  V.  Waltbrd  193,  387 

Rooth  V.  Quia  97,  195,  397,  411 

Rose  V.  Daniel  21 

V.  Marchie  292 

V.  Poulton  290 

Roes  v.  Decy  64,  291 

V.  Drinker  59 

V.  Henderson  343 

V.  Howell  175,  180 

V.  La  whom  108 

i\  Parkyns  67 

Rothwell  V.  Dewees  471 

V.  Humphreys  105,  172 

Routh  V.  Thompson  557,  570 

Rowe  V.  Wood  223,  228,  509 

Rowland,  In  re  469 

V.  Booser  363 

V.  Long  78 

Rowlandson,  Ex  parte    50,  68,  74,  345, 

474,  490,  493,  496,  499 

Rowley  v.  Adams  258 


Rowley  v.  Stoddard 

173 

Rowth  V.  Howell 

455 

Roxby,  Ex  parte 

148 

149,  488 

Roys  V.  Vilas 

440, 441 

Ruddock's  Case 

182 

Ruffin,  Ex  parte         167, 

168, 

344,  345, 

346,  350,  351, 442,  469, 

474, 

481,  493, 
497,  502 

Ruffner  v.  McConnel 

183 

Ruff'ord,  Ex  parte. 

489 

Russell  V.  Annable 

178,  183 

r.  Austwick 

225 

V.  Grimes 

284 

V.  Leland 

53 

V.  Loscombe 

511" 

V.  Miller 

365 

V.  Pellegrini 

177,  247 

V.  Perkins 

333 

V.  Swan 

828 

,  329,  330 

Rntledge  v.  Squires 

112 

Rutter  V.  Tallis 

814 

Ryan  v.  Mackmath 

308 

St.  Barbe,  Ex  parte  480, 

St.  Jago  de  Cuba,  The 
St.  James  Club,  In  re 
St.  John  V.  Holmes 

V.  Standring 
St.  Johns,  Ex  parte 
Sadler,  Ex  parte 

V.  Lee  155,  172, 

Sainter  v.  Ferguson 
Sale  V.  Dishman 
Salmon  v.  Davis 
Salomons  v.  Nissen 


182, 
39,  51,  164, 

59, 


Salter  v.  Ham 
Saltmarsh  v.  Bower 
Saltoun  V.  Houston 
Sampson  i".  Shaw 
Sanborn  v.  Merrill 
Sander  v.  Sander 
Sanderson  v.  Brooksbank 

V.  Stoctkdale 
Sandham,  Ex  parte 
Sandilands  v.  Marsh 
Sanford  v.  Mickles 
Sangster  v.  Mazarredo 
San  Jose  Indiano,  The 
San  Juan  Baptista,  The 
Saunders  v.  Johnson 
SauthofF,  In  re 
Savage,  In  re 

V.  Carter 

V.  Marsh 

V.  Putnam 

V.  Rockwell 
Saville  v.  Robertson  62,  104,  105, 
117,  118,  148,  215,256 
Saving  and  Loan  Society  i'.  Gibb 


172,  217. 
193, 

27; 

243 


501 
569 
43 
179 
823 
480 
482 
464 
251 
110 
325 
324, 
473 
508 
172 
437 
341 
323 
465 
212 
481 
435 
232 
391 
195 
261 
572 
275 
494 
469 
864 
474 
439 
409 
114, 
436 
443 


xlvi 


INDEX   TO    CASES    CITED. 


Sawyer  v.  Freem.an 

V.  Proctor 
Sayer  v.  Rennett 
Sayre  v.  Frick 
Scaife  V.  Jackson 
Scak'S  V.  Jacob 
Scliack  V.  Alitor 


553,  554,  570 

283 

455,  463,  464 

40 

486 

186,  190 

333 


Schemerliorn  v.  Loines    554,  565,  566, 

567 
Schmertz  v.  Shreever  178,  183 

Schoeffling  v.  Scliwarting  46 

Scliolefield  v.  Eiclielberger        27,  159, 
407,  438 
V.  Ileafield  447 

Scholey  v.  Walton  451 

SchoUenberger  v.  Seldonbridge      213, 

526 

Schulten  v.  Lord  535,  537 

Schunbacker  i\  Riddle  152 

Scotlin  V.  Stanley  565 

Scott  V.  Avery  177,  248 

V.  Beale  434 

0.  Berkeley  515 

V.  Buchanan  18,  21 

V.  Campbell         85,  87,  271,  272 

V.  Colmesnil  65,  80,  415 

V.  Dansley  128 

V.  Fisiier  427 

V.  Godwin  333 

V.  Milne  447,  516 

V.  Rayment  237 

Scottin  V.  Stanley  554,  566 

Scruggs  V.  Blair  365 

V.  Russell  7 

Seabrook  v.  Rose  548,  552,  563 

Sea,  Fire,  and  Life  Ass.  Co.,  In  re  543 

Searight  v.  Craighead  190 

Searle  v.  Adams  230 

Secor  V.  Killer  292 

Sedam  v.  Williams  65,  109 

Seddon,  Ex  parte      148,  149,  486,  488 

V.  Connel  287 

Sedgwick  v.  Daniell  273,  287 

See  Renter,  The  562 

Seighortner  v.  Weissenborn  459 

Seldon  v.  Hickock  323,  556 

Sellers  v.  Strcator  180 

Sells  V.  Hubbell  295 

Sergeant,  Ex  parte  287 

Servant  v.  Rusk  494 

Servante  v.  James  233 

Sessions  v.  Jones  808 

V.  Richmond  251 

Settembre  v.  Putnam  547 

Sewall  V.  Catlin  337,  3-38 

Sewel  V.  Bridge  517 

Sexton  V.  Sexton  225 

Shackle  v.  Baker  262,  263 

Shaffer  v.  Snyder  418 

Shakeshaft,  Stirrup,  &  Salisbury, 

Case  of  •  480,  499,  501 

Shaler  v.  Trowbridge  210 

Shamburg  v.  Ruggles  435 


Sharon  Canal  Co.  v.  Fulton  Bank    17, 

29 

Sharp  V.  Taylor  10,  11,  287 

V.  Warren  277 

Sharpe  v.  Cummins  258 

Shaw,  Ex  parte  174 

V.  Holland  542 

V.  Pic  ton  427,  428 

V.  Pratt  173 

V.  Rhodes  319 

V.  Robbins  475 

Shearer  v.  Paine  376 

V.  Shearer  365,' 872 

Shed  V.  Pierce  173 

Sheehy  v.  Mandeville  65,  110,  423, 

424,  486,  487 

Sheldon  v.  Sheldon  194,  346 

Shelton  v.  Cocke  188,  189 

V.  Pollock  178 

Shenkl  v.  Dana  230 

Shepard  v.  Hawley  40,  197 

V.  Pratt  67 

Shepherd,  Ex  parte  489 

V.  Morris  516 

V.  OxenfordJ  317 

V.  Tow  good  505 

Shepley  v.  Waterhouse  188 

Sheridan  v.  Medara  142 

Sherman  v.  Kreul  448 

Sherwood  v.  Barton  211 

V.  Hall  572 

V.  Marwick  152 

V.  St.  Paul,  &c.  7,  364 

Shields  v.  Oncy  291 

Shirley  v.  Long  471 

Shirretf  y.  Wilkes      111,  205,  207,  434 

Shoemaker  v.  Benedict  190 

Shott  0.  Strealfield  119,  131 

Shotwell  V.  Miller  173 

Shropshire  v.  Shepherd  33,  85 

Shumway  v.  Reed  486,  567 

Shurlds  V.  Tilson  412,  413 

Shute  V.  Taylor  252 

Sibley  r.  Lambert  190 

Siegel  V.  Cliidsey  104,  469,  470 

Siffkin  V.  Walker  105,  213,  334 

Sigourney  v.  Drury  188,  190 

V.  Munn    364,  441,  446,  525 

Sikes  V.  Work  279,  284 

Silk  V.  Osborn  445 

V.  Prime  449 

Sillitoe,  Ex  parte        480,  499,  500,  501 

Simmons  v.  Curtis  166 

V.  Leonard  446,  525 

V.  Swaine  468 

Simms  v.  Kirtley  522 

Simonds  v.  Strong  413 

Simpson,  Ex  parte  484,  496 

I'.  Bloss  10 

V.  Feltz  42,  56,  443,  524 

V.  Geddes  189,  192 

V.  How  den  308 

V.  Leach  373 


INDEX   TO    CASES   CITED. 


xlvii 


Simrall  i'.  O'Bannons 
Sims  V.  Bond 

V.  Brittain 

V.  Brutton 

V.  Smith 

j;.  Willing 
Simson  v.  Cooke 

V.  Ingham     427, 
Singer  v.  Kelly 
Sisters,  The 
Sitler  V.  Walker 
Skaife  v.  Jackson 
Skilling  V.  Coolidge 
Skinner  v,  Dayton    178, 


V.  Stocks 

V.  Tinker 

Skipp  V.  Harwood 


404, 
2yi, 


292,  334, 

334,  569, 

100, 


333 

428,  430, 

533 

650 


180,  181, 
510,  543 
334,  335 


168,  309,  321, 


559, 
173, 
187, 


448,  476, 


Skipworth  v.  Lea 
Skirving  v.  Williams 
Skrine  v.  Sloop  Hope 
Slater,  Ex  parte 

V.  Lawson 

V.  Willis 
Slee  V.  Bloom 
Sleech's  Case 
Slemmer's  Appeal 
Sloan  V.  Moore 
Slocum  V.  Hooker 
Sloo  V.  State  Bank  of  Illinois  178, 
Small  V.  At  wood 

V.  Fitzwilliams 
Smith,  Ex  parte  254,  343,  359,  469, 
478,  489,  491,  492,  494, 
497, 

Matter  of 

V.  Allen 

V.  Argall 

V.  Bailey 

V.  Barrow 

V.  Black 

V.  Burnham 

V.  Cliandos 

V.  Clay 

V.  Coleman 

V.  CoUins 

V.  Craven 

V.  Curamings 

V.  Danvers 

V.  Darker 

V.  De  Silva 

V.  Edwards 

V.  Emerson 

V.  Fromont 

V.  Goldsworthy 

V.  Hill 

V.  Hull  Glass  Co.  543, 

V.  Jackson  343, 

V.  Jameson    155,  232,  395, 

V.  Jarves 

u.  Jeyes  234,312,314,381, 

V.  Johnson 


310, 

532,  538, 
172,  199, 
269,  275, 
65, 
7,  37,  65, 


100, 
105, 


167,  469,  503, 
147,  346, 


326 
563 
570 
151 
103 

40 
432 
432 
535 
559 
310 
211 
176 
381, 
544 
501 
401 
400, 
461 
440 
456 
561 
488 
451 
556 
513 
485 
459 
313 

23 
179 
340 
251 
470, 
496, 
500 
480 
268 
539 
214 
277 
109 
368 
238 
575 
205 

35 
118 
311 
320 
343 
570 
351 
350 
303 
543 

36 
544 
373 
427 
199 
459 
345 


Smith  IK  Jones 

37,  65,  363 

V.  Kane 

483 

V.  Kerr 

181 

V.  Knight 

44 

V.  Lowe 

315 

V.  Ludlow 

188,  189 

V.  Lusher  98,  199, 212,  233,  289 

V.  Mallory's  Ex'r                  449 

V.  Mayo 

18,  19 

V.  Moynahan 

44 

V.  Oriell        324, 

461,  471,  472, 

473,  474 

ads.  Perry 

86 

V.  Rogers 

111,  425,  485 

V.  Sheldon 

392 

V.  Sherwood 

134 

V.  Sloane 

99 

17.  Smith  63,132,254,270,365, 

475,  486 

V.  Stokes      324, 

461,  469,  471, 

472,  473,  480 

V.  Stone 

182,  325 

V.  Sumner 

44 

V.  Tarlton 

7,8 

V.  Tupper 

179 

V.  Tustin 

326 

V.  Vanderberg 

67,  99 

V.  Watson 

50,  145,  495 

V.  Wigley 

430,  432 

V.  Winter 

180,  386,  392 

V.  Wright 

44,  56 

Smitha  v.  Cureton 

196 

Smout  V.  Ilbery 

397 

Smyth  V.  Harrie 

395 

V.  Hawthorn 

447 

V.  Strader 

212 

Smythe  v.  Smytlie 

311 

V.  Tankersley 

323 

Snaith  v.  Burridge     111,  153,  165,  209 

Snead  v.  Barringer  106 

Sneed  v.  Coyle  212 

V.  Wiester  427,430 

Snell  V.  Deland  72 

Sniffer  v.  Sass      '  480 

Snodgrass  v.  Broadwell  329 

Snow  V.  Howard  214 

Snyder  v.  May  179 

V.  Webb  25 

Solly  V.  Forbes  173,  333 

Solomon  v.  Solomon  39,  224,  238 

Somerbv  v.  Buntin  44 

Somerville  v.  Mackay  244, 299 

Sophie,  The  568 

Soules  V.  Burton  227 

Southard  v.  Steele  178 
South  Carolina  Bank  v.  Case  128, 129, 
200,  213,  233 

Southwick  V.  McGowan  12 

Spalding  v.  Hedges  117 

Sparhawk  v.  Bussell  449 

Sparrow  v.  Chisman  174,  211 

Spaulding    v.    Ludlow  Woollen 

Mill  190, 411 


xlviii 


INDEX    TO    CASES    CITED. 


Speake  v.  Brewitton  292,  329 

Spear  v.  Gillet  108,  109 

V.  Newell  270,  281,  282 

Spcer  V.  Bisliop  397 

Speights  y.  Peters  314,  316 

Speiiceley  v.  Grreeiiwood  397 

Speiieer  u.  Billing  121,  495 

V.  Darant  243,  275 

Sperry,  Ex  parte  349 

Spicer  v.  James  264 

Spiers  v.  Houston  382 

Sprague,  Jlx  parte  497 

V.  Ainsworth  218 

Springer  v.  Foster  475 

Spiiry,  In   re  345 

Staats  V.  Howlett  214,  263 

Stables  v.  Eley  414 

Stackpole  v.  Davoren  515 

Stacy  V.  Davy  385 

Stall  V.  Catskill  Bank  216 

Stannard  v.  Whittlesey  510 

Stansfield  v.  Levy  291 

Stanton  Iron  Works,  In  re  189 

Stanwood  u.  Owen  397 

Slapilton  v.  Stapilton  618 

Stark  V.  Taylor  24 

Starnes  v.  Quin  323 

State  V.  Bierman  151 

r.  Catskill  Bank  205 

V.  Neal  151 

State  Bights,  The  572 

Stead  V.  Salt  176,  177,  182 

Steamboat  Oi-Ieans  v.  Phoebus        555, 

559,  561 

Stearns  v.  Barrett  410 

V.  Burnham  203,  204 

V.  Haven  59,  66,  132 

V.  Houghton  20  L 

Stebbins,  Ex  parte  345 

Stegall  V   Coney  210 

Steel  f.  Jennings  172,175,190 

V.  Western  292 

Steele  v.  Stuart  52 

Steers  v.  Lashley      *  10 

Steiglitz  V.  Egginton  179,  180 

Stem  V.  Robertson  241,  261,  296 

V.  La  Dow  166 

Stephens  v.  Reynolds  201 

V.  Orman  224,  514 

V.  Thompson  423,  424 

Sterling  v.  Hanson  552,  564 

V.  Jaudon  103 

Sternberg  v.  Callaman  112,  484 

Sterndale  v.  Hankinson  482 

Sterry  v.  Clifton  17,  88 

Stevens  (;.  Denning  333 

V.  Faucet  86 

V.  Lunt  330,  334 

V.  Morse  394 

V.  Yeatman  394 

V.  Perry  319 

Stevenson  v.  Mathers  511 

Steward  v.  Blakeway  865,  371 


Stewart^.  Brown 
V.  P^orbes 
V.  Hall 
V.  Levy 
V.  Rogers 
Stileman  v.  Ashdown 
Stinison  v.  Lewis 
Stinson  v.  Wyman 
Stoallings  v.  Baker 
Stockdale  v.  Ullery 
Stocken  v.  Dawson 
Stocker  v.  Brockelbank 
Stockton  V.  Prey 
Stockwell  V.  Dillingham 
Stokes  V.  Brown 
Stone  V.  Chaniberlin 

V.  Dennis 

V.  Fouse 

V.  Ketland 

V.  Marsh 

V.  Seymour 
Storer  v.  Flack 

V.  Hinkley 

V.  Hunter 
Storrs  V.  Barker 
Story  V.  Livingstone 

V.  Lord  Winsor 

V.  Moon 
Stouffer  V.  Coleman 
Stoughton  V.  Lynch 

513,  516, 
Stout  V.  Fortune 
Stoveld,  Ex  parte 

V.  Eade 
Strain  v.  Wright 
Strange  v.  Lee 
Strangtbrd  i'.  Green 
Street  v.  Rigby 
Strelly  u.  Wiiison 
Strong  u.  Fish 

V.  Foster 
Stroud,  Ex  parte 
Struthers  v.  Pearce 
Stuart  V.  Corning 

V.  Kirkwall 
Studdy  V.  Sanders 
Styles  V.  Cowper 
Succession  of  Andrew 
Sullivan  v.  Greaves 
Sumner  v.  Hampson 

V.  Powell 
Sutcliffe  V.  Dohoman 
Sutton  V.  Back 
V.  Clarke 
V.  Gregory 
r.  Irvvine 
Suydam  v.  Barber 
V.  Owen 
Swallow,  Steamboat 
Swan  t'.  Stedman 

V.  Steele      52,  62, 
172,  175, 


404 

259,  260 

565,  566 

150 

485 

516 

645 

572 

44 

201 

231,  443,  451 

59,68 

156,  157 

103 

21 

110,  391 

248,  249 

457,  510 

572 

153,  154 

724 

8 

200 

496 

494,  495 

475 

36 

459 

471 

224,  242,  447, 

517,  522,  523 

315,  346,  351 

317 

431 

18 

382,  333 

178 

248,  249,  468 

557,  559,  562 

210 

424 

480,  502 

225 

267 

25 

195 

494 

470 

10,  287 

107,  372,  374, 

376,  503 

348 

343 

650 

157 

199,  212 

217 

108 

440 

65 

181 

121,  131,  163, 

182,  199,  201 


INDEX   TO    CASES    CITED. 


xlix 


Swasey  v.  Antrim  25 

V.  Vaiulerheyden  18 

Sweet  u.  Bradley  217 

V.  Jacocks  505 

Sweetser  v.  French  216,  217 

Sweetzer  v.  Mead  164,  183 

Sylvester  v.  Smith  104,  21)0 

Symonds  v.  Canter  339 


T. 


Taher  v.  Cannon  SfiO 

Taft  V.  Buffum  400 

V.  Seriieant  18,  19 
Tagrgard  v.  Loring       82,  144,  54U,  550 

Taitt,  Jix  parte  483,484 

Talbot  V.  Commanders  of  Three 

Brigs  572 

Tallmadge  i'.  Penoyer  208 

Tarns  V.  Hitner  126 

Tanner  y.  Hall  209,216 

Tapley  v.  Butterfield  163,  164,  166, 

172,  1«3 

Tappan  v.  Bailey  545 

V.  Blaisdell  343,  352,  449 

V.  Kimball  190 

V.  Poor  474 

Tassey  v.  Cliurch  289 

Tatam  v.  Williams  547 

Tate  V.  Mut.  Fire  Ins.  Co.  329 

Tatiock  V.  Harris  396 

Tattersall  v.  Groote     13,  248,  296,  457 

Tay  V.  Ladd  437 

Tayloe  i'.  Sandiford  427 

Taylor,  Case  of  178 

Ex  parte        477,  484,  496,  502 

V.  Bemis  265 

V.  Carpenter  265 

V.  Castle  438 

V.  Church  337,  338,  339 

V.  Coryell  174,  178 

V.  Davies  459 

V.  Fields  3,  167,  309,  442, 

480,  481,  506 

V.  Glassbrook  17 

V.  Hamlin  516 

I'.  Hayling  516 

V.  Henderson  133,  194 

V.  Herring  52 

V.  Higgins  287 

V.  Hilly er  203,  204 

V.  Jones  151,  516 

V.  Kymer  431,  433 

V.  Perkins  60,  147 

V.  Taylor  261 

V.  Terme  80 

V.  Young  413 

Teague  v.  Hubbard  274,  289,  545 

Teed  v.  Baring  566,  567 

V.  El  worthy  23,  135,  292 

Telford  v.  Pamsey  103,  128 

Teller  v.  Muir  194 


Temple  v.  Seaver  32.  390 

Tench  v.  Roberts  56,  59,  76 

Tennat  v.  Elliott  287 

Tenney  v.  Johnson  481 

V.  N.  E.  Protective  Union    541 

Terrell  v.  Goddard  316,  394 

V.  Richards  7,  275 

Terry  v.  Butler  481 

Texiere  v.  Da  Costa  314 

Thacher  v.  Dinsmore  567 

Thames,  The  672 

Thayer  v.  Buffum  289,  326 

V.  Lane  372,  374 

V.  Smith  202 

Thicknesse  v.  Bromilow    99,  172,  175, 

200 
Thimblethorp  v.  Hardesty  243,  275 
Thom  V.  Thorn  369 

Thomas,  Ex  parte  496 

V.  Elmaker  545 

V.  Fredericks  248 

V.  Harding  175 

V.  Lichfield  295 

V.  Penrick  103 

V.  Pyke  275 

V.  Shillibeer  110,  897,  422 
Thomason  v.  Frere  178,  469,  474,  476 
Thomasson  v.  Boyd  19 

Thompson  v.  Andrews  454 

V.  Bowman  316 

V.  Brown  430,  455,  456,  505 
V.  Charnock  288 

V.  Cook  555,  556 

V.  Davenport  565,  566 

V.  Finden  266, 554, 566 

V.  Graham  308 

V.  Howard  36,  100 

V.  Ketchum  328 

V.  Lay  19 

V.  Leake  556 

V.  Percival       110,  897,  422 
423,  426,  485,  487,  488 
V.  Ryan  258,  504 

V.  Snow  82,  144 

V.  Steamboat  J.  D.  Mor- 
ton 290 
V.  Wesleyan  Newspaper 

Association  644 

V.  AVilliamson  258,  260 

Thomson  v.  Cook  323 

w.  Thomson  287 

Thorn  v.  Hicks  550 

r.  Smith  105 

Thonidike  v.  De  ^Yolf      46,  145,  548, 

551,  554,  563,  564 

Thornton  v.  Dixon  438 

V.  Illingworth  18,  23 

V.  Kerr  133 

V.  Proctor  229,  230,  394 

Thorpe,  Ex  parte        111,  112,  113,  205 

V.  Jackson  348,  447,  448 

Thrall  V.  Seward  338,  434 

Thrupp  V.  Fielder  19 


INDEX   TO    CASES   CITED. 


Thurber  v.  Corbin  421 

Tliurlow  V.  Gilniore  I'J 

Tliursby  v.  Lidgerwood  388 

Thurston  v.  Blancliard  667 

V.  Lloyd  202 

Thwaites  v.  Richardson  196 

Tliweatt  V.  Jones  287 

Tibbatts  v.  Tibbatts  56,  144 

Tiekel  v.  Short  5-20 

Till's  Case  494 

Tilley  v.  Phelps  343 

Tillier  v.  Wliitehead  175,  233 

Tillinghast  v.  Champlin  347,  364,  372, 

378 
V.  Nourse  190 

Tillotson  V.  Tilh)tson  365,  441 

Tilson  V.  Warwick  Gas  Light  Co.  545 
Tindal  v.  Bright  289,  325 

Tinkler  v.  VValpole  194 

Tipton  V.  Nance  328 

Tirrell  v.  Jones  230 

Tobias  v.  Blin  85 

Todd  V.  Clapp  25 

Tom  V.  Goodrich  107,  179 

Toinbeckbee  Bank  v.  Dumell  391,411 


Tonikins  v.  Woodford 
Tonilin  v.  Lawrence 
Tooker's  Case 
Toplift  V.  Jackson 
Torrell,  Ex  parte 
Torrey  v.  Buck 
Toulniin  v.  Copland 


201 

173,  174 

182 

273,  386 

502 

808 

432,  518,  521, 

523 

329 

146 

151 

271,  280 

37 


Towle  V.  Harrington 
Town  V.  Hendee 
Townsend  v.  Bogart 

V.  Goewey 

V.  Neale 

V.  Riddle  424 

V.  Townsend  515 

Toyrnahend,  JEx  parte  517 

V.  Devaynes  204 

Tracy  v.  Pearl  111 

Traders'   Bank   of   Rochester    v. 

Bradner  208 

Tradesman's  Bank  v.  Astor  233 

Trafton  v.  United  States  108 

Trait  v.  Baird  276 

Travis  v.  Milne  260 
Treadwell  v.  Williams              164,  377 

V.  Brown  359 

Tredwen  v.  Bourne  99 

Tribune,  The  572 
Trimble  v.  Coons  178,  179,  180 
Troughton  v.  Hunter                417,  459 

Troup  V.  Haight  616 

Troy  Factory  i;.  Corning  407 

Troy  Ins.  Co.  v.  Winslow  448 

Trueman,  Ex  parte  621 

V.  Loder  129 

Tubbs  V.  Richardson  323 

Tucker  i;.  Bradley  146 

V.  Butiington  571 


Tucker  v.  Moreland 

V.  Oxly 

V.  Peaslee 
Tuckerman  v.  Newhall 
Tudor  V.  White 
Tunilin  v.  Goldsmith 
Tunno  v.  The  Betsina 
Tupper  V.  Haythorne 
Turbeville  v.  Ryan 
Turner,  Ex  parte 

V.  Bissell 

V.  Burrows   335, 

V.  Ross 

V.  Smart 
Turnipseed  v.  Goodwin 
Tult  V.  Adams 

V.  Lund 
Tuttie  V.  Cooper   23, 133, 

V.  Eskridge 
Twiss  V.  Massey 
Twopenny  v.  Young 
Twyford  v.  Trail 
Tyler  v.  Taylor 

V.  Scott 
Tyng  V.  Thayer 
Tyrrell  v.  Washburn 
Tyson  v.  Pollock 


u. 

Uhler  V.  Browning 

V.  Semple 
Ulling  V.  Gimrick 
Ulmer  v.  Cunningham 
Union  Bank  v.  Eaton 
V.  Hall 
V.  Knapp 
United  Ins.  Co.  v.  Scott 
United  States  v.  Astley 


18 

449 

105 

173 

413 

12 

661 

165 

181 

492 

84,  89,  91 

336,  569,  570 

188 

186 

241,  261,  463 

202,  203 

230 

158,194,475 

178,  181 

493 

833 

155 

323 

44 

509,  523 

544 

172 


202 
372 

99 
334 
201 
887 
516 
568 
179, 
182 

18 
432 
108 
343 
432 
107 
156 
173 
432 


105, 


46,57 
107,  178, 


65, 
428, 


V.  Bainbridge 

V.  Bradbury 

V.  Cushman 

V.  Hack 

V.  Kirkpatrick 

V.  Lyman 

V.  Thomason 

V.  Thompson 

V.  Ward  well 
United  States  Bank  v.  Binney    30,  38, 
129,  130,  239,  401,  446,  522 
United  States  Express  Co.  v.  Bed- 
bury  267 
Univ.  of  Cambridge  v.  Baldwin        333 
Universities  of  Oxford  and  Cam- 
bridge V.  Richardson  243 
Updyke  v.  Doyle  484 
Upham  V.  Hewett  44 
V.  Naylor                                360 
Usborne,  Ex  parte                              497 
Usher  v.  Dauncey                             212 


INDEX   TO    CASES   CITED. 


li 


V. 

Valentine  v.  Ford 
Valiant,  The 
Vallett  V.  Parker 
Van  Alstyne  v.  Cook 
Van  Aninnge  v.  Ellmaker 

Vance  v.  Blair 

V.  Canipbe-ll 
Vanderburgli  v.  Hull 
Van  Deuscn  v.  Blum 
Van  Epps  v.  Van  Ueusen 
Van  Eps  v.  Dillage 
Vanlieatli  v.  Turner 
Van  Keuren  v.  I'arraelee 

Vann  v.  Barnett 
Van  Ness  i-.  Forrest 
Van  Ostranrl  v.  Reed 
Van  Reiinsdyk  v.  Kane 
Van  Sandau  v.  Moore 


Van  Scoter  v.  Lefferts 
Van  Valcn  v.  Russell 
Van  Valkenburgh  v.  Bradley 
Van  Winkle  v.  Ketchum 
Varnor  v.  Nobleborougli 
Vassar  v.  Camp 
Venning  v.  Leckie 
Vent  V.  Osgood 
Venus,  Tiie 
Vere,  Ex  parte 
V.  Aslibj' 
Vermillion  v.  Bailey 
Vernon  v.  Jf fferj's 


24 

5(il 

200,  202,  212 

635 

278,  280, 

28^,  510 

2:^7 

100 

42,  85,  91 

178,  180 

483 

110 

1 

170,  190, 

192 

518 

G5,  274,  283 

480 

195 

236,  401,  403, 

405,  512 

167 

65 

391 

18 

486,  507 

14,  57 

275,  276 

18 

327 

473 

14,  64,  201,  436 

511 

333,  475 


V.  Manhattan  Co 


V.  Vawdry 
Vesey  v.  Mantell 
Vez  V.  Emery 
Vihbard  i\  Roderick 
Vioary's  Case 
Vice  V.  Anson 

V.  Fleming 
Vigers  v.  Sainet 
Vililia,  The 
Villa  V.  Joute 
Vinall  0.  Burrill 
Vincennes,  The 
Viner  v.  Cadell 
Volant,  The 
Voorhees  v.  Jones 
V.  Wait 
Vose  V.  Grant 


212,  412, 

415,  419 

513,  515,  516 

275 

456 

87 

196 

7 

97,893,  397,411 

541 

568 

7 

189, 192,  550 

559 

505 

572 

86 

21 

287 


VuUiamy  v.  Noble    407,  438,  449,  450, 
474,  485 


W. 


Waddell  i'.  Cook 
Wade  V.  Jenkins 


359 
446 


Wadley  v.  Jones  284 

Wadsworth  v.  Manning  55 

Wagner  v.  Wagner  511 

Wagnon  v.  Clay  175,  216 

Wainwright  v.  Crawford  568 

V.  Waterman  452 

Wait,  In  re  474,  476,  477 

Waite  V.  Dodges  33 

V.  Foster  392 

V.  Thayer  103 

Waithman,  Ex  parte  196,  420 

V.  Miles  884,  385,  387, 

399 

Waland  v.  Elkins  55,  156 

Walburn  v.  Ingilby     301,  541,  543,  544 

Walcott  V.  Canfield  157,  175 

V.  Willcut  572 

Walden  v.  Sherburne  80,  163,  164, 

170,  179,  193,  195,  200,  233 

,  Waldo,  The  572 

Waldo  Bank  v.  Greely  202 

V.  Lamber  212,  216 

Walford  v.  De  Pienne  24 

Walker,  Ex  parte  491,  499 

V.  Crain  542 

V.  Duberry  189,  193 

r.  Eyth  349 

V.  Eyton  349 

V.  Harris  237 

r.  House        312,316,319,320 

V.  Long  278 

V.  McCulloch  173 

V.  Svmonds  515,  516 

V.  Trott  307,  314 

Wall's  Adm's  v.  Fife  105 

AVallace  v.  Agry  486 

V.  Fairman  107 

V.  Fitzsimmons  396,  447 

«.  Kelsall  211,293 

V.  Patterson  475,  481 

Wallis  V.  Hirzch  247 

V.  Wallace  325 

Wallworth  v.  Holt  300,  459,  512 

Walmsley  v.  Cooper  174 

V.  Walmsley  521 

Walney  v.  Wells  437 

Walsh  V.  Adams  339,  843,  359 

V.  Kelly  477 

Walton  V.  Dodson  175 

V.  Robinson  189 

V.  Treston  178 

Warasley  v.  Lindenberger  23 

Want  V.  Reece  275,  285 

AVarbritton  v.  Cameron  272 

Ward  V.  Brampston  337 

V.  Dalton  489 

V.  Gaunt  47 

V.  Howell  189 

I'.  Johnson  65,  107 

V.  Lewiston  292,  334,  335 

V.  Morris  475 

V.  Motter  65,  107,  108,  110 

V.  Newell  532,  535 


lii 


INDEX   TO    CASES    CITED. 


Ward  V.  Society  of  Attorneys         543 

V.  Tlioni'pson  14,  48,  117 

Wnrtlell  v.  IIu<;lies  202 

Warder  r.  Newdigate  210 

Wardwell  v.  Haiglit  415,  418 

Ware  v.  Clowny  338 

Waring  v.  Cram  443,  447 

V.  KoLinson  17y,  320 

Warner  v.  Cunningham  159,  439 

V.  Griswold  3(3,  334 

V.  Sraitli  34 

Warren,  In  re     8,  37,  63,  126,  215,  363 

V.  Ball  416 

V.  Batchelder  485 

V.  Dickson  112 

V.  French  103 

V.  Taylor  297 

V.  Tyler  386 

V.  AVills  351 

V.  Wheelock  282. 

Warwick  i\  Brnce  21 

Washburn  v.  Bank  of  Bellows  Falls, 

343,345,346,348,351, 

352 

V.  Goodman     390,  392,  394. 

407,  438,  442,  443,  447, 

449 

Watchman,  The  475 

Waterer  v.  Waterer  365. 

Waters  v.  Taylor      299,  312,  314,  315, 

316,  317,  358,  881,  458, 

459,  462,  464,  511,  512 

V.  Tompkins  187,  428 

Watkins,  E.r  parte  493,  494,  500 

r.  Hill  486,  567 

Watkinson  u.  Bank  of  Penn.  411, 

412,  419 

V.  Bernadiston  56'J 

Watney  v.  Wells  230 

Watson,  Ex  parte       22,  32,  33,  66,  76, 

135,  155,  290,  477,  501, 

502 

V.  Bourne  474 

V.  Fletcher  287 

V.  Owens  65 

V.  Siieath  477 

V.  Taylor  481 

r.  Wells  196,  420 

V.  Woodman  194 

Watt  V.  Kir])y  104 

Watts  V.  Brook  9 

Waugh  V.  Austen  475 

V.  Carriger  1C7 

V.  Carver       31,  36,  41,  65,  72, 

78,  85,  88,  90,  136,  145, 

287,  495 

Way  V.  Bassett  187,  451 

Wavdell  v.  Luer  110,  111,  486 

Weal  r.  King  157 

Weald  of  Kent  Canal  Co.  v.  KoLin- 

son  546 


Weaver  v.  Upton 

230,  276 

V.  Weaver 

48> 

Webb,  In  re 

224,  287 

V.  Brooke 

10 

Webster  v.  Bray 

249 

259,  261 

V.  Seekamp 

508 

V.  Stearns 

106,  190 

V.  Webster 

265, 

308,  397, 

Weaver  v.  Jones 

V.  Tapscott 


18 
110 


445,  449 

Wedderburn  u.  Wedderburn    445,447, 

450,  503,  515,  524,  552 

Weed  V.  Panama  11.  II.  Co.  572 

V.  Richardson  112,  203 

V.  Small  516 

Weeks  v.  Weeks  323 

Weisman  v.  Smith'  307 

Weld  V.  Oliver  323,  555,  556 

Weller  v.  Baker  338 

Wells  V.  Carpenter  284 

V.  Evans  182 

V.  March  164 

V.  Masterman  212 

V.  Simons  284 

V.  Turner  100 

V.  Wells  278 

Welsh  V.  Speakman  195 

Wendell  v.  Van  Rensselaer  494 

Wendover  v.  Hagebroom  550 

Werner  v.  Leisen  459 

Wesson  v.  Washburn  Iron  Co.         372 

West,  Ex  parte  22 

V.  Randall  475 

V.  Skip     2,  3.  167, 168,  344,  442, 

472,  474,  481.  502,  524 

West  Branch  Bank  v.  Moorehead  427 

Westcott  V.  Price  289 

V.  Tyson  477 

Westerdell  v.  Dale  553,  554 

Westerlo  v.  Evertson  36,  280,  283, 

286 
Western  Bank  of  Scotland  v.  Need- 
ell  416 
Western  Stage  Co.  v.  Walker        170, 
219,220 
Weston  V.  Barton                       332,  333 
V.  Penniman  550 
West  Point  Foundry  Asso.  v.  Brown    6 
Wetherell  v.  Spencer  566 
Wetmore  i'.  Baker                       55,  278 
Wetter  v.  Schlieper           106,  314,  317 
Weyer  v.  Thorn  burgh  481 
Weyland  v.  Elkins                      55,  156 
Whaley  v.  Moody  216 
Wharton  v.  P'isher  483 
V.  Walker  485 
V.  Woodburn  109 
Whately  v.  Manlieim  195 
Wheatcroft  v.  Hickman              86,  146 
Wheatley  v.  Calhoun                365,  368 
Wheeler,  Ex  parte                     139,  497 
V.  Jennings  25 
V.  Rice                                  203 
V.  Sage                               223 


INDEX   TO    CASES    CITED. 


liii 


Wheeler  v.  Van  Wort  .'  381,  388,  384, 

401,403,404 

Wheelock  v.  Doolittle  188,  189,  190 

Wheleii  V.  Watmoutli  510 

Whipple  V.  Parker  42,  541 

v.  Stevens  190 

Whitakcr  v.  Brown  104,  105,  112,  155, 

172,  200,  203,  238 

Whitcomb  v.  Converse  230 

V.  Whiting  185,  186,  187, 

laa,  iby,  191 

V.  Williams  567 

White  V.  Fitzoerald  372 

V.  Gibson  196 

V.  Ilaekett  634,  535 

V.  Hall  186,  189 

?;.  Harlow  286,287 

V.  Jones  330,  353 

.  V.  Murphy  419 

V.  Osborn        323,  339,  555,  556 

V.  Phelps  328 

V.  Smith  157 

V.  Toles  210 

V.  Tudor  391 

V.  Union  Ins.  Co.  407,  503 

V.  Woodward  310 

Whitehead  v.  Barron  433 

V.  Chadwcll  492 

Whiteright  v.  Stimpson  442 

Whitesides  v.  Cannon  25 

V.  Lafferty  318,  319 

Whitewright  v.  Stimpson  533 

Whiting  V.  Furanet  480 

Whitman  v.  Boston  &  Maine  R.  R.  367 

V.  Leonard  420,  463,  470 

V  I'orter  44 

V.  Bobinson  234 

Whitmore,  Ex  parte  149,  435,  485,  488 

V.  Adams  204 

Whitney  v.  Dean  283 

V.  Dutch  19 

V.  Ferris  133,  194 

V.  Ludington  46,  86 

V.  McKechnie  334 

V.  Sterling  194 

V.  Beese  190 

Whittaker  v.  Howe  264 

Whittingham  i-.  Hill  18 

Whittle  r.  iM'Farlane  229 

AVhitton  v.  Hulbert  163 

V.  Smith  381 

Whit  well  V.  Warner  385 

Whitworth  v.  Harris  13 

Why  wall  v.  Champion  18 

Wickham  v.  Wick  ham  431 

Widdifield  v.  Widdifield  7 

Wide  V.  Jenkins  516 

Wiggin  V.  Cummings  269 

V.  Goodwin  511 

V.  Tudor  173 

Wiggins  V.  Hammond  104 

V.  Cunnnings  275 

Wightman  v.  Townroe  146,  454,  505 


Wllby  V.  Phinnev  279, 281, 285,  394, 449 

Wilcox  V.  Boath  19 

I'.  Singletary  178 

Wild  V.  Dean  487,  488 

Wilde  V.  Jenkins  514,  520 

Wilder  v.  Keeler  349,  448 

Wildes  V.  Fessenden  110,  422,  487 

Wildman,  Ex  parte  489 

Wiles  V.  Maddox  351,  358 

Wilkins  v.  Davis  469,  472,  475 

V.  Pearce  97,  98 

V.  Beed  565,  567 

Wilkinson,  Ex  parte  497 

V.  Candlish  100 

V.  Frazier  59,  76 

V.  Henderson  348,  448,  485 

V.  Jett  59 

V.  Stafford  456 

V.  Torkington  237 

Wilks  V.  Back  149,  214 

Willard  v.  Stone  21 

AVillett  V.  Blanford  230,  444,  524 

V.  Brown  372 

V.Chambers  39,150,526 

Williams,  Ex  parte    149,  160,  167,  333, 

344,  345,  346,  351,  388,  393, 

435,440,461,  471,480,481, 

484,  486,  493,496,  497,  503 

V.  Attenborough  36 

V.  Bank  of  Michigan      541 

V.  Barrett  210 

V.  Beaumont  338 

V.  Bingley  305 

V.  Bowers  411 

V.  Brimliale  12 

V.  Butler  7 

V.  Gage  345 

V.Gilchrist  112,202 

V.  Gridley  190 

V.  Henshaw     271,  273,  275, 

279,  280,  281,  284,  523 

V.  Hodgson      107,  108,  109, 

180,  196,  510 

IK  Jones  14 

V.  Keats  132,  411,  414 

V.  Moor  18 

1-.  Bawlinson  432 

V.  Savage  Manuf.  Co.     516 

V.  Thomas         100,  200,  552 

V.  Thorp  497 

V.  Walbridge  203,  216 

V.  Walsby  180 

V.  Williams  306 

V.  Wilson         2G2,  264,  315, 

316,  444 

Williamson  v.  Fox  412 

V.  Johnson     126, 128,  213, 

255 

V.  Haycock  297 

V.  McGinnis  157 

V.  Naylor  454 

V.Wilson       316,318,320, 

438,  459,  461,  469 


liv 


INDEX   TO    CASES    CITED. 


Willings  I'.  Blight  559,  5G1 

!'.  Coiisequa  65,  109,  173 

Willis  V.  Dyson  97,  98,  397,  411 

V.  Freeman  364,  474,  481 

V.  Green  40 

V.  Hill  104,  189,  218 

V.  Jernegan  513,  519, 520 

Willison  V.  Patteson  27,  28 

Willock,  Ex  parte  502 

Wills  V.  Sinimonds  44 

Wilsford  V.  Wood  14,  331 

Wilson,  Et  parte  407,  484 

V.  Bowden  1G8 

V.  Campbell  12 

V.  Conine  338,  481 

V.  Curzon  545 

V.  Cutting  273 

V.  Dickson  552,  572 

V.  Forder  194 

V.  Gibbs  480 

V.  Greenwood     160,  313,  314, 

316,  317,  319,  388,  393, 

446,459,461.469,  471, 

472,503,  511 

V.  Hirst  433 

V.  Hunter  181,  366 

V.  Lasson  457,  510 

V.  Lewis  112,  207 

V.  Mower  174 

V.  Reed  323,  324,  339,  555,  556 

V.  Robertson  493 

V.  Soper        167,  345,  346,  351 

V.  Stihvell  300 

V.  Tovbet  190 

V.  Turn  man  150 

V.  Wallace   128,  291,  292,  329, 

501 

V.  Whitehead  55,  118 

V.  Williams  112,  203,  205 

Wiltram  v.  Van  Worraer  201 

Windliam  Co.  Bank  v.  Kendall        201 

Windsor  Castle,  The  561 

Winget  V.  Heatlicote  317 

Winsliip  V.  Bank  of  U.  S.     33,  56,  62, 

63,  105,  163,  170,  172,  175,  200,  201, 

233 
Winsor  v.  Cutts  114 

Winsten  v.  Ewing  343 

Winter  v.  Innes  111,  485 

V.  White  278,  283 

Wintle  V.  Crowther    64,  111,  112, 175, 
201,  207 
Wise  V.  Copley  112,  210 

Wish  V.  Small  48,  58 

Wisham  v.  Kay  349 

Withers  v.  Withers  522 

Withington  v.  Herring  76 

Witter  V.  McNiel  181 

V.  Richards    310,  343,  345,  501 
Woddrop  V.  Wards  345,  503 

Wolbert  v.  Harris  314,  315,  320 

Wolf  V.  Mills  152 

Wood,  Ex  parte   26, 162,  491,  496,  497 


Wood  r.  Beath  44 

V.  Bod  well  486,  5G7 

V.  Braddick  188,  189,  191,  192, 

193,  194,  387,  395 

V.  Connell  175 

V.  Copper  Miner's  Co.  248 

V.  Creditors  of  Weir  569 

V.  Dodgson  477,  479,  502 

V.  l^ummer  442 

V.  O'Kelley  292,  334 

r.  Pennell  66,119 

V.  Rutland  Ins.  Co.       330,  336 

V.  Scoles  231,  521 

V.  Shepherd  164,  176,  178 

V.  Vallette  42,  56,  81,  89 

Woodbridge  v.  Swann  477 

V.  Wilkins  363 

Woodford  v.  Downer  387 

Wo(jdgate,  Ex  jiarte  497 

Woodman  r.  Cowing  2 

Woods  V.  Wilder  27 

Woodward,  Ex  parte  451 

In  re  17 

V.  Cowing  2,  43 

V.  Gyles  251 

V.  Newhall  23 

V.  Schatzell  307 

V.  Winship  176 

Woodworth  v.  Downer  192 

V.  Fuller  325 

Wooley  V.  Batte  286 

Woolley  V.  Kelly  350,  421 

Worcester  Corn  Exc.  Co.,  In  re       43, 

96,  100,  543 

Wormley  v.  Worraley  515 

Worrall  v.  Mume  181,  183 

Worsley  v.  De  Mattos  496 

Worts  V.  Pern  302 

Wray  v.  Hutchinson  303,  458,  464 

V.  Milestone  278,  281,  283 

Wren  v.  Kirton  36 

Wrexham  v.  Huddleston  159,  464 

Wright  V.  Cumpsty  272, 278 

V.  Davidson  72 

V.  Hunter     272,  273,  285,  286, 

295,  548,  551,  554,  556, 

565,  567 

V.  Michie  271,  275 

V.  Pratt  494 

V.  Pulham  411,  413,  419 

V.  Russell  331,  332 

V.  Williamson  329,  334 

V.  Wrislit  24 

Wrightson  v.  Pullan  391,  411,  413,  419 

Wyatt  V.  Marquis  of  Hertford        566, 

567 
V.  Hudson  186,  187 


Yale  V.  Fames 
V.  Yale 


193,  392,  447 
210 


INDEX    TO   CASES   CITED. 


Iv 


YrWqi),  Ex  parte  493,496 

Yandes  v.  Lefavour  173,  180 

Yarnell  v.  Anderson  111,424,425,  485 
Yeager  i;.  Wallace  95,  210,  321 

Yeatman  v.  Worde  373 

Yonge,  Ex  parte        228,  477,  492,  500 
York  V.  Clemens  7,  364 

V.  Eaton  441 

York  &  North  Midland  R.  R.  Co. 

V.  Hudson  394 

Young,  Ex  parte        344,473,477,479, 

548,  550,  551,  552,  554, 

563,  564,  570 

V.  Axtell        65,  119,  120,  132, 

136,  138,  142 

V.  Brander  552,  553,  569 

V.  Brick  278 


Young  V.  Goodson 
V.  Hunter 


174 

64,  104,  114,  118, 

433 

V.  Keighly   163,  165,  442,  481, 

545,  547 

V.  Smith  194 


V.  Tibbetts 
V.  Timming8 


Zenobia,  The 
Zent  V.  Heart 
Zettee  v.  Soper 
Zoller  V.  Janvrin 
Zuel  V.  Bo  wen 


413 
410 


572 

188,  190 

99 

411,  413 

201 


THE    LAW    OF    PARTNERSHIP. 


CHAPTER   I. 

OF   THE   ORIGIN   AND   PURPOSE   OP  PARTNERSHIP. 

The  Law  of  Partnership,  as  it  exists  in  England  and  in  this 
country,  constitutes  a  system  by  itself.  Its  origin  cannot  be 
found,  excepting  in  the  Law-Merchant,  which  is  itself  only  the 
custom  of  merchants,  adopted,  systematized,  and  enforced  by 
the  courts,  (a) 

Commercial  partnerships  were  known  to  the  Romans ;  and 
their  law  recognized  and  regulated  them.  So  far  as  commerce 
was  then  conducted  in  a  similar  manner  and  upon  similar 
principles  as  at  present,  the  rules  of  the  Roman  law  are  appli- 
cable now  ;  for  that  law,  quite  as  much  as  our  own,  applied  to 
the  transactions  of  merchants  a  law  founded  upon  their  usages  ; 
and  to  this  extent  we  may  regard  the  Roman  civil  law  of  part- 
nership as  similar  to  our  own.  As  a  very  large  part  of  com- 
mercial business  consists  in  forming  and  executing  contracts 
which  must  be  governed  by  the  law  of  contracts  generally, 

(«)  Thus  the  peculiar  doctrines  of  dock,  3  P.  Wms.   158  ;    Vanheath  v. 

the    law   of    partnership,  which   most  Turner,  Winch.  24 ;  Molloy,  b.  2,  ch. 

distinguish  it  from  the   common  law,  10,    §    19.     The   case    of   Pinckney   v. 

as  that  there  is  no  survivorship  of  prop-  Hall  is  thus  reported  in  1   Salk.  126  : 

erty  or  rights  between  partners  (except  "  By  the  custom  of  England,  where  there 

for  the  settlement  of  the  business),  that  are  two  joint  traders,  and  one  accepts 

the  act  of  one  partner,  in  reference  to  a  bill  drawn  on  both  for  liim  and  part- 

a  partnership  matter,  is  the  act  of  all,  ner,  it  binds  both   if   it  concerns  the 

are  declared  by  the  earliest  authorities  trade  ;    otherwise,   if  it   concerns  the 

to  be  "per  legem  mercatoriam,"  and  "pro  acceptor  only  in  a  distinct  interest  and 

beneficio  commercii."    Jenkins,  160;  Co.  respect."    y.  Layfield,  1  Salk.  292. 

Litt.  182  a ;  2  Brown,  99 ;  Jeffreys  v.  See  also  2  Rol.  Abr.  702,  370 ;  Anon., 

Small,  1  Vernon,  217  ;  Leake  v.  Crad-  Styles,  370  A. 

1 


2  THE  LAW   OF   PARTNERSHIP.  [CH.  I. 

*  2  and  this  is  a  part  of  the  common  law,  *  many  of  the 
principles  applicable  to  partnership  are  the  same  as  those 
which  regulate  the  common  transactions  of  men ;  and  so  far 
the  law  of  partnership  may  be  said  to  be  founded  upon  the 
common  law.  We  doubt,  however,  whether  any  thing  is  gained 
by  references  of  this  kind.  The  supposed  analogies  between 
the  law  of  partnership  and  other  branches  of  the  law,  if  they 
sometimes  afford  ample  illustration,  lead  to  confusion  and 
error  when  we  attempt  to  carry  them  far ;  or,  by  their  help, 
deduce  from  other  departments  of  the  law  a  rule  which  may 
control  and  determine  a  question  of  partnership. 

Thus  partnership  has  been  compared  to  tenancy  in  common, 
and  also  to  joint  tenancy  ;  and  has  been  said  to  be  one  or  other 
of  these,  modified  in  certain  ways.  This  was  the  view  taken 
in  all  the  early  books.  (J)  But  this  is  no  more  true  than  that 
tenancy  in  common  or  joint  tenancy  is  a  modified  partnership. 
The  three  things  are  essentially  distinct.  Tbey  all  have  the 
element  of  joint  ownership  of  property ;  but  in  all  other  re- 
spects are  different  and  independent ;  and  the  law  of  each  must 
be  sought  for  in  itself.  Only  when  a  partnership  has  termi- 
nated, may  the  former  partners  be  considered  as  tenants  in 
common  of  the  property  not  yet  divided  among  them  ;  but 
even  then  certain  peculiar  rights  and  principles  attach  to  the 
property,  or  to  the  interests  of  the  parties,  growing  out  of  the 
former  partnership.  And  as  to  joint  tenancy,  not  only  may  all  of 
the  four  unities,  —  title,  interest,  time,  and  possession,  —  every 
one  of  which  is  essential  to  joint  tenancy,  be  absent  from  part- 
nership, but,  beside  this  technical  difference,  the  substantial 
characteristic  of  joint  tenancy,  which  is  the  right  of  survivor- 
ship, is  wholly  wanting  in  fact  in  partnership,  for  it  exists  there 
only  in  form  and  as  a  mere  trust  for  the  purpose  of  settle- 
ment, (c)     And  it  may  be  added  that  partnership  differs  from 

{b)  See  ante,  p.  1,  note  (a).    See  also  ticular  stock  in  being  at  the  time  of  en- 

38  Edw.  III.  7 ;  tit.  "  Accompt ;  "  Bac.  tering  into  the  partnership,  but  to  con- 

Abr.,   tit.  "Joint   Tenants,"  &c.  (C);  tinue  so  throughout,  whatever  changes 

Com.  Dig.  tit.  "Merchant"   (D).    In  might  be  made  in  tlie  course  of  the 

West  V.  Skip,  1  Ves.  Sen.  239,  Lord  trade."    Of  modern  law-writers,  Story 

Chancellor  Hardwicke  uses  the  follow-  is  perhaps  the  only  one  who  denies  the 

ing  language  :    "  The   partners    them-  accuracy  of  this  view.    Story  on  Part, 

selves  are  clearly  joint  tenants  in   the  §  90,  et  seq. 
stock  and  all  effects ;  not  only  that  par-         (c)  Co.  Litt.  186  a  ;  2  Bl.  Com.  183 ; 


CH.  I.]        OF   THE   ORIGIN   AND   PURPOSE   OP   PARTNERSHIP.  3 

both  *  of  these   species  of  joint  ownership,  in   this,  —     *  3 
that  neither  joint  tenant  nor  tenant  in  common  can  alien- 
ate more  than  his  own  interest  in  the  joint  property,  whereas 
each  partner  has  usually  a  power  of  disposition  over  all  the 
partnership  effects.    Our  conclusi?)n  is,  that  the  law  of  partner- 
ship is  an  entirely  distinct  and  independent  branch  of  the  law  ; 
and  we  have  made  these  remarks  because  it  has  not  always 
been  so  considered.     When  these  species  of  joint  interest  and 
ownership  came  under  the  cognizance  of  the  courts  of  England 
it  was  new  to  them,  and  new  to  the  law  of  England ;  and  it 
was  perhaps  unavoidable  that  they  who  administered  the  law 
should  have   sought  to  bring  this  new  topic  within  the  rules 
and  principles  of  those  kinds  of  joint  ownership  which  were 
well  known.     For  this  not  only  seemed  to  preserve  the  unity 
and  symmetry  of  the  law,  but  relieved  the  courts  just  so  far 
from  the  labor  and  the  hazard  of  framing  new  rules  for  these 
new  relations.     Perhaps  this  was  not  only  inevitable,  but  wise, 
at  the  beginning.     We  think,  however,  that  it  has  been  carried 
too  far  and  continued  too  long  in  England.     And  even  in  this 
country,  at  the  present  time,  perhaps   something  would   be 
gained,  if,  when  new  questions  in  partnership  arise,  the  courts 
looked  for  assistance,  in  giving  an  answer,  to  the  existing  sys- 
tem of  the  law  of  partnership ;  which,  if  it  does  not  provide  in 
advance  for  all  possible  questions,  contains  within  itself  prin- 
ciples that,  generally  at  least,  will  suggest  the  proper  answers. 
And  if  they  fail,  and  an  absolutely  new  question  demands  an 
absolutely  new  answer,  it  will  be  safer  to  look  to  the  reason 
and  justice  of  the  case,  and  the  usage  of  merchants  if  there  be 
one,  than  to  remote  and  disconnected  branches  of  law,  resem- 
bling partnership  in  some  respects,  but  dififering  from  it  in  still 
more. 

The  law  of  partnership  is  at  once  more  important  and  more 
difficult  in  this  country  than  in  any  other.     The  general  pur- 

Com  Dig.  "Estate,"  K.  6,  K.  8 ;  Fox  v.  specie,  while  a  partner  can  claim  only 

Hanbury,    Cowp.   445 ;    Woodman    v.  his  proportion  of  the  residue  found  to 

Cowing,  11  Me.  1.     Partnership  is  also  belong  to  him  upon  a  balance  of  ac- 

unlike    tenancy   in    common    in    that  count.      West   v.    Skip,    1    Ves.    392 ; 

each  co-tenant  is  entitled,  as   against  Taylor  v.  Fields,  4  id.  396  ;  Button  v. 

his  co-tenants,  to  a  specific  share  as  Morrison,  17  id.  193. 
interest  in   the   common  property   in 


4  THE   LAW   OP   PARTNERSHIP.  [CH.  I. 

pose  of  mercantile  partnership  is  twofold :  either  to  aggregate 
capital,  or  combine  the  capital  of  one  with  the  labor  and  skill 
of  another ;  or  to  apply  the  principle  of  association  and  divi- 
sion of  labor  and  all  the  advantage  of  common  interest  and 

common  action  to  mercantile  transactions. 
*  4  *  As  to  the  first  of  these  objects,  it  is  obvious  that  a 

country  in  which  commercial  enterprise  is  perfectly  free, 
and  well  rewarded,  and  finds  an  almost  boundless  field  for 
action,  while  at  the  same  time  there  is  a  want  of  capital  in  com- 
parison with  that  of  older  and  wealthier  nations,  is  precisely 
the  place  in  which  it  would  be  most  common  to  supply  this  want 
of  capital  by  bringing  small  portions  of  it  into  a  common  stock. 
And,  as  to  the  second,  there  is  among  us  a  strong  and  uni- 
versal tendency  to  association,  to  a  joinder  of  interest  and  a 
joinder  of  action,  which  pervades  us  as  a  people.  Every  thing 
that  is  done,  from  the  bond  which  makes  our  whole  country  a 
state  composed  of  states,  to  the  habit  which  fills  all  our  cities 
and  villages  with  partnerships,  illustrates  this  tendency.  If 
we  look  upon  the  signs  over  the  doors  of  shops  or  stores,  from 
the  main  streets  of  business  of  our  wealthiest  marts  to  the 
smallest  settlements  of  the  interior,  we  shall  find  more  names 
than  one  upon  a  majority  of  them.  And  it  is  perhaps  a  curious 
recognition  of  the  universality  of  the  principle  of  association, 
and  of  the  advantage  which  it  is  believed  to  give,  that  it  is  not 
uncommon  for  traders  who  have  no  partner,  to  put  to  their 
names  the  addition  of  "  and  Co.,"  to  give  themselves  the 
appearance  and  respectability  of  partnership ;  a  practice  which 
it  has  been  thought  necessary  to  prohibit  by  statute  in  New 
York,  (d) 

Thus  we  explain  the  fact  that  partnership  is  far  more  com- 
mon here  than  it  is  anywhere  else ;  and  of  course  the  law  of 
partnership  is  more  important,  if  only  because  it  is  more  often 
appealed  to.  But  this  law  is,  as  we  have  said,  not  only  more 
important  in  this  country,  but  more  difficult.  All  business 
action  is  with  us  entirely  free  and  untrammelled ;  and,  as  a 
consequence  of  this,  business  enterprise  —  which  encounters  all 
risks,  and  explores  all  paths  which  seem  to  open,  and  perpetu- 

(c?)  See  pos^,  p.*  255. 


CH.  I.]        OF   THE    ORIGIN    AND   PURPOSE   OF   PARTNERSHIP.  5 

ally  seeks  for  profitable  novelties  —  is  far  greater  here  than  else- 
where. And  beside  this,  as  any  man  may  be,  or  try  to  be,  a 
merchant  of  any  kind  in  this  country,  many  who  are  inexperi- 
enced, and  ignorant,  and  unqualified,  engage  in  business;  and 
as  they  do  not  go  in  the  established  ways,  because  they  do  not 
know  them,  they  are  often  getting  into  difficulties  not  known 
elsewhere,  and  exhibiting  new  complications,  which  raise  new 
questions. 

Nor  is  this  all.  If  partnership  offers  important  advantages, 
it  also  exposes  those  who  enter  into  it  to  peculiar  liabilities. 
The  safety  of  society  requires  this.  If  every  partner  were 
not  held  *  absolutely  for  the  whole  amount  of  all  the  debts  *  5 
of  the  firm,  by  which  soever  of  the  partners  they  were  con- 
tracted, a  wide  door  would  be  opened  for  fraud  and  public  loss. 
It  is,  however,  a  very  common  thing  for  persons  to  try,  in  a  vast 
variety  of  ways,  to  gain  all  the  advantages  and  profits  of  part- 
nership, without  encountering  these  liabilities  ;  or  to  escape 
from  these  liabilities  when  loss  has  accrued.  This  the  law 
forbids,  and,  as  far  as  it  can,  prevents ;  and  it  must  therefore 
be  always  ready  to  meet  the  contrivances,  evasions,  and  dis- 
guises resorted  to  by  ingenious  men.  A  very  large  proportion 
of  the  many  questions  under  the  law  of  partnership,  which  are 
constantly  coming  before  our  courts,  is  of  this  kind. 

There  seems  to  be  a  necessity,  therefore,  that  the  law  of 
partnership  should  have  a  greater  development  and  precision  in 
this  country  than  elsewhere  ;  and  this  seems  also  to  be  the  fact. 
The  jurisprudence  of  England  appears  to  have  borrowed  some- 
thing from  us.  And  lately  parliament  has  endeavored  to  intro- 
duce to  some  extent  our  system  of  Limited  Partnership,  bor- 
rowed by  us  from  Continental  Europe,  and  improved.  By  this 
we  endeavor  to  facilitate  the  aggregation  of  capital,  and  its  em- 
ployment in  business  transactions,  by  affording  many  of  the  ad- 
vantages of  partnership,  with  less  than  the  general  liability  ;  and 
to  guard  this  privilege  by  well-devised  provisions  for  the  safety 
of  the  community.  But  England,  or  at  least  its  government, 
does  not  seem  able  as  yet  fully  to  adopt  this  system,  although 
the  experience  of  this  country  proves  its  utility  and  safety. 


THE  LAW   OP  PARTNERSHIP.  [CH.  II. 


CHAPTER   11. 

WHAT   PARTNERSHIP   IS,    AND    HOW   IT   IS    MADE. 
SECTION    I. 

WHAT     PARTNERSHIP     IS. 

We  define  partnership  as  the  combination  by  two  or  more 
persons  of  capital,  or  labor,  or  skill,  for  the  purpose  of  business 
for  their  common  benefit. 

Considering  this  as  the  definition  of  a  partnership,  the  topics 
it  suggests  are  :  First,  the  way  in  which  it  may  be  made.  Sec- 
ond, who  may  be  partners.  Third,  what  the  partners  may 
bring  into  the  common  stock.  Fourth,  for  what  purposes  a 
partnership  may  be  formed. 

SECTION    II. 

HOW   PARTNERSHIP    MAY    BE    MADE. 

There  must  be  a  lawful  and  valid  agreement  to  enter  into 
partnership ;  and  this  contract  must  be  executed.  And  there- 
fore courts  do  not  declare  persons  to  be  partners  under  an 
agreement  of  partnership,  withouf  proof  that  some  joint  trans- 
actions have  been  undertaken  in  accordance  with  it,  or  some 
joint  benefit  received,  (ft)     But  a  partnership  may  be  made  by 

(a)  Metcalf  v.  Eoyal  Exch.  Ass.  filment  of  which  no  partnership  will 
Co.,  Barnard.  343 ;  Heyhoe  v.  Barge,  exist,  unless  it  be  waived  by  the  con- 
9  C.  B.  431 ;  West  Point  Foundry  sent  of  both  parties.  McGraw  v.  Pull- 
Association  V.  Brown,  3  Edw!  Ch.  284  ;  ing,  1  Freem.  Ch.  357 ;  Bird  v.  Hamil- 
Atkins  V.  Hunt,  14  N.  H.  205;  God-  ton.  Walker  Ch.  361.  Where  E. 
dard  v.  Pratt,  16  Pick.  412.  If  two  or  advanced  money  to  W.,  to  enable  hina 
more  persons,  who  agree  to  enter  into  to  perfect  and  realize  a  certain  inven- 
partnership,  stipulate  each  to  furnish  tion,  and  W.,  beside  expressly  promis- 
a  certain  amount  of  capital,  compli-  ing  to  repay  the  advance,  agreed  that, 
ance  with  this  stipulation  may  be  a  if  the  invention  should  be  one  of  pub- 
condition  precedent,  without  the  ful-  lie   or  private    use,   W.   should   have 


CH.  II.]  WHAT   PARTNERSHIP   IS,    AND    HOW   MADE. 


an  agent ;  and,  if  by  one  not  then  an  agent,  a  subsequent  ratifi- 
cation makes  the  partnership  effectual,  (aa)      Not  un- 
frequently  in  England,  and  more  rarely  here,  *the  con-      *7 
tract  is  sealed  ;    but  this  can  seldom  be  useful,  and  is 
never  necessary  to  its  validity.      Usually  the  contract  is  in 
writing ;  and  should  always  be  so,  as  a  matter  of  reasonable 
precaution.     But  writing  is  not  essential  to  render  the  general 
agreement,  or  any  of  its  details,  valid.  (6)     And  though  ar- 
ticles exist,  the  partnership  may  be  proved  by  parol,  if  the  ques-  • 
tion  is  between  those  who  form  the  firm,  and  a  stranger.  (65) 
Whether  a  partnership  exists  is  a  question  of  fact ;  what  a 
partnership  is,  is  a  question  of  law.  (c)     Sometimes,  although 
rarely,  the  question  occurs,  whether  the  provisions  of  a  partner- 
ship come  within  the  requirement  of  the  Statute  of  Frauds,  and 
must  therefore  according  to  some  authorities  be  in  writing ; 
but  this  may  be  doubted,  (c?) 


one-tliird  of  the  profits  thereof;  held, 
that  E.  might  sue  W.  for  the  sum  so 
advanced.  Elgie  v.  Webster,  5  M.  & 
\y.  518.  So  in  Burnell  v.  Hunt,  5  Jur. 
650,  where  B.  was  to  receive  from  A., 
for  superintending  the  latter's  manu- 
factory, half  the  profits  as  soon  as  any 
accrued,  and,  till  that  time,  21.  per 
week.  No  profits  liaving  ever  arisen, 
the  court  held  that  there  could  be  no 
partnership  before  that  time.  If  a 
man  make  an  agreement  for  a  partner- 
ship, but  expressly  reserve  for  himself 
for  twelve  months  the  option  of  deter- 
mining finally  whether  or  not  he  will 
be  a  partner,  he  is  not  one  until  he 
exercises  that  option  and  declares  him- 
self such.  Gabriel  v.  Evill,  9  M.  & 
W.  297.  See  Chapman  v.  Wilson,  1 
Rob.  (Va.)  267;  President,  Directors, 
&  Co.  of  the  Adams  Bank  v.  Rice,  2 
Allen,  480  ;  Andrews  i".  Garstin,  10  C. 
B.  N.  s.  (100  Eng.  Com.  L.  R.)  444; 
Lascaridi  v.  Gurney,  11  C.  B.  n.  s. 
(103  Eng.  Com.  L.  R.)  890;  Moody  v. 
Rathburn,  7  iVlinn.  89 ;  Cook  v.  Car- 
penter, 34  Vt.  121.  Where  one  per- 
mits another  to  buy  stock  on  their 
joint  account,  in  anticipation  of  form- 
ing a  partnersiiip,  and  immediately 
afterwards  repudiates  the  agreement 
to  become  a  partner,  he  is  not  entitled 


to  any  of  the  property  bought,  nor  are 
his  individual  creditors.  Rice  v.  Shu- 
man,  43  Penn.  87.  See,  as  to  what 
connection  in  business  constitutes  a 
partnership,  and  the  admission  of  new 
members,  Meaher  v.  Cox,  37  Ala.  201. 

{cm)  Williams  v.  Butler,  85  111.  544. 

(6)  The  true  meaning  and  applica- 
tion of  this  rule  is  clearly  stated  by 
Tindal,  C.  J.,  in  Fox  v.  Clifton,  9  Bing. 
117.  See  also  Smith  v.  Tarlton,  2 
Barb.  Ch.  336. 

(bb)  Anderson  v.  Clay,  1  Stark.  405 ; 
Grifiin  v.  Doe,  12  Ala.  783  ;  Widdifield 
V.  Widdifield,  2  Binn.  245;  Bonnafie 
V.  Fenner,  6  Smedes  &  M.  212 ;  Allen  v. 
Rostain,  11  S.  &  R.  362.  Otherwise, 
perhaps,  where  the  question  of  partner- 
ship or  no  partnership  arises  between 
the  partners  themselves.  Cutler  v. 
Thomas,  25  Vt.  73.  See  BuflEum  v. 
Buffum,  49  Me.  108,  and  Villa  v.  Jonte, 
17  La.  Ann.  9. 

(,■)  Gabriel  v.  Evill,  Car.  &  M.  358  ; 
Drake  v.  Elwyn,  1  Caines,  184  ;  Beech- 
am  V.  Dodd,  3  Marring.  (Del.)  485; 
Doggett  V.  Jordan,  2  Fla.  541 ;  Ever- 
ett V.  Chapman,  6  Conn.  347  ;  Terrell 
V.  Richards,  1  Nott  &  McC.  20.  See 
Dwinell  v.  Stone,  30  Me.  384. 

((/)  Vice  V.  Anson,  7  B.  &  C.  409; 
Smith   V.  Burnham,  3  Sumn.  435.     In 


THE   LAW    OP   PARTNERSHIP. 


[CH.  II. 


*  It  becomes  more  important,  and  indeed  necessary, 
that  the  contract  should  be  reduced  to  writing,  in  propor- 


this  last  case,  the  plaintiff  brought  his 
bill  in  equity,  alleging  an  agreement 
of  copartnership  between  himself  and 
the  defendant  for  general  business  pur- 
poses, and,  among  others,  for  the  pur- 
chase and  sale  of  lands,  and  praying 
for  a  general  account  of  the  affairs  of 
the  partnership.  The  existence  of  the 
partnership  was  attempted  to  be  proved 
only  by  parol.  Held,  per  Story,  J., 
that  a  verbal  agreement  to  become 
interested  as  partners  in  the  purchase 
and  sale  of  lands  was  a  parol  contract 
respecting  an  interest  in  lands  within 
the  Statute  of  Frauds,  and  therefore 
void.  So  in  Henderson  v.  Hudson,  1 
Munf.  510.  [And  this  appears  to  be  the 
law  of  Pennsylvania.  Lefevre's  Ap- 
peal, 69  Penn.  St.  123 ;  Ebbart's  Appeal, 
70  Penn.  St.  79.]  But  in  Dale  v.  Hamil- 
ton, 5  Hare,  309,  a  different  view  would 
seem  to  have  prevailed.  In  that  case, 
the  bill  of  the  plaintiff,  a  land  agent 
and  surveyor,  alleged  a  parol  agree- 
ment of  copartnership  with  the  defend- 
ants, who  were  capitalists,  for  the  sole 
purpose  of  speculation  in  lands  ;  and 
that,  by  the  terms  of  their  agreement, 
each  of  the  parties  was  to  be  interested 
one-third  in  profits  and  losses.  Real 
estate  had  confessedly  been  acquired 
under  some  arrangement  of  this  sort, 
which  had  since  greatly  risen  in  value. 
The  prayer  of  the  plaintiff  was,  that 
the  affairs  of  the  joint  concern  might 
be  wound  up,  the  lands  sold  for  the 
most  they  would  fetch,  and  the  pro- 
ceeds distributed  by  the  court  in  ac- 
cordance with  the  terms  of  the  said 
contract.  The  Vice- Chancellor  (after 
a  statement  of  the  question  raised) 
said  :  "  When  the  proposition  was  first 
advanced  by  the  plaintiff,  I  confess,  it 
appeared  to  me,  that  to  admit  the  ar- 
gument to  the  extent  contended  for 
would  be  virtually  to  repeal  the  Stat- 
ute of  Frauds,  or  nearly  so."  But, 
upon  examination  of  the  authorities, 
he  felt  himself  bound  to  hold  that  the 
plaintiff  might  first  prove  by  parol  the 
existence  of  the  partnership,  as  an   in- 


dependent fact,  and,  tliat  being  estab- 
lished, might  then  show  by  the  same 
evidence  his  interest  in  the  lands,  con- 
sidered as  the  substratum  or  stock  of 
the  partnersiiip.  An  issue  was  accord- 
ingly directed  to  determine  whether 
such  an  agreement  of  copartnership  as 
that  alleged  in  the  bill  had  been  made. 
[See  Caddeck  v.  Simpson,  2  De  G.  &  J. 
52.J  In  Fall  River  Wlialing  Co.  v.  Bor- 
den, 10  Cush.  458,  where  both  the 
above  cases  are  examined,  the  exist- 
ence of  the  copartnership  was  evi- 
denced by  the  books  and  other  written 
transactions  of  the  parties,  and  was 
therefore  held  to  be  proved  by  a  memo- 
randum in  writing  in  compliance  with 
the  statute.  See  Haupf  v.  Howard,  3 
Jones  Eq.  440,  445.  In  Smith  v.  Tarl- 
ton,  2  Barb.  Ch.  336,  an  agreement  of 
copartnership  to  last  three  years  was 
entered  into  by  parol.  Held,  that  this 
was  not  an  agreement  not  to  be  per- 
formed within  one  year  within  the 
Statute  of  Frauds.  Tiie  object  of  the 
partnership  was  to  carry  on  a  certain 
kind  of  manufiicture,  and  with  that 
end  to  purchase  a  water  privilege  and 
site,  and  to  erect  suitable  buildings. 
Held,  that  the  contract  of  partnership 
was  valid,  though  made  by  parol  with 
the  design  of  purchasing  real  estate 
for  the  purposes  of  the  firm,  and  that 
such  real  estate  was  partnersiiip  prop- 
erty subject  to  partnership  equities. 
It  is  held  by  Ware,  J.,  in  the  case  of 
In  re  Warren,  Daveis,  320,  that  a  part- 
nership for  buying  and  selling  lands 
may  be  proved  by  the  same  evidence 
as  a  partnership  for  ordinary  mercan- 
tile business,  so  far  as  third  persons 
are  involved.  The  result  of  the  cases, 
as  well  as  of  true  reasoning  upon  the 
question,  would  seem  to  be  tliat  of  the 
Vice-Chancellor  in  Dale  v.  Hamilton, 
supra.  See  Julio  v.  Ingalls,  1  Allen, 
41;  Storer  v.  Flack,  41  Barb.  162; 
Jones  V.  McMichael,  12  Rich  Law 
(S.  C),  176.  [Chester  v.  Dickerson, 
54  N.  Y.  1 ;  Sherwood  v.  St.  Paul  R.  R. 
Co.,  21  Minn.  127 ;   Scruggs  v.  Russell, 


CH.  II.]  WHAT   PARTNERSHIP   IS,    AND    HOW   MADE.  9 

tion  as  it  is  composed  of  many  articles,  and  provides  in  detail 
for  the  transaction  of  the  business  of  the  firm,  or  for  the  riglits 
and  duties  of  the  partners.  Of  the  effect  and  construction  of 
written  articles  we  shall  speak  particularly  hereafter,  (e) 

Partnership  may  be  formed  not  only  by  express  agreement, 
but  may  grow  out  of  transactions  or  relations  in  which  the 
word  "  partnership  "  is  not  uttered.  If  there  is  such  a  joinder 
of  interests  and  action  as  the  law  considers  as  the 
equivalent  of  partnership,  or  *  rather,  such  as  it  re-  *9 
gards  as  constituting  partnership,  it  will  give  to  the 
persons  engaged  in  it  all  the  rights,  and  lay  upon  them  all  the 
responsibilities,  and  give  to  third  parties  dealing  with  them  all 
the  remedies,  which  belong  to  partnership.  Of  this  we  shall 
treat  somewhat  in  the  chapter  on  the  rights  and  obligations  of 
partners  between  themselves,  but  more  in  that  upon  their  obli- 
gations to  third  parties.  (/) 

That  the  contract  may  be  legal,  it  must  be  formed  for  a 
legal  purpose.  (^)  It  is  obvious  that  the  law  —  through  the 
courts  —  cannot  protect  or  enforce  what  the  law  forbids.  (A) 

McCahon  (Kan.),  39;  York  f.  Clemens,  Geo.  3,  ch.  99,  regulating  tlie  pawn- 
41  Iowa, 95]  brokers'  trade.  See  Armstrong  v. 
(e)  Ch.  7,  §  7.  Lewis,  2  C.  &  M.  274 ;  Armstrong, 
(/)  Ciis.  5,6.  V.  Armstrong,  2  Mylne  &  K,  45; 
(g)  Tlie  English  law  has  at  different  Garden  v.  Slowden,  12  Clark  &  F.  237. 
periods  laid  various  restrictions  upon  There  have  also  been  certain  restric- 
the  formation  of  partnerships,  some  tive  statutes,  which  have  been  passed 
designed  to  secure  monopolies  to  one  rather  to  protect  the  revenue  of  the 
or  several  large  incorporated  corapa-  realm  than  to  afford  security  to  the 
nies,  and  which  have  since  been  re-  public.  Hence  it  is  held,  in  several 
pealed  or  greatly  modified,  while  others  cases,  that,  though  a  partnership  be 
have  aimed  at  the  more  laudable  ob-  formed  in  disregard  of  the  provisions 
ject  of  protecting  the  public  from  the  of  these  statutes,  yet  such  infringe- 
combinations  and  the  delusive  schemes  ment  will  not  deprive  the  partnership 
of  speculators.  Thus  tlie  statute  of  of  the  right  to  recover  upon  their  con- 
6  Anne,  ch.  22,  §  9,  made  it  unlawful  tracts  with  third  persons.  Hodgson 
for  a  partnership  of  more  than  six  v.  Temple,  5  Taunt.  181 ;  Johnson  v. 
persons,  other  than  the  Bank  of  Eng-  Hudson,  11  East,  180;  Brown  v.  Dun- 
land,   to  carr}'   on   banking   business,  can,  5  B.  &  C.  93. 

By  6  Geo.  1,  ch.  18,  §  12,  partnerships  (h)  A  distinction  was  formerly  made 
were  forbidden  to  engage  in  the  busi-  between  contracts  of  partnersiiip  for 
ness  of  marine  insurance,  or  to  make  objects  which  are  mala  in  se,  and  those 
loans  upon  bottomrj\  In  like  manner,  for  objects  which  are  only  mula  prohib- 
by  28  Geo.  3,  ch.  53,  §  2,  partnersliips  ita.  It  was  held  that  contracts  arising 
of  more  than  five  persons  for  trading  out  of  the  transactions  of  a  partner- 
in  lands  are  made  illegal.  See  further  ship,  formed  for  purposes  which  were 
6  Geo.  1,  ch.  18,  §  18;  also,  39  &  40  inhibited   by   positive    statute    merely, 


10 


THE   LAW   OP   PARTNERSHIP. 


[CH.  II. 


*  10      Hence  a  partnership  *  would  be  deemed  void  because 
illegal,  not  only  if  it  contemplated  a  business  which  the 


might  be  recognized  and  enforced  by 
the  courts,  if  they  were  one  step  re- 
moved from  the  illegal  contract  itself. 
Ex  parte  Balmer,  13  Ves.  313.  Thus, 
in  Faikney  i\  Reynous,  4  Burr.  2069, 
the  action  was  debt  upon  a  bond. 
The  defendant  pleaded  an  act  of  par- 
liament "  to  prevent  the  infamous 
practice  of  stock-jobbing ;  "  that  the 
plaintiff  and  one  Richardson  were 
partners  ;  that  in  the  partnership  busi- 
ness the  plaintiff  had  paid  out  large 
sums,  contrary  to  the  provisions  of  the 
said  statute  ;  and  that  the  bond  in  suit 
was  given  to  secure  to  the  plaintiff 
the  repayment  from  Richardson  of  a 
moiety  of  such  illegal  expenditure. 
Demurrer  joined.  Ld.  Mansfield  : 
"  The  offence  relied  upon  as  furnish- 
ing a  ground  of  defence  ...  is  not 
malum  in  se ;  'tis  only  prohibited  by 
this  act  of  parliament."  The  other 
judges  observed,  "  that  paying  money 
to  compound  these  differences  was  not 
a  malum  in  se,  but  only  stood  prohibited 
by  this  act ;  which  neither  says  nor 
means  to  invalidate  all  securities  relat- 
ing to  it :  it  only  prohibits  paying  or 
receiving  money  for  compounding  dif- 
ferences." Per  Cur.,  unanimously, 
judgment  for  plaintiff.  Upon  the  au- 
thority of  this  case,  a  similar  decision 
was  made  in  Petrie  v.  Hannay,  3  T.  R. 
418;  and  in  Watts  v.  Brook,  3  Ves. 
612.  The  Lord  Chancellor,  upon  the 
same  ground,  sustained  a  bill  for  an 
account  between  partners  engaged, 
contrary  to  act  of  parliament,  in  the 
business  of  marine  insurance.  See 
also  Berkshire  v.  Evans,  4  Leigh,  223. 
But  these  cases  were  in  conflict  with 
previous  aj3judication,  and  cannot  be 
regarded  as  decided  upon  sound  prin- 
ciples. Sullivan  v.  Greaves,  Park  on 
Ins.  8.  In  Bensley  v.  Bignold,  5  B.  & 
Aid.  335,  Best,  J.,  says  :  "  The  distinc- 
tion between  jnala  prohihita  and  7nala 
in  se  has  been  long  since  exploded.  It 
was  not  founded  upon  any  sound  prin- 
ciple ;  for  it  is  equallj^  unfit  that  a  man 
should  be  allowed  to  take  advantage 
of  what  the  law  says  he  ought  not  to 


do,  whether  the  thing  be  proliibited 
because  it  is  against  good  morals,  or 
wliether  it  be  prohibited  because  it  is 
against  the  interests  of  the  state." 
Mitchell  V.  Cockburne,  2  H.  Bl.  379 ; 
Aubert  v.  Maze,  2  Bos.  &  Pul.  371 ;. 
Ewing  I'.  Osbaldistone,  2  My.  &  Cr.  53. 
See  also  Cannan  v.  Bryce,  3  B.  &  Aid. 
179 ;  Steers  v.  Lashley,  6  T.  R.  61 ; 
Brown  v.  Turner,  7  id.  630;  Webb  v. 
Brooke,  3  Taunt.  6 ;  Simpson  v.  Bloss, 
1  Taunt.  246  ;  Ottley  r.  Browne,  1  Ball 
&  B.  360;  Ex  parte  Randleson,  1  Mont. 
&  M'A.  36,  and  cases  cited.  Compare 
with  these  cases  Sharp  v.  Taylor,  2 
PhiUips,  801.  Nor  will  the  courts  any 
more  sustain  an  action  brought  in 
revocation  and  disaffirmance  of  an  il- 
legal contract  of  partnership.  Booth 
V.  Hodgson,  6  T.  R.  405 ;  Ex  parte 
Bell,  1  M.  &  S.  751.  But  though 
equity  will  not  sustain  a  bill  for  an 
account  of  illegal  partnership  transac- 
tions, yet,  if  a  part  of  the  business  of 
the  partnership  be  legal  and  a  part 
illegal,  an  account  of  that  which  is 
legal  may  be  directed  ;  as  where  the 
business  of  a  firm  was  that  of  brokers 
and  underwriters,  the  court  dismissed 
so  much  of  the  bill  as  sought  for  an 
account  of  the  profits  of  the  under- 
writing business,  but  decreed  an  ac- 
count of  the  other  business.  Knowles 
V.  Haughton,  11  Ves.  168.  Where 
the  business  of  pawnbrokers  was  car- 
ried on  by  two  persons  under  a  deed 
of  partnership,  but  under  the  apparent 
conduct  and  in  the  name  of  one,  and 
he  only  was  licensed,  semhle,  tiiat  al- 
though the  parties  might  have  made 
themselves  liable  to  the  penalties  im- 
posed by  39  &  40  Geo.  3,  ch.  99,  yet 
that,  it  being  no  part  of  the  contract  to 
carry  on  the  partnership  in  such  a 
manner  as  to  contravene  the  law,  the 
contract  was  not  void ;  but  that,  had 
a  collateral  agreement  to  carry  on  the 
partnership,  in  violation  of  the  act  of 
parliament,  been  proved,  no  rights  could 
have  been  acquired  under  it  by  eitiier 
party.  Armstrong  v.  Lewis,  2  Cromp. 
&  M.  274. 


CH.  II,]  WHAT   PARTNERSHIP   IS,   AND    HOW   MADE.  11 

law  expressly  prohibits,  as  smuggling,  gambling,  making  coun- 
terfeit bills  or  false  coin  to  be  used  at  home,  or  stealing,  but 
also  if  it  were  formed  for  a  purpose  distinctly  opposed  to  the 
principles  or  policy  of  the  law  ;  as,  to  procure  the  election  of 
persons  to  office,  or  the  success  of  a  political  party,  or  for  mar- 
riage brokerage,  (f)  Whether  our  courts  would  take  notice,  in 
this  way,  of  a  breach  of  a  foreign  law,  has  not  been,  so  far  as  we 
know,  determined  by  adjudication.  If,  for  example,  a 
*  partnership  were  formed  in  New  York  to  make  coun-  *  11 
terfeit  Bank  of  England  notes,  to  be  used  only  in  Eng- 
land, or  false  coin  to  be  exported  to  the  "West  Indies,  it  may  be 
a  question  whether  our  courts  would  sanction  such  a  partner- 
ship. We  are  of  opinion  they  should  not ;  and,  perhaps,  that 
they  would  not.  This  may  well  be  doubted,  however  ;  for  it 
seems  to  be  well  established,  both  in  England  and  in  this  coun- 
try, that  the  courts  will  take  notice  of  no  violation  of  law  at 
home,  excepting  of  the  law  of  the  country  to  which  the  tribunal 
belongs.  This  rule  grew,  in  many  of  its  applications  at  least, 
out  of  the  unwillingness  of  the  English  courts  to  interfere  with 
the  very  profitable  trade  which  Englishmen  have  sometimes 
carried  on  with  foreign  nations,  in  violation  of  the  municipal 
law  of  those  nations.  The  law  of  Shipping  and  the  law  of 
Insurance  have  many  instances  in  which  this  rule  is  in  force  ; 
and  it  seems  now  to  be  adopted  in  this  country,  (/) 

((')  M.,  an  agent  and  officer  of  the  Lever  r.   Fletcher,  cited  in  Park   on 

government,    contracted    with   B.   for  Ins.   507 ;    Boucher    v.    Lawson,    Cas. 

the   rebuilding   of    Fort   Washington,  temp.  Hardw.  183;    Holman   v.  John- 

and  stipulated  for  a  share  in  the  profits  son,    Cowp.    341 ;   Pellecat  v.  Angell, 

of  the  undertaking.     The  frauds  upon  2  Cromp.,  M.  &  R.  311 ;  Sharp  v.  Tay- 

the    government,   by   which    the    ex-  lor,  2  Phillips,  801  ;  Gardiner  v.  Smith, 

pected  profits,  in  part  at  least,  were  to  1    Johns.     Cas.    141  ;     Richardson   v. 

be    gained,    were    detected    and    pre-  Marine  Ins.  Co.,  G  Mass.  102;  Parker 

vented.     B.  filed   a   bill   in   equity   to  v.  Jones,  13  id.   173;    Andrews  v.  Es- 

compel  an  alleged  partner  in  the  trans-  sex   F.   &  M.   Ins.    Co.,   3   Mason,    6 ; 

action  to  account  for  his  share  of  the  Archibald   v.   Mercantile    Ins.    Co.,   3 

loss  sustained  in  the  execution  of  the  Pick.  70.    The  rule,  as  now  understood 

contract.      Baldwin,    J.  :     "  To    state  and  applied,  was  first  definitely  settled 

such  a  case   is   to   decide  it.     Public  by  Lord  Mansfield.     It  has  ever  since 

morals,  public  justice,   and   the    well-  been  invariably  followed  by  the  Eng- 

established   principles    of    all  judicial  lish  judges,   and,  as  we  have  seen,  is 

tribunals,  alike  forbid  the  interposition  firmly    established    in     this    country, 

of  courts  of  justice  to  lend  their  aid  to  But  its  morality  has  been  often   and 

purposes  Hke   this."      Bartle  v.   Cole-  gravely   questioned.      Of    the    Conti- 

man,  4  Pet.  184.  nental  writers,  Valin,   Emerigon,  and 

{j)  Planche  v.  Fletcher,  Doug.  251 ;  Pardessus,  admitting  the  existence  of 


12 


THE   LAW   OF   PARTNERSHIP. 


[CH.  II. 


The  contract  of  partnership  must  be  voluntary ;  that  is,  all 
the  partners  must  consent  and  agree  to  it.  This  is  so  essential, 
that  no  person  can  be  introduced  into  a  firm  without  the  con- 
sent of  all  who  are  members  of  it.  (^)  This  consent 
*  12  may  be  *  implied  ;  (/)  and  even  if  one  or  more  members 
were  reluctant,  and  made  objections,  and  never  expressly 
gave  their  assent,  still  it  might  be  inferred  from  their  acts,  if 


the  rule,  justify  it  only  on  the  ground 
of  tl'.e  concurrent  usage  of  nations, 
while  Pothier,  on  strictly  moral 
grounds,  pointedly  condemns  it.  2 
Valin,  128,  note;  1  Emerigon,  210- 
215;  Pardessus,  Cours  de  Droit  Com., 
torn.  Ill,  art.  792;  Pothier,  Traite' 
d'Assurance,  No.  58.  The  English 
law-writers  are  divided  on  the  ques- 
tion. Miller,  Park,  and  Arnould  openly 
or  tacitly  sustain  the  morality  of  the 
English  doctrine.  On  the  other  hand, 
Marshall  and  Chitty  adopt  and  sup- 
port the  views  of  Pothier.  Miller  on 
Ins.  23 ;  Park  on  Ins.  236  ;  Arnould 
on  Ins.  TOG,  707;  1  Marshall  on  Ins. 
50,  61  ;  1  Chitty  on  Com.  Law,  82,  84. 
Chancellor  Kent  speaks  of  the  rule  as 
one  "  which  does  no  credit  to  the  com- 
mercial jurisprudence  of  the  age  ;  " 
and  Mr.  Justice  Story  says,  "  An  en- 
lightened policy,  founded  upon  nation- 
al justice  as  well  as  national  interest, 
would  seem  to  favor  the  opinion  of 
Pothier  in  all  cases,  where  practical 
legislation  has  not  adopted  the  princi- 
ple as  a  retaliation  upon  the  narrow 
and  exclusive  revenue  system  of 
another  nation."  3  Kent.  Com.  265  ; 
Story,  Confl.  of  Laws,  §  257. 

(k)  Ex  parte  Barrow,  2  Rose,  255 ; 
Kingman  v.  Spurr,  7  Pick.  235  ;  Mur- 
ray V.  Bogert,  14  Johns.  318  ;  Channel 
V.  Fassit,  16  Ohio,  166;  Moddewell 
V.  Keever,  8  Watts  &  S.  63 ;  NicoU  v. 
Mumford,  4  Johns.  Ch.  522.  [Partner- 
ships inter  sese  can  only  be  formed  by 
the  contract  of  the  parties.  Freeman 
V.  Bloomfield,  43  Mo.  391 ;  Metcalf  v. 
Redmon,  43  III.  264.]  See  Brown  v. 
De  Tastet,  Jacob,  284 ;  Bray  v.  Fro- 
mont,  6  Madd.  5 ;  Mathewson  v.  Clark, 
6  How.  122;  Goddard  v.  Hodges,  1 
Cromp.  &  M.  33.  Upon  this  principle 
of  dilectus  persona,  neither  the   repre- 


sentatives   of  a  deceased  partner,  nor 
the  assignees  of  one  bankrupt,  become 
partners  with  the  surviving  or  solvent 
partners,  but  are  simply  entitled  to  an 
account.      Pearce    v.    Chamberlin,    2 
Ves.  33  ;  Marquand  v.  N.  Y.  Man.  Co., 
17  Johns.  525 ;  Griswold  v.  Waddirtg- 
ton,  15   id.  82.     In   the  civil  law,  the 
doctrine  was  even  carried  to  the  length 
of   making  null  and  void   stipulations 
in  the  articles  of  association  that  heirs 
or  representatives    should    themselves 
be  partners.     Otherwise  in  the  English 
and  American  law.    See  post  [p.  *  159]. 
(/)  Mason  v.  Connell,  1  Whart.  381, 
The  question  in  this  case  was,  whether 
the  firm  of  A.  &  B.  was  partner  with 
C.     The  evidence  offered  on  this  point 
was  a  written  agreement  of  copartner- 
ship to  which  was  signed  the  name  of 
C,  and  also  the  name  of  the  firm  of  A. 
&  B.,  in  the  handwriting  of  A.     Held, 
that  engaging  the  firm  in  such  a  part- 
nership was  out  of  the  ordinary  com- 
mercial transactions,  and  was  therefore 
presumed  to  be  without  the  scope  of  one 
partner's  authority.     But,  though  the 
consent  of  each  partner  was  absolutely 
necessary  to  constitute  a  partnership, 
yet  that  such  consent  might  be  testified 
in  exjiress  terms,  or  the  assent  might  be 
tacit,  or  to  be  implied  solely  from  the 
acts  and  conduct  of  the  parties.     [Gen- 
eral reputation  is  not  evidence  of  part- 
nership, Campbell  v.  Hastings,  29  Ark. 
512;  Bowen  v.  Rutherford,  60  111.41; 
or  of   its    dissolution.  Pitcher  v.   Bar- 
rows,  17    Pick.  (Mass.)  361 ;   nor   are 
the  admissions  of  an  alleged  partner, 
till  shown  uliimde  to  be  a  partner.  Cross 
V.  Langley,  50  Ala.  8 ;  Converse  v.  Shan- 
baugh,  4  Neb.   376  ;  Allcott  v.  Strong, 
9  Cush.  (Mass.)  31  ;   Tumlin  v.  Gold- 
smith, 40  Ga.  221 ;  Southwick  v.  McGov- 
ern,  28  III.  533.     See  also  post,  p.  *  195.] 


CH.  II.]  WHAT    PARTNERSHIP    IS,    AND    HOW    MADE.  13 

the  alleged  partner  or  partners  were  treated  by  the  other 
partners  and  in  their  transactions  as  only  a  partner  could  be 
or  should  be  treated.  (^/)  Still  there  must  be  this  consent; 
and  we  shall  presently  see  that  if  a  partner  sells  out  all  his 
interest  in  a  firm  to  a  third  person,  and  expressly  agrees  with 
him  that  he  shall  take  the  seller's  place  in  the  partnership,  this 
will  not  make  him  a  partner,  unless  the  other  partners  receive 
him  as  such,  (m) 

If  the  articles  of  the  copartnership  provided,  somewhat  in  the 
way  those  of  joint-stock  companies  do,  that  a  copartner  might, 
in  a  certain  way,  and  upon  certain  terms,  transfer  all  his  inter- 
est and  rights  in  the  company  to  a  third  person,  who  should, 
by  force  of  the  transfer,  become  a  copartner  in  the  transferrer's 
stead,  a  court  of  equity  generally  would,  and  a  court  of  law 
might,  so  far  recognize  the  force  of  this  provision  as  to  hold 
such  transferee  partner  at  once,  (n)  It  is  certain,  however, 
that  a  mere  agreement  to  admit  a  new  member  into  a  partner- 
ship, like  an  agreement  to  form  a  partnership,  (o)  however 
expressed,  and  on  whatever  consideration,  would  not  of 
itself  invest  any  person  or  persons  with  the  *  character  *  13 
of  partners,  although  the  breach  of  it  might  give  an 
action  for  damages.  ( jo) 

For  sufficient  reason  equity  will  decree  specific  performance 
of  articles  agreed  on  ;  but  only  where  the  partnership  is  for  a 
definite  period,  or  such  decree  is  necessary  to  invest  one  of  the 
partners  with  legal  rights  which  he  could  not  otherwise  pos- 
sess. (  pp') 

Whatever  be  the  evidence  offered  to  prove  a  partnership,  it 
is  said  that  parties  denying  it  cannot  give  evidence  of  private 
conversation  or  correspondence  to  rebut  that  evidence.  (  ppjo) 

(//)  Pierce  r.  Whitley,  39  Ala.  172.  Scott,  89;  Byrd  v.  Fox,   8   Mo.  574. 

(m)  Seech.  7,  §  1.  See  ch.  8,  §2. 

(n)  Fox  f.  CHfton,  9Blng.  115.    See  {pp)  Whitworth  ('.Harris,  40  Miss. 

Kingman   v.   Spurr,    7  Pick.  236;  Al-  483  ;  Freeman  v.  Smith,  2  Wallace,  160; 

vord  V.  Smith,  5  id.  232 ;    Cochran  v.  Buxton  v.  Lister,  3  Atk.  .383 ;  Anony- 

Perry,  8  Watts  &  S.  262.    See  also  post,  mous,  2  Ves.  629,  630 ;  Birchctt  v.  Bol- 

ch.  7,  §  1.  ling,  5  Munf.  442  ;  Hibbert  v.  llibbert ; 

(o)  Wilson  V.   Campbell,  5  Oilman,  CoUyer  on  Part.  §  203.     See  jiost,  ch. 

383  ;  Howell  v.  Brodie,  6  Bing.  N.C.  44.  7,  §  7. 

{p)  Figes  V.   Cutler,   3   Stark.   139;  (ppp)  Freeman  i;.  Smith,  2  Wallace, 

M'Neill  V.  Reid,  9  Bing.  68,  2  Moore  &  160. 


14  THE   LAW   OF   PARTNERSHIP.  [CH.  II. 

We  shall  hereafter  see  that,  in  reference  to  transfer  and  to 
incoming  partners,  the  courts  pay  great  respect  to  that  "  dilec- 
tus  personarum,'^  by  which  partners,  who  are  so  much  in  the 
power  of  each  other,  may  protect  themselves  from  the  danger 
of  having  that  power  pass  into  hands  to  whom  they  would  not 
willingly  intrust  it.  (g) 

Every  contract  that  is  vitiated  by  fraud,  or  by  coercion,  is 
thereby  avoided  and  annulled.  This  is  certainly  true  of  the 
contract  of  partnership ;  and,  from  the  peculiar  character  of 
the  relation  of  partners,  and  of  their  almost  unrestricted  capac- 
ity to  do  each  other  an  injury,  it  may  be  thought  that  courts 
would  be  peculiarly  watchful  to  require  that  this  contract  was 
formed  deliberately  and  freely,  and  without  deception  or  undue 
or  wrongful  influence,  (r) 

So,  too,  that  the  contract  of  partnership  may  be  lawful,  it 
must  be  made  by  competent  parties  ;  that  is,  by  those  who  have 
a  legal  right  to  enter  into  it.  And  we  shall  hereafter  see  that 
competency  to  enter  into  partnership  is  almost  or  quite  coex- 
tensive with  a  competency  to  transact  business  generally.  (&•) 

It  is  sometimes  important  to  determine  when  a  partnership 
begins.  Usually,  this  is  determined  by  the  contract  of  partner- 
ship. If  not,  it  would  probably  be  held  as  presumption  of  law 
that  it  began  when  the  written  articles  were  executed.  (^)  But 
even  if  in  the  contract  of  partnership  it  were  expressly  stipu- 
lated that  it  should  have  a  retrospective  effect,  and  that  the 
partnership  should  begin  a  certain  time  before  the  date,  it 
might  bind  the  parties  to  it,  for  some  purposes  at  least ; 
*  14  but  could  not  make  them  *  partners  at  the  time  stipu- 
lated, in  reference  to  third  parties,  except  from  the 
date,  (w) 

(q)  See  ch.  7,  §  1.  38;  Austin  v.  Williams,  id.  282  ;  Grant 
(r)  TattersalU'.  Groote,  2Bos.  &Pul.  v.  Watts,   10  Paige,  82;   Ingraliam  v. 
131 ;    Ex  parte   Broome,   1    Rose,  69 ;  Foster,  31  Ala.  123 ;  Beaman  v.  Whit- 
Green  V.  Barrett,  1  Sim.  45  ;  Pillans  v.  ney,  20  Me.  413. 

Harkness,    CoUes   P.  C.   442;    Ilynes  (m)  Thus,  where  A.  &  B.,  who  were 

V.  Stewart,  10  B.  Mon.  429 ;  Howell  v.  already  in  partnership,  agreed  on  the 

Harvey,  5  Ark.  270  ;  Fogg  v.  Johnston,  24th  of  June  to  become  partners  with 

27   Ala.   432.     See  post,   ch.   14,   sub-  C,  and  it  was  farther  agreed  that  the 

section  1.  new  partnership  should  be  considered 

(s)  See  ch.  3.  as  commencing  from  the  18th  of  May 

(t)  Howell  V.  Brodie,  6  Bing.  N.  C.  preceding ;  held,  that  C.  was  not  liable 

108 ;    Aspinwall  v.  Williams,  1  Ohio,  as  a  partner  upon  a  bill  of  exchange 


CH.  II.] 


WHAT   PARTNERSHIP   IS,    AND    HOW   MADE. 


15 


If  the  agreement  of  copartnership  is  executory  and  condi- 
tional, no  partnership  is  created  by  it  until  all  the  conditions 
are  fulfilled,  (v) 

In  one  case,  in  which  the  partnership  was  unlawful  if  entered 
upon  on  the  day  of  the  date  of  the  articles,  and  lawful  if  it  be- 
gan three  months  afterward,  the  court  held  it  to  be  an  absolute 
presumption  of  law  that  it  began  on  the  day  of  the  date,  although 
nothing  in  the  articles  specially  indicated  it.  And  the  court 
refused  evidence  that  the  bargain  and  intention  of  the  parties 
was  not  to  enter  upon  the  partnership  until  it  should  be  legal. 
This  case  we  do  not  think  law ;  altliough  it  would  be  proper 
to  exclude  evidence  which  contradicted  an  express  provi- 
sion. (^^) 

Where  the  partnership  was  not  formed  by  any  express  agree- 
ment, written  or  oral,  but  implied  by  law  from  certain  joint 
transactions,  it  would  be  held  to  begin  when  these  transactions 
took  place,  or  perhaps  when  the  agreement  to  enter  into  them 
was  formed.  (:f)      Thus,  if  there  were  such   a  joint  buying 


indorsed  by  the  firm  of  A.  &  B.  upon 
the  19th  of  May.  Vera  v.  Asliby,  10 
B.  &  C.  288 ;  Wilsford  v.  Wood,  1  Esp. 
182.  See  Dyke  v.  Brewer,  2  Car.  & 
K.  828.  On  the  other  hand,  if  A.,  B., 
and  C.  agree  to  enter  into  partnership 
on  the  1st  of  January,  and  from  that 
time  regard  themselves  as  partners, 
the  partnership  will  be  held  to  have 
commenced  on  that  day,  though  the 
deed  of  partnership  be  not  executed 
till  the  18th  of  January.  Battley  v. 
Bailey,  1  Scott  N.  R.  143. 

(v)  Fox  V.  Clifton,  6  Bing.  776; 
Dickinson  v.  Valpy,  10  B.  &  C.  128 ; 
Murray  r.  Richards,  1  Wend.  58.  See 
further  Ward  v.  Thompson,  1  Newb. 
Adni.  95;  Bisset  on  Part.,  part  2d,  ch. 
6 ;  Story  on  Part.  §  150 ;  Avery  v. 
Louve,  1  La.  Ann.  457  ;  ]>ost,  ch.  18. 
See  Peck  v.  Thomas,  29  Eng.  L.  &  Eq. 
276. 

{w)  Williams  v.  Jones,  5  B.  &  C.  108. 
See  Dix  v.  Otis,  5  Pick.  88 ;  Vassar  v. 
Camp,  14  Barb.  35G  ;  Bird  v.  Hamilton, 
Walker  Ch.  361.  In  this  last  case 
the  contract  of  partnership  was  exe- 
cuted the  IGth  of  May.  The  language 
imputed  a  partnership  in  prcesenti.    But, 


inasmuch  as  the  business  of  the  part- 
nership could  not  be  entered  upon 
until  the  1st  of  July,  the  court,  regard- 
ing the  situation  of  the  parties,  con- 
strued the  partnership  not  to  commence 
until  that  time. 

(.r)  Gardiner  v.  Childs,  8  Car.  &  P. 
345.  The  firm,  C.  &  D.,  defendants, 
were  printers.  The  present  action 
was  brought  to  recover  of  them  the 
price  of  a  certain  amount,  of  paper 
delivered  to  them  by  the  plaintiffs, 
but  at  the  order  and  upon  the  credit  of 
the  firm  of  A.  &  B.,  publishers.  The 
plaintiffs,  to  prove  the  existence  of  a 
partnership  between  the  defendants 
and  A.  &  B.  in  certain  pubhcations  for 
which  the  paper  was  furnished  and 
used,  put  in  evidence  accounts  be- 
tween the  two  firms,  determining  their 
respective  shares  of  the  profits  accru- 
ing from  such  publications.  These 
accounts  bore  dates  from  January, 
1836,  to  February,  1837.  Tlie  impcr 
was  supplied  in  April  and  May,  1836. 
Upon  this  state  of  tacts,  Ed.  Denman, 
C.  J.,  left  it  to  the  jury  to  say  whether, 
at  the  time  the  goods  in  question  were 
furnished,  the  defendants  were  partners 


16  THE   LAW   OP   PARTNERSHIP.  [CH.  II. 

*  15  of  property  *  with  the  intention  of  joint  selling,  as 
would  make  the  parties  partners  in  law  as  to  their  prop- 
erty or  business,  they  would  be  partners,  not  only  when  the 
thing  was  bought,  but  they  might  become  partners  as  to  this 
purchase  by  their  agreement  to  join  and  act,  although  no  re- 
sponsibilities as  partners  would  rest  upon  them  until  something 
was  done  to  carry  the  agreement  into  effect. 

It  may  be  well  to  remark,  in  this  connection,  that  courts  of 
common  law  cannot  take  cognizance  of  a  large  proportion  of 
the  cases  which  arise  under  the  law  of  partnership.  Nearly  all 
of  those  which  relate  to  the  rights  and  obligations  of  partners 
inter  se  go  into  a  court  of  equity.  We  shall  hereafter  see  that 
one  partner  can  sue  another  at  law  only  in  a  few  exceptional 
cases.  And  when  the  settlement  of  the  affairs  of  a  partnership 
is  required,  or  the  taking  of  an  account,  or  the  prevention  or 
discontinuance  of  some  wrongful  act,  or  the  protection  or  en- 
forcement of  a  right  by  other  means  than  damages  for  a  breach 
of  it,  the  parties  necessarily  resort  to  equity.  Hence  there  is 
certainly  no  branch  of  commercial  law  (to  which  partnership 
emphatically  belongs)  that  so  often  finds  the  common-law  ju- 
risdiction inadequate  to  its  wants,  and  is  therefore  obliged  to 
resort  to  equity  for  relief.  As  we  go  on,  we  shall  endeavor  to 
point  out  specifically,  in  reference  to  the  various  questions  and 
conflicting  claims  which  are  frequently  springing  up  under  the 
law  of  partnership,  the  methods  and  measures  of  relief  which 
equity  administers. 

in  the  concern  upon  whose  credit  they    the  plaintiffs.     See  Avery  v.  Louve,  1 
were  supplied.     The  jury  finding  that    La.  Ann.  457. 
they  were,  judgment  was  rendered  for 


CH.  III.]  PARTNERS.  17 


CHAPTER  III. 

OF   PARTNERS. 
SECTION  I. 

WHO    MAY    BE    PARTNERS. 

There  is  nothing  in  this  country  to  prevent  any  number  of 
persons  from  entering  into  partnership.  Nothing  but  their 
own  convenience  and  pleasure  determine  this,  (a) 

As  to  personal  competency,  it  may  be  said  that  any  persons 
competent  in  law  and  in  fact  to  transact  ordinary  business  on 
their  own  account  may  enter  into  partnership  for  that  purpose. 
For  there  is  nothing  in  the  status  of  partnership,  which,  on  the 
one  hand,  confers  a  power  to  transact  business  on  one  who 
otherwise  would  have  no  power,  or,  on  the  other,  restrains  or 
diminishes  the  power  in  him  who  possesses  it  before  or  without 
partnership. 

We  have  said  competent  in  law  and  in  fact,  because  there 
are  incompetencies  created  by  the  law,  or  absolutely  presumed, 
without   any  reference   to   the    actual   fact.  (6)      As   in   the 

(a)  But  now,  in  England,  by  "  The  3,  ch.  99,  §  3,  rendered  all  spiritual 
Companies  Act "  of  25  &  26  Vict,  persons  incompetent  in  law  to  carry 
1862,  consolidating  and  amending  on,  by  themselves  or  their  agents, 
former  acts  upon  the  subject,  no  part-  "  any  trade  or  dealing  for  gain  or 
nership  consisting  of  more  than  twenty  profit,"  and  of  course  thereby  inter- 
persons,  which  has  for  its  object  the  dieted  such  persons  from  being  partners 
acquisition  of  gain,  is  allowed  to  carry  for  that  purpose.  Hall  v.  Franklin,  3 
on  business,  without  forming  a  company  M.  &  W.  259.  See  102  Vict.  ch.  10. 
by  registration  ;  and  under  the  pro-  So  also  the  law  sometimes  renders  all 
visions  of  this  act  any  seven  or  more  persons  who  have  not  been  qualified  in 
persons  may  so  associate,  with  or  a  prescribed  legal  way,  incompetent 
without  limited  liability,  as  they  may  to  exercise  particular  trades  or  pro- 
elect  and  declare.  This  is  the  nearest  fessions.  Thus,  by  5  Eliz.  ch.  4,  per- 
approach  to  our  system  of  limited  sons  were  prohibited  from  following 
partnership  that  has  yet  been  made  by  any  manual  art  or  occupation,  who 
the  legislation  of  that  country.  had  not  previously  served  an  appren- 

(6)  In  England,  the  statute  57  Geo.  ticeship  to  the  same.     But  one  who, 


18 


THE    LAW    OF    PARTNERSHIP. 


[CH.  III. 


*  17  case  of  an  *  infant,  who  cannot  lawfully  do,  the  day  be- 
fore he  is  twenty-one,  what  he  may  do  on  that  day.  So 
a  married  woman  is  disabled  at  common  law,  althougli  in  fact 
she  may  have  far  greater  business  capacity  than  her  husband. 
The  recent  changes  in  the  law  of  married  women,  which  in 
some  of  our  States  seem  to  give  her  all,  or  very  nearly  all,  the 
rights  and  powers  of  a  single  woman,  may  extend  to  the  right 
of  becoming  a  partner  in  a  trading  firm  ;  but  we  know  no  case 
in  which  this  question  is  decided.  An  insane  person  is  disabled 
by  the  fact  of  his  insanity.  And  whether  insanity  exists,  and  in 
a  sufficient  degree  to  have  this  effect,  must  be  a  question  of  fact 
only.  And  some  difficulty,  to  say  no  more,  would  attend  the 
entering  into  a  copartnership  of  a  corporation  as  a  member  of 
the  firm,  (c)  We  will,  however,  look  at  some  of  these  ques- 
tions more  specifically. 

1.  Infants. 

Infants  are  persons  under  twenty-one  years  of  age  ;  and,  for 
their  own  benefit  and  safety,  the  law  considers  them  disqualified 
for  the  transaction  of  business.     Their  contracts  or  promises 


though  he  had  not  been  apprenticed, 
was  a  partner  witli  a  brewer,  was  held 
not  within  the  statute,  since  lie  had 
not  acted  in  nor  personally  exercised 
the  trade.  Keynard  v.  Chase,  2  Wils. 
40.  See  22  Geo  2,  ch.  46,  §  11,  an  act 
to  prevent  unqualified  persons  from 
acting  as  attorneys  or  solicitors.  In 
re  Jackson,  1  B.  &  C.  270 ;  In  re  Clark, 
3  D.  &  R.  260 ;  Hopkinson  v.  Smith, 
1  Bing.  13 ;  Candler  v.  Candler,  Jac. 
225;  Sterry  v.  Clifton,  9  C.  B.  110; 
Taylor  v.  Glassbrook,  3  Stark.  76.  In 
GilfiUan  v.  Henderson,  2  Clark  &  F.  1, 
two  solicitors  had  entered  into  partner- 
ship, one  of  whom  could  practise  only 
in  a  superior  court,  the  other  only  in 
an  inferior  court.  By  their  agreement 
the  profits  of  their  general  business 
were  to  be  divided;  each  was  to  recom- 
mend clients  to  the  other,  and  the  ex- 
istence of  the  partnership  was  to  be 
kept  secret.  Held,  that  the  agreement 
was  illegal  and  void.  See  In  re  Wood- 
ward, 4  Johns.  289. 


(c)  As  the  whole  power  of  a  corpo- 
ration is  derived  from  its  charter,  it 
may  well  be  questioned  whether  it 
could  enter  into  a  partnership  for  the 
transaction  of  a  business  different 
from  the  object  for  which  it  was  char- 
tered. And  it  seems  that  two  or  more 
corporations  cannot  consolidate  their 
funds,  or  form  a  partnership,  unless 
authorized  by  express  grant,  or  neces- 
sary imj)lication.  Sharon  Coal  Co.  v. 
Fulton  Bank,  7  Wend.  412.  It  is  a 
different  question,  whether  a  corpora- 
tion may  not  render  itself  liable  to 
third  parties  as  a  quasi  partner,  by  its 
acts ;  and  we  know  of  no  reason  why 
this  might  not  be  the  case.  The  sub- 
ject was  before  the  court  in  Holmes  v. 
Old  Colony  R.  II.  Co.,  5  Gray,  58 ;  but, 
as  the  acts  of  the  corporation  were 
held  not  sufficient  to  constitute  a  part- 
nership liability  as  to  third  parties, 
there  was  no  direct  decision  upon  the 
question  whether  a  corporation  could 
be  held  as  partner. 


CH. 


III.] 


PARTNERS. 


19 


for  necessaries  —  such  as  slielter,  food,  raiment,  and  such 
other  means  of  support  and  education  as  are  proper  for  them 
—  are  valid  and  obligatory,  because  it  is  for  their  interest  that 
they  should  be  able  to  l)ind  themselves  for  the  things  they  must 
have,  or  suffer  from  the  want  of  them.  But  the  promise 
of  an  infant  in  *  any  business  transaction  is  voidable  by  *  18 
him  ;  because  it  is  not  necessary  that  he  should  earn 
money  by  buying  and  selling,  (dl) 

The  promise  is  voidable  only  (if  made  by  an  infant  mentally 
and  physically  able  to  make  it),  and  not,  we  think,  in  any  case 
absolutely  void,  as  it  used  to  be  called,  (e)     For  any  such 


(d)  1  Rol.  Abr.  729;  Whittingham 
V.  Hill,  Cro.  Jac.  494;  Whywall  v. 
Champion,  2  Stra.  1083  ;  Dilk  v.  Keigh- 
ley,  2  Esp.  480;  Goode  v.  Harrison,  5 
B.  &  Aid.  147  ;  Van  Winkle  v.  Ketcli- 
um,  3  Caines,  823 ;  Smith  i'.  Mayo,  9 
Mass.  62  ;  Mason  v.  Wright,  13  Mete. 
306  ;  Crabtree  v.  May,  1  B.  Mon.  289. 
The  contract  of  partnership  is  like  all 
other  mercantile  cq^itracts,  and  may 
be  made  by  an  intant  for  his  own 
benefit,  subject  to  his  right  to  avoid  it 
when  he  comes  of  age.  Ibid.  ;  Glossop 
V.  Colman,  1  Stark.  25.  Hence,  an 
infant  may  be  a  partner  in  a  mercan- 
tile house,  his  father  supplying  the 
capital ;  and  if  the  transaction  be  a 
bond  Jide  one,  and  the  son  be  the  real 
party  in  interest,  and  the  father  retain 
no  power  of  withdrawing  from  the 
firm  either  the  capital  or  the  profits, 
an  agreement  tliat  the  firm  shall  ac- 
count to  the  father  as  trustee  for  his 
son,  for  one-third  profit  of  his  son's 
capital,  or  any  loss  that  may  accrue, 
and  be  governed  by  his  advice  in  all 
business  matters,  will  not  make  the 
father  a  partner.  Barklie  v.  Scott,  1 
Hud.  &  Bro.  83.  But,  though  an  infant 
coming  of  age  may  avoid  his  contract, 
he  cannot  recover,  of  persons  who 
have  dealt  with  the  partnership, 
money  expended  by  him  in  its  afiairs, 
for  which  he  has  received  and  enjoyed 
a  valuable  consideration.  Holmes  v. 
Blogg,  8  Taunt.  508.  But  where  A., 
an  infant,  made  an  agreement  of  co- 
partnership with  B.,  and  paid  to  him  a 


hundred  pounds,  to  be  forfeited  if, 
when  he  came  of  age,  the  partnership 
deed  was  not  duly  executed  by  him, 
the  jury  finding  that  A.  had  paid  the 
monej-  on  a  fraudulent  representation 
in  B.'s  balance  sheet.  A.,  attaining  his 
majority  and  disaffirming  the  contract, 
was  allowed  to  recover  back  the  de- 
posit. Corpe  v.  Overton,  10  Bing.  2-52. 
This  last  case  differs  from  Holmes  v. 
Blogg  in  many  important  features. 
The  court,  however,  distinguish  it 
from  that  case  only  upon  the  ground, 
that  in  the  one  the  infant  had,  and  in 
the  other  he  had  not,  enjoyed  a  valu- 
able consideration  for  the  money  he 
sought  to  recover  back. 

(e)  The  doctrine  of  the  common 
law,  that  there  are  some  contracts  of 
an  infant,  namely,  those  which  the 
courts  can  pronounce  to  be  to  his 
prejudice,  which  are  absolutely  void, 
is  recognized  and  asserted  in  a  very 
great  number  of  cases.  Keane  v.  Boy- 
cott, 2  H.  Bl.  511;  Bayley,  J.,  in 
Thornton  v.  lUingworth,  2  B.  &  C. 
826;  Fisher  v.  Mowbray,  8  East,  330; 
Baylis  v.  Dineley,  3  M.  &  S.  477; 
Tucker  v.  Moreland,  10  Pet.  58 ;  Vent 
V.  Osgood,  19  Pick.  572;  Lawson  v. 
Lovejoy,  8  Greenl.  405 ;  Rogers  v. 
Hurd,  4  Day,  57 ;  Fool  v.  Pratt,  1  D. 
Chip.  252;  McGaw  v.  Marshall,  7 
Humph.  121 ;  M'Minn  v.  Kichmonds, 
6  Yerg.  9 ;  M'Crillis  v.  How,  3  N.  H. 
348 ;  Swasey  v.  Vanderheyden,  10 
Johns.  33 ;  United  States  v.  Bain- 
bridge,  1  Mason,  71 ;   Fridge  v.  The 


20 


THE   LAW   OF   PARTNERSHIP. 


[CH.  III. 


promise  of  an  infant  may  be  ratified  by  him  after  he  is  of  full 
age.  And  this  ratification  may  be  direct  and  express, 
*  19  or  it  may  be  implied  by  *  his  acts,  or  even  his  silence,  or 
inferred  by  law  from  circnmstances.  In  England,  no 
ratification,  after  full  age,  binds  an  infant,  unless  made  in 
writing  and  signed  by  him.  (/)  A  similar  statute  exists  in 
Maine.  (//)  It  is  not  quite  certain  how  this  requirement  would 
affect  a  ratification  by  a  continuance  of  the  partnership  and 
business.  If,  for  example,  a  young  man  of  the  age  of  twenty 
entered  into  a  partnership,  and  at  twenty-one  took  no  notice  of 
his  having  been  an  infant,  but  continued  in  the  partnership  and 
in  the  same  business  for  a  year  or  two  more,  and  tlie  firm  was 
tlien  called  on  to  settle  an  account  running  through  all  these 
years,  we  doubt  whether,  under  this  statute,  the  infant  would 
be  permitted  to  draw  a  line  between  the  items,  and  hold  him- 
self responsible  only  for  those  which  were  subsequent  to  his 
majority.  In  this  country  generally,  one  who  was  an  infant 
may  not  only  ratify  after  coming  of  age  any  promise  to  which 
there  is  no  other  objection  than  the  fact  of  the  previous  infancy, 
but  may  ratify  this  by  any  conduct  of  an  unequivocal  character, 
which  must  be  understood  either  as  a  ratification,  or  else  as 
fraud  or  as  gross  negligence  on  his  part.  (Ji)      But  a  mere 


State,  3  Gill  &  J.  103;  Ridgeley  v. 
Crandall,  4  Md.  435  ;  Cronise  v.  Clark, 
4  M(l.  Ch.  403.  But  the  doctrine  of 
the  text  seems  more  sound  in  principle 
and  more  practical  of  application,  and 
is  supported  by  the  later  authorities. 
Williams  v.  Moor,  11  M.  &  W.  256; 
Fonda  v.  Van  Home,  15  Wend.  631 ; 
Brockenbridge  v.  Ormsby,  1  J.  J.  Marsh. 
236 ;  Scott  v.  Buchanan,  11  Humph. 
468 ;  Cunimings  v.  Powell,  8  Texas, 
80  ;  Cole  v.  Pennoyer,  14  111.  158;  Rob- 
bins  V.  Cutler,  6  Foster,  173 ;  Weaver 
i;.  Jones,  24  Ala.  420 ;  Hardy  v.  Wa- 
ters, 38  Me.  450 ;  Ferguson  v.  Bell, 
17  Mo.  347  ;  Strain  v.  Wright,  7  Ga. 
568;  1  Am.  Lead.  Cas.  103;  Taft 
V.  Sergeant,  18  Barb.  .320. 

(/)  y  Geo.  4,  ch.  14,  §  5.  In  the 
construction  of  this  statute,  it  has 
been  held  that  "  any  written  instru- 
ment signed  by  the  party,  which,  in  the 
case  of  adults,  would  have  amounted 


to  the  adoption  of  the  act  of  a  party 
acting  as  agent,  will,  in  the  case  of  an 
infant  who  has  attained  his  m.ajority, 
amount  to  a  ratification."  Harris  v.  Wall, 

I  Exch.  122.  See  Mawson  v.  Blane, 
10  Exch.  206.     In  Hartley  v.  Wharton, 

II  A.  &  E.  934,  the  writing  by  which 
the  ratification  was  alleged  to  be  made 
was  a  letter,  without  date  or  address, 
containing  a  promise  to  remit  within  a 
short  time,  but  mentioning  no  sum  nor 
any  particular  debt.  Held,  nevertheless, 
that  this  was  a  ratification  which  satis- 
fied the  statute,  and  that  the  date,  ad- 
dress, and  debt  might  be  proved  by  parol. 

(fj)  Acts  of  Maine,  1845,  ch.  166. 
See  Thurlow  v.  Gilmore,  40  Me.  378. 

(h)  Martin  v.  Mayo,  10  Mass.  137; 
Whitney  v.  Dutch,  14  id.  457  ;  Pierce 
V.  Tobey,  5  Mete.  168 ;  Orvis  v.  Kimball, 
3  N.  H.314;  Aldrich  v.  Grimes,  10 
N.  H.  194  ;  Bobbins  v.  Eaton,  id.  561 ; 
Edgerly  v.  Shaw,  5  Foster,  514 ;  Boy- 


CH.  III.] 


PARTNERS. 


21 


acknowledgment  that  the  de))t  exists  is  not  of  itself  a  ratifica- 
tion of  a  promise  to  pay  tlie  debt.  (^') 

*  If  we  suppose  that  an  infant  enters  into  a  partner-  *  20 
ship,  liolding  liimself  out  by  his  declarations,  or  by  the 
plain  indication  of  circumstances,  as  an  adult,  and,  after  he 
comes  of  age,  does  not  expressly  withdraw  or  give  any  equiva- 
lent notice,  persons  dealing  with  the  firm  in  the  belief  that  the 
former  infant  was  still  a  partner  would  hold  him  liable  ;  be- 
cause, whether  he  was  a  partner  or  not,  he  permitted  the  firm 
to  use  his  credit,  and  he,  and  not  an  innocent  third  party,  must 
suffer  the  consequences,  (y) 

In  general,  an  infant  partner  who  comes  of  age,  should,  with 
no  unnecessary  delay,  leave  the  firm,  and  declare  himself  not 
responsible  for  its  debts,  if  he  intends  to  take  that  course ;  for 
any  considerable  delay  would  bind  him  like  a  ratification,  be- 
cause it  could  be  accounted  for  only  by  criminal  neglect  or 
fraud.  (A;) 


den  V.  Boyden,  9  id.  519 ;  Delano  r. 
Blake,  11  Wend.  85 ;  Bigelow  v.  Gran- 
nis,  2  Hill  (N.  Y.),  120;  Taft  v.  Ser- 
geant, 18  Barb.  320;  Lavvson  v.  Love- 
joy,  8  Greenl.  405 ;  Richardson  v. 
Bright,  9  Vt.  368 ;  Best  v.  Givens,  3 
B.  Mon.  72;  Cheshire  v.  Barrett,  4 
McCord,  241  ;  Bobo  v.  Hansell,  2  Bai- 
ley, 114  ;  Eubanks  v.  Peak,  id.  497  ; 
Alexander  v.  Heriot,  Bailey  Eq.  223 ; 
Thomasson  v.  Boyd,  13  Ala.  419; 
Forsyth  v.  Hastings,  27  Vt.  646. 

{i)  Thrupp  V.  Wilder,  2  Esp.  628; 
Goodsell  V.  Myers,  3  Wend.  479  ;  Mil- 
lard V.  Hewlett,  19  id.  301;  Smith  v. 
Mayo,  9  Mass.  62 ;  Ford  v.  Phillips,  1 
Pick.  202 ;  Thompson  r.  Lay,  4  Esp. 
48 ;  Benham  v.  Bishop,  9  Conn.  330 ; 
Wilcox  V.  Eoath,  12  id.  550;  Hale  v. 
Gerish,  8  N.  H.  374;  Robbins  v.  Eaton, 
10  id.  561 ;  Ordinary  v.  Wherry,  1 
Bailey,  28 ;  Alexander  v.  Hutcheson, 
2  Hawkes,  535;  Hindy  v.  Margarity, 
8  Barr,  428. 

(j)  Goode  V.  Harrison,  5  B.  &  Aid. 
147.  Goode  &  Bennion,  defendants 
below,  had  held  themselves  out  as 
general  partners  in  trade,  especially 
by  a  joint  purchase  of  goods  of  the 
plaintiff  in  April,  1818.     At  that  time 


Bennion  was  an  infant,  though  that 
fact  was  unknown  to  the  plaintiff. 
There  was  evidence  showing  tliat  Ben- 
nion did  not  intend  to  be  a  partner 
with  Goode,  except  for  the  single 
transaction  of  April,  1818,  and  that 
he  did  not  afterwards  interfere  with 
Goode's  general  business.  In  May 
following,  he  became  of  age  ;  but  no 
notice  of  his  having  ceased  to  be  a 
partner  was  ever  given  by  him.  Sub- 
sequently to  his  coming  of  age,  Goode 
bought  more  goods  of  Harrison  in  the 
name  of  the  firm,  and  accepted  a  bill 
for  them  in  the  name  of  himself  and 
Bennion.  Held,  that  Bennion  was 
liable  on  this  bill ;  for,  having  shortly 
before  he  came  of  age  represented 
himself  as  a  partner,  it  was  his  duty 
to  notify  the  plaintiff  that  he  was  not 
so,  when  he  came  of  age,  as  otherwise 
he  facilitated  the  commission  of  a 
fraud  upon  the  plaintiff. 

(k)  See  Holmes  v.  Blogg,  8  Taunt. 
35;  1  J.  B.  Moore,  466.  In  March, 
1816,  the  firm  of  A.  &  B.  leased  cer- 
tain premises,  for  the  purposes  of  their 
trade.  A.,  an  infant,  in  the  presence 
of  B.,  advanced  one-half  of  the  amount 
of  the  rent.    For  the  other  half,  three 


22 


THE    LAW    OF    PARTNERSHIP. 


[CH.  III. 


*  21  *  It  may  be  well  to  remark  that  the  right  of  an  infant 

to  avoid  his  contract  gives  no  right  of  avoidance  what- 


bills  were  drawn  upon  the  firm,  and 
aecei)ted  bj'  A.,  in  tlie  names  of  }nm- 
self  and  partner,  the  first  bill  payable 
in  four  months.  In  June,  A.  reached 
his  majority,  and  immediately  dis- 
solved the  partnership ;  but,  though 
his  name  was  taken  from  the  door 
shortly  afterwards,  no  notice  was 
given  of  his  avoidance  of  the  lease 
till  nearly  four  months  afterwards. 
Dallas,  J.,  said  :  "  I  agree  that  in  every 
instance  of  a  contract,  voidable  only 
by  an  infant  on  coming  of  age,  the 
infant  is  bound  to  give  notice  of  disaf- 
firmance of  such  contract  in  reasonable 
time  ;  and,  if  the  case  before  the  court 
were  that  simple  case,  I  should  be 
disposed  to  hold,  that,  as  the  infant 
liad  not  given  express  notice  of  dis- 
affirmance within  four  months,  he  had 
not  given  notice  of  disaffirmance  in 
reasonable  time."  But  it  seems  that 
notice  of  disafl[irmance  of  an  infant's 
contract  may  be  dispensed  with  by 
the  acts  of  the  party  to  whom  it  would 
otherwise  be  due.  The  lessor,  in  this 
case,  having,  after  the  dissolution  of 
the  partnership,  made  a  new  arrange- 
ment with  B.,  A.'s  copartner,  by  which 
a  part  of  the  rent  was  remitted,  and 
having,  when  the  first  bill  became 
due,  sued  B.  alone  upon  it,  and  having 
afterwards  compromised  the  action 
and  accepted  from  B.  alone  a  sur- 
render of  the  lease,  and  cancelled  the 
other  bills,  all  this  without  the  privity 
of  A.,  it  was  held,  that  there  should  be 
a  new  trial,  in  order  that  the  jury 
might  determine  whether,  upon  these 
facts,  notice  of  disaffirmance  had  not 
been  waived.  The  case,  however,  was 
ultimately  decided  upon  other  grounds. 
8  Taunt.  508.  The  dictum  of  Dallas, 
J.,  above  quoted,  that  an  infant  must 
disaflirm  his  contract  within  a  reason- 
able time  after  coming  of  age,  or  his 
silence  will  bind  him  like  a  ratifica- 
tion, is  established  law  in  the  English 
courts,  and  has  been  approved  by  emi- 
nent judges  in  this  country.  Cork 
&   Bandon  R.  K.  Co.  r.  Cazenove,  11 


Q.  B.  935;  Leeds  &  Thirsk  R.  R.  Co.  v. 
Fearnley,  4  Exch.  26  ;  Northwestern 
R.  R.  Co.  V.  M'Michael,  5  id.  114; 
Dublin  &  Wicklow  R.  R.  Co.  v.  Black, 

8  Exch.    181  ;  Richardson  v.   Boright, 

9  Vt.  368;  Kline  i-.  Bebee,  6  Conn. 
494;  Scott  v.  Buchanan,  11  Humph. 
468.  But  the  weiglit  of  American 
authority  cannot  be  said  to  be  in  favor 
of  the  proposition  that  mere  neglect 
to  disaffirm  will  of  itself  amount  to  a 
ratification.  There  must,  beside,  be 
positive  action  on  the  part  of  him  who 
lias  come  of  age  clearly  indicating  his 
intention  to  abide  by  the  contract 
which  he  has  made  during  his  infancy. 
Thus,  in  Dana  v.  Stearns,  3  Cush.  842, 
B.,  an  infant,  and  S.  had  been  in  part- 
nership, which  was,  however,  dissolved 
by  mutual  consent  before  B.  came  of 
age.  B.  sold  out  his  share  to  S.,  took 
therefor  the  note  of  S.  with  security, 
but  never  expressed  any  purpose  of 
repudiating  the  partnership.  In  an 
action  brought  against  B.  &  S.  as 
partners,  upon  notes  given  by  them 
while  in  business  together,  and  in 
consideration  of  merchandise  sold  and 
delivered  to  them,  it  was  contended 
that  B.  had  ratified  the  partnership 
after  coming  of  age,  and  therefore  the 
notes  in  suit,  by  retaining  and  attempt- 
ing to  enforce  the  note  of  S.  above 
mentioned,  which  was  given  by  S. 
not  only  for  the  amount  of  capital 
originally  contributed  by  B.,  but  also 
in  addition  for  B.'s  siiare  of  the  profits 
realized  by  the  firm  during  their  con- 
tinuance in  business.  But  the  court 
held,  that  no  sufficient  ratification  was 
proved  from  these  facts,  and  that  B. 
was  not  liable  for  the  partnership 
debts.  See,  to  the  same  point,  the 
note  to  the  case  of  Dublin  &  Wicklow 
R  R.  Co.  r.  Black,  8  Exch.  181,  where 
the  American  authorities  are  reviewed. 
See  also  Jones  v.  Phoenix  Bank,  4 
Seld.  228;  N.  H.  Mut.  F.  Ins.  Co.  v. 
Noyes,  32  N.  H.  345 ;  Stokes  r.  Brown, 
4  Chand.  39.  A  plea  of  infancy  to  a 
note  executed  by  an  infant  partner  in 


CH.  III.] 


PARTNERS. 


23 


ever  to  the  other  contracting  party,  who  is  bound  if  the  infant 
does  not  choose  to  avoid  tlie  contract.  (/)  The  infant's  privi- 
lege of  avoiding  his  contracts  extends  to  his  legal  representa- 
tives, (w) 

*  A  fiat  or  decree  of  bankruptcy  against  an  infant  is      *  22 
not  voidable  only,  but  wholly  void  at  law.  (w)     Equity, 
liowever,  will  not  declare  it  void  if  he  has  induced  persons  to 
give  him  credit  as  an  adult  member  of  the  firm,  but  will  leave 
him  to  his  remedy  at  law.  (o)     But  the  fact  that  his  name  is 


the  name  of  the  firm  is  not  avoided  by 
a  replication  that  defendant  had  con- 
tinued to  be  a  partner  for  a  year  and 
more  after  he  became  of  age,  and  had 
not  during  tliat  time,  nor  for  some 
years  after,  disaffirmed  any  note  exe- 
cuted during  his  infancy,  in  tlie  name 
of  the  firm.  There  should  also  be  an 
averment  that  he  had  knowledge  of 
the  particular  contract  declared  on, 
and  that  he  was  looked  to  as  a  party 
to  it.  Crabtree  v.  May,  1  B.  Mon.  289. 
In  Miller  v.  Sims,  2  Hill  (S.  C),  479,  an 
action  was  brought  on  a  note  signed 
by  Sims  in  the  name  of  Sims  &  Ash- 
ford.  Ashford  was,  at  the  time  of 
signing,  a  minor.  After  he  came  of 
age,  there  was  evidence  that  he  re- 
ceived moneys  due  the  firm,  and  signed 
the  firm  name,  but  refused  to  have 
any  thing  to  do  with  the  note  in  ques- 
tion, and  never  ratified  or  confirmed  it. 
The  court  held,  that  if  Ashford,  after 
coming  of  age,  did  in  any  manner  con- 
cur in  carrying  on  the  partnership 
business,  or  received  profits  from  it, 
it  would  amount  to  a  ratification  ;  and 
that,  by  affirming  the  partnership, 
Ashford  recognized  and  affirmed  the 
agency  of  Sims. 

(/)  Holt  V.  Ward,  2  Str.  9.37  ;  War- 
wick V.  Bruce,  2  M.  &  S.  205;  Willard 
V.  Stone,  How.  22 ;  Parker  v.  Barker, 
1  Clarke  Ch.  136 ;  Rose  v.  Daniel,  3 
Brev.  438  ;  Voorhees  v.  Wait,  3  Green, 
343;  M'Ginn  v.  ShaefCer,  1  Watts,  412; 
Cannon  v.  Alsbury,  1  A.  K.  Marsh.  76. 

(m)  Hussey  v.  Jewett,  9  Mass.  100; 
Martin  v.  Mayo,  10  id.  137 ;  Jackson 
V.  Mayo,  11  id.  147. 

(n)  O'Brien   v.  Currie,   3   C.  &  P. 


28.3;  Belton  v.  Hodges,  9  Bing.  365. 
The  fiat  is  void,  because  a  minor's 
contracts  of  trade  being  voidable,  he 
cannot  be  a  bankrupt  for  debts  which 
he  is  not  obliged  to  pay.  Ibid.  ;  Rex 
V.  Cole,  1  Ld.  Raym.  443 ;  Lord  El- 
don  in  Ex  parte  Adam,  1  Ves.  &  B. 
494;  Ex  parte.  Moule,  14  Ves.  602. 
Hence  also  a  joint  commission  of  bank- 
ruptcy against  a  firm,  one  of  the  mem- 
bers of  which  is  an  infant,  will  be 
superseded.  Ex  parte  Henderson,  4 
Ves.  163 ;  Ex  parte  Barwis,  6  Ves.  601. 
But  where  a  statute  provides  that  an 
adjudicated  bankrupt,  to  test  the  val- 
idity of  the  commission,  must  show 
cause  before  the  commissioner  within 
seven  days  after  the  adjudication  ;  or, 
to  dispute  or  annul  the  fiat,  must  com- 
mence proceedings  within  twenty-one 
days  after  the  advertisement  of  the 
bankruptcy,  —  a  partner,  adjudged  a 
bankrupt  while  an  infant,  cannot 
after  the  lapse  of  the  prescribed  pe- 
riod maintain  a  petition  praying,  on 
the  ground  of  his  infancy,  to  have  the 
adjudication  and  fiat  annulled  ;  there 
being  in  this  respect  no  exception  made 
of  infants  in  the  statute.  Ex  parte 
West,  2  De  Gex,  Mac.  &  Gor.  198. 

(o)  Ex  parte  Watson,  16  Ves.  265. 
The  Lord  Chancellor  delivered  his 
opinion  as  follows  :  "  As  it  appears  in 
this  case  that  the  petitioner  held  him- 
self forth  to  the  world  as  an  adult,  and 
sui  juris,  and  traded  in  tliat  character, 
and  contracted  debts  to  a  considerable 
amount  for  two  years  jirevious  to  the 
commission,  and  as  this  petition  is  op 
posed  on  belialf  of  tlie  creditors,  I  will 
make  no  order;    but  leave   the  bank- 


2-i  THE   LAW   OF   PARTNERSHIP.  [CH.  III. 

used  in  the  firm  is  not  of  itself  sufficient  to  prevent  equity  from 
annulling  the  same.  (  p) 

If  a  contract  be  made  with  a  firm,  one  of  the  members  being 
an  infant,  and  repudiating  his  own  liability,  it  seems  to  be 
doubted  whether  the  contract  can  afterwards  be  treated  as  a 
contract  made  with  the  other  partners,  ipp')  We  should  say, 
however,  that  it  may.  The  technical  rules  of  pleading  in  Eng- 
land require  that  if  an  action  be  brought  against  an  infant  (or 
one  who  was  an  infant  at  the  time  of  the  promise)  and  others, 
and  infancy  is  pleaded,  the  plaintiff  cannot  proceed  against  the 
others,  but  he  may  bring  a  new  action  against  them 
*  23  alone.  (5)  And  if  he  brings  an  action  *  originally 
against  them  alone,  and  the  non-joinder  of  the  infant  is 
pleaded  in  abatement,  the  infancy  is  a  sufficient  replication,  (r) 
although  a  ratification  by  him  who  has  been  an  infant  would 
be  a  good  rejoinder.  (5)  In  Massachusetts,  New  York,  New 
Hampshire,  Indiana,  and  Maine,  it  has  been  held  that  an  action 
brought  against  all  may  be  continued  against  the  other  parties 
when  one  of  them  pleads  infancy,  (t^  We  know  of  no  dis- 
rupt to  his  action  at  law,  if  he  shall  ())  Burgess  v.  Merrill,  4  Taunt, 
think  proper  so  to  do.  I  consider  him  469  ;  2  Vin.  Ab.  08. 
no  more  entitled  to  any  favor  or  assist-  (s)  Gibbs  v.  Merrill,  3  Taunt.  307. 
anee  than  a  feme  coveH  is  who  hves  But  such  rejoinder  must  be  supported 
apart  from  lier  husband,  and  holds  by  proof  of  a  ratification  made  before 
herself  out  as  a,  feme  sole,  and  contracts  suit  brought.  Tliornton  v.  Illingworth, 
debts,  is  entitled  to  any  summary  re-  2  B.  &  E.  824.  In  an  action  for  a 
lief  from  the  judges  at  common  law  ;  partnership  debt,  an  infant  partner 
Avho  always  leave  a  woman  of  that  must  be  made  co-plaintiff.  Teed  v. 
description  to  make  the  best  she  can  Elworthy,  12 East,  210;  Kelly.  Nainby, 
of  her  plea  of  coverture  in  any  action     10  B.  &  C.  20. 

brought   against   her,   and   constantly  (t)  Woodward  v.  Newhall,  1   Pick, 

refuse  to  interfere  so  as  to  afford  her     500 ;    Tuttle    v.   Cooper,    10    id.   281  ; 
anj-  summary  relief."  Hartness  v.  Thompson,  5  Johns.  160 ; 

ip)  As  where  A.  takes  B.,  liis  minor  Robertson  v.  Smith,  18  id.  478;  Mor- 
son,  sixteen  years  old,  into  partnership,  ton  v.  Croglian,  20  Johns.  123  ;  Judson 
Thougli  the  names  of  A.  &  B.  are  put  i\  Gibbons,  5  Wend.  224 ;  Ex  parte 
over  the  door  of  their  place  of  busi-  Nelson,  1  Cow.  424 ;  Cutts  v.  Gordon, 
ness,  B.  is  not  by  that  circumstance  so  13  Me.  474.  The  same  is  the  rule  in 
held  out  to  customers  as  an  adult  part-  Indiana.  Kirby  v.  Cannon,  9  Ind.  371. 
ner  as  to  lose  the  right  of  having  an-  So,  too,  in  New  Hampshire.  Gay  v. 
nulled  a  joint  fiat  of  bankruptcy  Johnson,  32  N.  H.  167.  See  also 
issued  against  the  firm  of  A.  &  B.  Wamsley  v.  Lindenberger,  2  Rand. 
Ex  pane  Lees,  1  Deason,  70.5.  478  ;  Cole  v.  Pennell,  id.  174  ;  Barlow 

(pp)  See  Story  Part.  §  25-5.  v.  Wiley,  3  A.  K.  Marsh.  457  ;  Slocum 

iq)  Chandler  v.  Parkes,  3  Esp.  76 ;     v.  Hooker,  13  Barb.  536. 
JafEray  v.  Frebain,  5  id.  47. 


CH.  III.] 


PARTNERS. 


25 


tinctly  opposite  ruling,  and  should  expect  that  this  would  be 
recognized  as  the  American  rule. 


2.  Married  Women. 

A  married  woman  is,  by  common  law,  incapable  of  trade, 
and  therefore  of  entering  into  partnership.  But,  by  the  "  cus- 
tom of  London,"  married  women  may  sometimes  be  sole 
traders,  (ii')  and  the  courts  of  this  country  are  quite  indulgent 
in  permitting  women  whose  husbands  have  deserted  them  — 
voluntarily,  or  by  compulsion  of  law  —  to  enter  into  business 
for  their  support.  And  we  know  no  reason  whatever  why  any 
married  woman  who  is  capable  of  being  a  sole  trader  may  not 
also  enter  into  a  commercial  partnership,  (f ) 


(u)  Langham  r.  Bewett,  Cro.  Car. 
68.  In  this  case,  the  custom  of  Lon- 
don was  read,  to  wit:  "That  a  feme 
sole  merchant  is  wliere  the  feme  trades 
by  herself  in  one  trade,  with  which 
her  husband  doth  not  meddle,  and 
buys  and  sells  in  that  trade."  But 
the  city  courts  only,  not  the  superior 
courts  at  Westminster,  take  notice  of 
this  custom,  so  that  a  feme  covert  can- 
not, by  virtue  of  it,  sue  or  be  sued  in 
the  latter  without  her  husband.  Cau- 
dell  i".  Shaw,  4  T.  R.  861;  Beard  v. 
Webb,  2  B.  &  P.  93  ;  Cosio  v.  De  Ber- 
nales,  1  C.  &  P.  266,  note. 

(v)  By  the  law  of  England  a  wife 
may  act  as  a  feme  sole,  if  her  husband 
has  been  banished,  or  has  abjured  the 
realm,  or  been  transported,  or  if  he 
has  professed  the  Catholic  religion. 
Co.  Litt.  132  b,  133  a  ;  Lean  r.  Sciiutz, 
2  W.  Bl.  1195;  Corbett  v.  Poelnitz,  1 
T.  R.  5  ;  Marshall  v.  Button,  8  id.  545 ; 
Carroll  v.  Blencow,  4  Esp.  27 ;  Marsh 
r.  Hutchinson,  2  B.  &  P.  231 ;  Ex  parte 
Franks,  1  Moore  &  S.  1.  So,  also,  if 
her  husband  is  an  alien,  who  has  never 
resided  in  England.  Deerly  v.  Maza- 
rine, 1  Salk.  116 ;  De  Gallon  v.  L'Aigle, 

1  B.  &  P.  357  ;  Marsh  ?•.  Hutchinson, 

2  id.  226  ;  Farber  t-.  Granard,  4  id.  80 ; 
Walford  i'.  De  Pienne,  2  Esp.  554; 
Franks  v.  De  Pienne,  id.  587  ;  Kay  v. 
Pienne,  3  Camp.  123.  The  principle 
upon  which  the  English  courts   have 


proceeded  in  these  cases  is.  that,  in 
the  view  of  the  law,  the  husband  has 
no  civil  existence,  and  that  the  wife  is 
therefore  in  a  state  of  civil  widowhood. 
In  this  country,  the  same  exceptions 
to  the  disability  of  married  women  to 
make  and  to  be  bound  by  contracts 
have  been  recognized  by  the  courts. 
Gregory  v.  Paul,  15  I\Iass.  31  ;  Robin- 
son V.  Reynolds,  1  Aik.  174 ;  Cornwall 
V.  Hoyt,"^  7  Conn.  420;  Wright  v. 
Wright,  2  Desau.  244 ;  Boyce  v.  Owens, 

1  Hill  (S.  C),  8;  M'Arthurr.  Bloom, 

2  Duer,  151.  And,  if  a  man  has  never 
lived  in  that  State  of  the  Union  in 
which  his  wife  resides,  he  is,  so  far  as 
that  State  is  concerned,  an  alien,  and 
his  wife  is  treated  as  a  feme  sole.  Ab- 
bot V.  Bayley,  6  Pick.  89.  But  Ameri- 
can courts  have  also  gone  farther,  and 
have  held  a  separation  from  and  aban- 
donment of  the  wife,  coupled  with  an 
intent  to  renounce  de  facto  the  marital 
relation,  to  operate  like  an  abjuration 
of  the  realm,  and  to  invest  the  wife 
with  the  rights  of  a  feme  sole.  And  in 
some  cases  slight  circumstances  have 
been  considered  sufficient  to  constitute 
such  desertion  and  renunciation.  Bog- 
get  i'.  Frier,  11  East,  301 ;  Gregory  y. 
Pierce,  4  Mete.  478  ;  Rliea  v.  Rhenner, 
1  Pet.  105  ;  Valentine  v.  Ford,  2  P.  A. 
Browne,  193 ;  Bean  v.  Morgan,  4 
McCord,  148 ;  Love  v.  Moynehan,  16 
111.  277;    Krebs   v.  O'Grady,  28  Ala. 


26 


THE   LAW   OF   PARTN'ERSHIP. 


[CH.  III. 


*  24  *  Tlie  whole  law  of  married  women  is,  in  this  country, 

or  in  many  of  our  States  at  least,  in  a  transition  condi- 
tion ;  and  it  is  not  easy  to  ascertain  or  to  define  it.  There  is 
everywhere  a  stron<^  disposition  to  escape  from  the  old  feudal 

doctrine  which  almost  merged  the  existence  of  the  wife 

*  25      in  that   of    the    husband,  (w)       *  We    do    not   always 


726.  In  Massachusetts,  a  wife  di- 
vorced a  mensa  et  thoro  may  sue  and  be 
sued  as  a  feme  sole.  Dean  v.  Richmond, 
6  Pick.  461  ;  Pierce  v.  Barnham,  4 
Mete.  303.  Otherwise  in  England. 
Lewis  V.  Lee,  3  B.  &  C.  291. 

(iv)  Legislation  in  this  country  has 
made  tlie  most  important  and  exten- 
sive additions  to  the  powers  of  married 
women.  So  early  as  1718,  in  Penn- 
sylvania, and  1744,  in  South  Carolina, 
the  privileges  of  feme  sole  traders  by 
the  custom  of  London  were  extended 
to  married  women  in  those  States, 
which  were  then  colonies.  See  Burke 
V.  Winkle,  2  S.  &  R.  189 ;  Jacobs  v. 
Fatherstone,  6  W.  &  S.  346  ;  Newbig- 
gin  V.  Pillans,  2  Bay,  462 ;  McDowall 
V.  Wood,  2  Nott  &  McCord,  242  ;  Stark 
V.  Taylor,  4  McCord,  413.  Within 
the  last  few  years,  however,  the  legis- 
latures of  very  many  States  have 
made  much  greater  innovations  upon 
the  law  of  husband  and  wife.  The 
various  statutes  differ  of  course  in 
their  details,  and  are  changing  every 
year.  Their  exact  nature  and  effect 
remain  to  be  determined  by  time  and 
adjudication.  But,  in  general,  their 
object  and  scope  are  the  same,  and 
may  be  said  to  be  to  give  to  a  married 
woman  the  rights  of  a  feme  sole,  when 
there  has  been  a  de  facto,  though  not 
legal,  dissolution  of  the  marriage  tie, 
as  by  the  desertion  of  the  husband,  or 
his  imprisonment,  or  by  a  divorce  o 
mensa  et  thoro;  and,  secondly,  to  give 
her  those  rights  with  respect  to  all  the 
property  which  she  may  possess  in  her 
own  right  at  the  time  of  her  marriage, 
or  may  afterwards  acquire  by  her  own 
exertions,  or  otherwise  independently 
of  her  husband.  See  Rev.  Stat,  of 
Maine,  1857,  ch.  61 ;  Colby  v.  Lamson, 
89  Me.   119;  Oxnard  v.  Swanton,  id. 


12.5  ;  Rev.  Stat,  of  New  York  (4th  ed.), 
1852,  p.  331  ;  Berley  r.  Rampacher,  5 
Duer,  183  ;  Freeman  v.  Orzer,  id.  476  ; 
Rev.  Code  of  North  Carolina,  ch.  39, 
§  13  ch.  56 ;  Acts  of  Pennsylvania  of 
1848,  1850,  and  1851  ;  Laws  of  New 
Jersey,  1852,  ch.  41;  Gen.  Stat,  of 
Mass.  ch.  108  ;  Rev.  Stat,  of  Louisi- 
ana, 1856,  p.  560  ;  Rev.  Stat,  of  Rhode 
Island,  1857,  chs.  135,  136;  Acts  of 
Vermont,  1847  ;  Rev.  Stat,  of  Connec- 
ticut, ch.  1,  §  7,  1849;  Act  of  1849, 
ch.  20  ;  Acts  of  Alabama,  1850  ;  Laws 
of  Texas,  ch.  79,  1848  ;  Acts  of  Mary- 
land, 1853,  ch.  245 ;  Anger  v.  Price,  9 
Md.  552 ;  Practice  Act  of  California, 
1851  ;  Snyder  v.  Webb,  3  Cal.  3  ;  Caw- 
shaw  V.  Cawshaw,  id.  312  ;  Wheeler 
V.  Jennings,  17  B.  Mon.  476 ;  Rev. 
Stat,  of  Michigan,  1846,  ch.  85,  §§  25, 
26  ;  Session  Laws,  1855,  p.  420  ;  Mark- 
ham  t».  Markham,  4  Gibbs,  305;  Brown 
V.  Fifield,  id.  .322 ;  Dalton  v.  Murphy, 
30  Mo.  59  ;  Lee  v.  Bennett,  32  id.  119; 
Laws  of  Wisconsin,  1850,  ch.  44  ;  Rev. 
Stat  of  Indiana,  p.  320  ;  Acts  of  1853, 
p.  57,  §  5 ;  McCarty  v.  Mewhinney,  8 
Ind.  513. 

In  equity,  also,  it  is  the  English 
doctrine,  that,  where  property  is  set- 
tled upon  a  married  woman  to  her 
separate  use,  she  has  complete  jus  dis- 
ponendi,  and,  as  far  as  that  property  is 
concerned,  is  competent  to  act  in  all 
respects  as  a  feme  sole,  unless  express 
restrictions  are  prescribed  by  the  deed 
of  settlement.  The  courts  of  chan- 
cery will  enforce  all  her  engagements 
against  such  property,  real  or  personal. 
Thus,  a  feme  covert,  with  property  set- 
tled to  her  separate  use,  renders  it 
liable,  by  accepting  a  bill  of  exchange, 
Stuart  V.  Kirkwall,  3  Madd.  387  ;  or 
by  making  a  promissory  note,  Bulpin 
V.  Clark,  17  Ves.  365 ;  Field  i;.  Sowle, 


CH.  III.] 


PARTNERS. 


27 


remember,  however,  that  tlie  opposite  extreme  of  wrong  is 
not  necessarily  right.  It  is  undoubtedly  well  to  give  a  wife 
a  more  secure  possession  of  and  a  better  control  over  her  prop- 
erty than  she  enjoys  at  common  law.  But  if  some  of  the 
changes  are  made  which  are  from  time  to  time  pressed  upon 
legislatures,  or  indeed  if  some  of  the  laws  now  existing  are 
carried  out  to  the  full  extent  of  their  language,  we  do  not 
know  why  a  wife  might  not  enter  into  a  commercial  partnership 
with  her  husband,  and  he  and  she  constitute  a  firm, 
as  seems  to  be  the  case  in  *  some  parts  of  Continental  *  26 
Europe,  (a;)  But  we  do  not  know  that  any  law  has  been 
enacted  of  which  it  can  be  presumed  that  this  was  its  purpose. 
And  if  a  single  woman  was  a  member  of  a  firm, — which  she 
certainly  may  be,  —  we  have  no  doubt  that  what  we  consider  the 
established  principle,  by  which  her  marriage  dissolved  the  part- 
nership, would  prevail,  generally  at  least,  in  this  country.  (?/) 


4  Russ.  112.  In  New  York,  the  rule 
in  equity  was  substantially  the  same, 
till  changed  by  the  Revised  Statutes 
of  that  State,  regulating  trusts.  Noyes 
V.  Blakeman,  8  Sandf.  531.  But  the 
courts  of  this  country  generally  appear 
to  have  adopted  an  opposite  rule,  and 
to  incline  to  the  position  that  a  mar- 
ried woman  has  no  power  over  her 
separate  estate  that  is  not  plainly 
given  her  by  the  instrument  creating 
such  estate.  See  1  Lead.  Cas.  Eq. 
324,  34o,  where  the  whole  subject  is 
discussed  and  the  principal  authorities 
collected.  Also,  2  Kent  Com.  (9th 
ed.)  pp.  152-164;  Dobbin  y.  Hubbard, 
17  Ark.  189 ;  Whitesides  v.  Cannon, 
23  Mo.  457 ;  Lillard  v.  Turner,  1(3  B. 
Mon.  374  ;  Burch  v.  Breckinbridge,  id. 
482.  In  these  instances,  at  law  and 
in  equity,  married  women  may  bind 
themselves  by  their  contracts,  and  of 
course  by  those  made  in  the  way  of 
trade.  Wherever  they  have  tiiis  gen- 
eral power,  it  would  seem  to  follow, 
as  suggested  in  the  text,  that  they  also 
have  the  power  to  enter  into  a  com- 
mercial partnership.  Where  a  feme 
covert  entered  into  agreement  of  part- 
uersliip,  providing  for  its  duration  be- 
yond  tlie  death  of  her  husband,  and 


this  agreement  was  executed,  and  the 
partnership  continued  beyond  her  hus- 
band's death  until  her  own,  it  was 
held,  that  the  copartnership  related 
back  to  the  execution  of  the  articles, 
so  as  to  give  all  parties  the  same  rights 
and  advantages  as  they  would  have 
been  entitled  to  if  the  feme  covert  had 
been  a  feme  sole  at  the  date  of  their 
execution.  Everit  v.  Watts,  10  Paige, 
82.  [Married  women  may  be  partners 
in  Ohio,  Swasey  v.  Antram,  21  Ohio 
St.  87  ;  in  Illinois  (with  her  husband), 
lie  Kinkead,  3  Biss.  (U.  S.  C.  Ct.) 
405,  and  note  ;  in  Virginia,  Penn  v. 
Whitehead,  17  Graft.  (Va.)  503.  But 
not  in  Maryland,  Bradstreet  v.  Baer, 
41  Md.  19 ;  nor  in  Massachusetts, 
Todd  V.  Clapp,  118  Mass.  495.]  But 
the  vesting  in  the  husband  of  his 
wife's  shares  in  a  joint  stock  company, 
so  as  to  impose  upon  him  the  liabilities 
of  a  partner,  must  always  be  subject  to 
the  provisions  of  the  original  deed  con- 
stituting tlie  company,  those  provisions 
being  in  fact  the  terms  upon  which  the 
members  of  the  partnershij)  consent 
to  the  admission  of  a  new  member. 

(x)  As  in  Spain,  Cosio  v.  De  Ber- 
nalles,  Ryan  &  M.  102, 1  Car.  &P.  266. 

(y)  Watson  on  Part.  384;  Gow  on 


28  THE   LAW    OF   PARTNERSHIP.  [CH.  III. 

There  are  kinds  of  partnership,  as  joint-stock  companies  and 
the  like,  in  which  a  partner  may  only  own  stock  or  shares,  and 
take  no  part  whatever  in  the  active  management  of  the  concern. 
We  know  nothing  to  prevent  a  wife  from  holding  such  stock  or 
shares;  but  we  think  her  ownership  —  or  partnership,  if  it 
should  be  so  called  —  would  be  that  of  her  husband,  and  that 
upon  him  would  rest  generally  all  the  liabilities  and  obligations 
of  a  partner,  (z)  So,  if  a  man's  wife  inherited  an  interest  in  a 
partnership,  and  he,  instead  of  having  the  accounts  settled,  and 
the  interest  withdrawn,  as  he  might  do,  permitted  it  to  continue 
in  the  business,  this  would  make  him  a  partner,  even  without 
his  actually  withdrawing  and  appropriating  funds.  It  certainly 
would  have  this  effect  wherever  the  common  law  so  far  pre- 
vailed that  all  her  share  of  the  profits  were  at  once  his.  If, 
however,  the  property  or  interest  were  given  to  trustees  for  the 

sole  benefit  of  the  wife,  free  from  any  right  or  control  of 
*  27      the  husband,  then  the  mere  fact  of  its  *  continuance  in 

the  business  would  not  render  him  liable  as  partner,  al- 
though it  would  probably  cast  this  responsibility  on  the  trustees  ; 
as  otherwise  it  would  be  a  kind  of  limited  pai'tnership,  without 

Part.  225.  See  post,  ch.  12,  §  5.  And  under  Stat.  Geo.  4,  cli.  46,  §  13,  could 
see  Brown  v.  Jewett,  18  N.  H.  230.  issue.  The  same  was  held  In  Ness  v. 
(z)  Gow  on  Part.  2.  In  Dodgson  v.  Angas,  3  Exch.  806,  where  tlie  defend- 
Bell,  5  Exch.  57,  the  question  was,  ant's  wife  had  bought  shares  after  her 
wliether  the  defendant  was  a  partner  marriage,  witli  the  consent  of  licr  hus- 
in  a  joint-stock  banking  company  in  band,  but  out  of  tlie  proceeds  of  lier 
which,  before  and  at  the  time  of  his  own  estate ;  and  this  although  her 
marriage,  his  wife  was  a  legally  regis-  husband  had  received  some  of  thedivi- 
tercd  owner.  After  their  marriage,  dends,  signed  receipts  therefor  as  her 
the  shares  had  contiinied  to  stand  in  agent,  and  attended  company  meetings, 
the  maiden  name  of  defendant's  wife,  at  which  only  shareholders  were  en- 
and  she  had  received  dividends  and  titled  to  be  present.  It  is  to  be  observed, 
paid  calls  in  respect  of  them,  though  that,  in  this  last  case,  upon  the  author- 
without  tlie  knowledge  of  her  husband,  ity  of  which  Dodgson  v.  Bell  was 
■who  never  in  any  way  meddled  with  decided,  great  stress  is  laid  by  the 
them.  The  company's  deed  of  settle-  judges  upon  the  fact  that  the  remedy 
ment  provided,  that  the  husband  of  a  attempted  to  be  enforced  against  the 
female  shareholder  should  not,  merely  defendant,  as  a  partner  by  virtue  of 
in  respect  of  his  wife's  shares,  become  his  wife's  interest,  was  an  extraor- 
a  member  of  the  company,  but  that  dinary  statutable  remedy.  In  both 
he  must  first  comply  with  certain  con-  these  cases  the  question  was  as  to  who 
ditions.  The  defendant  not  having  were  partners  inter  se,  and  not  as  to 
fulfilled  tliese  conditions,  it  was  held,  who  were  partners  with  respect  to 
that  he  was  not  a  member  against  third  persons.  In  re  Keene's  Execu- 
whom   a   sci.  fa.    to    levy   execution  tors,  8  De  Gex,  Mac.  &  Gor.  272. 


CH.  III.]  PARTNERS.  29 

the  precautions  and  safeguards  of  the  law  on  that  subject.  And 
if  the  law  of  the  State  where  the  case  occurred  gave  to  the  wife, 
so  far  as  her  property  was  concerned,  the  status  of  a  single 
woman,  she  might  then  be  a  partner. 

3.    Of  Aliens. 

An  alien  friend  can  be  a  partner  in  a  commercial  house  ;  for 
there  is  nothing  to  prevent  his  holding  any  personal  property, 
or  in  bringing  and  maintaining  or  defending  any  suits,  (a)  If 
the  property  of  the  firm  were  in  part  or  in  whole  real  estate,  a 
question  might  arise.  If  the  estate  was  in  a  country  in  which 
aliens  could  not  hold  land,  the  legal  title  certainly  could  not  be 
in  him  ;  but  we  think  that  courts  of  equity  would,  in  that  case, 
hold  the  partners  possessing  the  legal  title  as  trustees  for  the 
partnership.  They  would  certainly  do  this  where  one  of  many 
partners  alone  holds  the  title,  and  there  were  no  aliens ;  and 
we  see  no  sufficient  reason  why  they  should  not,  if  one  or  more 
of  the  cestui  que  trusts  were  aliens.  (&) 

The  rule  is  quite  otherwise  as  to  alien  enemies.  Here  partner- 
ship is  impossible,  (c)  And  if  there  be  a  partnership  with  an 
alien  friend,  and  war  breaks  out  between  the  countries,  it  en- 
tirely suspends  the  partnership.  From  the  language  sometimes 
used,  it  might  be  inferred  that  a  war  would  terminate  and  annul 
such  partnership  altogether  ;  (d)  and  it  might  have  this  effect 
in  many  cases.  But  where  the  terms  and  business  and  state 
of  affairs  of  the  partnership  were  such  that  an  entire  suspen- 

(a)  Co.  Litt.  129  b.  subject  a  learned  note  to  the  case  of 

(b)  See  post,  ch.  11.  Clemontson  v.  Blessing,  11  Exch.  135. 

(c)  The  reason  is,  that  the  existence  {d}  See  Griswold  v.  Waddington,  15 
of  a  state  of  hostility  between  two  coun-  Johns.  57;  16  id.  438.  [A  commercial 
tries  renders  illegal  all  commercial  partnership  between  citizens  of  the  re- 
intercourse  between  their  citizens,  spective  belligerents  was  dissolved  by 
Bristow  V.  Towers,  6  T.  R.  35  ;  Potts  the  late  rebellion.  Woods  v.  Wilder,  43 
V.  Bell,  8  id.  548  ;  Willison  v.  Patteson,  N.  Y.  164.  Bat  the  general  doctrine  of 
7  Taunt.  439 ;  The  Hoop,  1  Rob.  Adm.  the  text  seems  to  be  upheld  by  the 
196;  The  Indian  Chief,  3  id.  22;  weight  of  modern  authority.  Kershaw 
The  Jonge  Pieter,  4  id.  79  ;  The  v.  Kelsey,  100  Mass.  561 ;  Cohen  v.  N.  Y. 
Franklin,  6  id.  127  ;  Ex  parte  Bouss-  Life  Ins.  Co.,  50  N.  Y.  610.  See  also 
maker,  13  Ves.  71 ;  Griswold  v.  Wad-  Mutual  Benefit  Life  Ins.  Co.  v.  Hild- 
dington,  15  Johns.  57,  16  id.  4-38;  The  yard,  37  N.  J.  Law,  444,  where  the 
Rapid,  8  Cranch,  155 ;  The  Julia,  1  cases  upon  the  efiect  of  war  upon  the 
Rob.  Adm.  181;  Scholefield  v.  Eichel-  abrogation  of  contracts  are  fully  col- 
berger,  7  Pet.  585 ;  The  San  Jose  lected ;  N.  Y.  Life  Ins.  Co.  v.  Statham, 
Indiano,  2   Gall.   268.     See  upon  this  93  U.  S.  24.] 


30  THE   LAW    OP   PARTNERSHIP.  [CH.  III. 

sion  of  all  rights  and  intercourse  during  the  war  would  still 
leave  the  partnership  in  a  condition  to  go  on  as  before  when 
the  war  ended,  we  should  say  that  the  partnership  revived  by 

peace,  and  did  not  need  to  be  created  anew. 
*  28  *  No  alien  enemy  can  bring  any  action  in  any  court  of 

the  hostile  country,  (e)  And  this  rule  has  been  applied 
to  a  citizen  then  resident  in  a  foreign  country,  on  the  ground 
that  if  he  prevailed,  and  funds  in  satisfaction  of  his  judgment 
were  remitted  to  the  foreign  country,  it  would  be  a  strengthen- 
ing of  the  enemy.  (/) 

There  is  nothing  to  prevent  a  firm  consisting  wholly  of  aliens 
from  having  an  agency  in  this  country,  and  bringing  any  per- 
sonal actions.  Even  if  husband  and  wife  form  a  commercial 
partnership  in  a  foreign  country  in  which  such  a  partnership 
could  legally  exist,  it  would  be  difficult  to  say  that  they  could 
not  maintain  an  action  together,  in  this  country  even  as  joint 
plaintiffs,  however  unusual  such  a  thing  might  be.  (^) 

4.    Of  the  Insane  and  Persons  v.nder  Cruardianship. 

A  fatuous  or  insane  person  could  neither  transact  business  on 
his  own  account  nor  as  a  partner.  The  degree  of  mental  inca- 
pacity which  should  have  this  effect  is  hardly  capable  of  defini- 
tion ;  and  the  question  whether  it  existed  might  be  a  difficult 
question  of  mixed  law  and  fact.  So,  if  one  were  generally  sane, 
with  attacks  of  insanity,  or  generally  insane,  with  lucid  inter- 
vals, it  might  be  difficult  to  apply  the  rule ;  (Ji)  but  the  rule 
itself  certainly  must  be  that  no  one  is  incapacitated  from  be- 
coming a  partner  who  is  able  to  transact  business  of  his  own. 

(e)  Co.  Litt.  129  b  ;  Anthon  v.  Fislier,  disabled  from  suing  in  her  own  name  on 

Dougl.  649,  note  ;  Brandon  y.  Nesbitt,  a  contract  made  either  before  or  during 

6  T.   R.  23  ;    Willison  v.    Patteson,    7  coverture.    De  Wahl  v.  Braune,  1  Hurl. 

Taunt.  439 ;  Griswold  v.  VVaddington,  &  Nor.  178. 

15  Johns.  57,  16  id.  438;  Hoare  v.  (/)  M'Connell  v.  Hector,  3  B.  &  P. 
Allen,  2  Dallas,  102.  And  the  disa-  113;  O'Mealey  i;.  Wilson,  1  Camp.  482; 
bility  to  sue  attaches  to  an  alien  carry-  Roberts  v.  Hardy,  3  M.  &  S.  533  ;  The 
ing  on  trade  in  an  enemy's  country,  Julia,  8  Cranch,  181 ;  Griswold  y.  Wad- 
though  lie  resides  there  also  as  consul  dington,  16  Johns.  438. 
of  a  neutral  country.  His  individual  (9)  See  ch.  9,  §  1. 
character  for  purposes  of  trade  is  not  [h)  See  the  impressive  remarks  of 
merged  in  his  national  character.  Al-  Lord  Chancellor  Thurlow,  in  Attorney 
bretcht  v.  Sussman,  2  Ves.  &  B.  323.  General  v.  Panither,  3  Bro.  Ch.  Rep. 
The  wife   of  an   alien   enemy  is  also  441. 


CH.  III.]  PARTNERS.  31 

Indeed,  it  might  perhaps  be  said  that  one  with  a  less  measure 
of  intellect  might  become  a  partner,  because  he  would  have  the 
assistance  and  protection  of  others,  and  so  be  guarded  against 
liis  own  imbecility. 

*  To  those    under   guardianship   as    spendthrifts    or      *  29 
otherwise,  or  whom  habitual  intoxication  has  enfeebled 
and  stultified,  a  similar  rule  must  apply,  (i)     They  are  incom- 
petent to  transact  business  on  their  own  account,  and  therefore 
incapable  of  entering  into  a  commercial  partnership,  (y) 

5.    Of  Corporations. 

The  question  has  arisen  in  one  or  two  cases  whether  a  cor- 
poration, considered  as  a  person,  may  become  a  partner,  either 
with  another  corporation  or  with  individuals.  We  have  alluded 
to  this  already.  Perhaps  no  other  general  rule  on  this  subject 
can  be  stated  than  that  a  corporation  may  incur  the  liability  of 
a  partner  as  to  third  persons,  although,  on  general  principles, 
it  would  be  inconvenient,  if  not  impossible,  for  a  corporation, 
which  is  only  a  legal  person,  to  enter  into  a  full  copartnership, 
either  with  another  legal  person  or  with  natural  persons.  (Jc) 

[i)  Menkins  v.  Lightner,  18  111.  282  ;  and  such  as  are  necessarily  incident  to 
Mansfield  f.  Watson,  2  Clarke,  111.  So,  the  grant  made  to  them.  Corporations 
an  agreement  to  form  a  partnership  at  common  law  have  certain  powers, 
would  clearly  be  avoided,  by  proof  but  not  such  as  would  authorize  the 
that  at  the  time  it  was  made  one  of  the  forming  of  a  partnership,  or  the  consoli- 
parties  "  had  not  an  agreeing  mind,"  dation  of  two  corporations  into  one." 
through  temporary  intoxication.  Pitt  In  Catskill  Bank  v.  Gray,  14  Barb. 
V.  Smith,  3  Camp.  33 ;  Fenton  v.  Hollo-  479,  one  of  the  questions  presented  was 
way,  1  Stark.  126.  See  Lightfoot  v.  whether  a  corporation  could  be  a  part- 
Heron,  3  Younge  Exch.  586.  ner  with  an  individual  even  as  to  lia- 

{j)  See  further,  on  the  subject  of  per-  bility.  The  language  of  the  court  is  : 
sons  of  insufficient  mind  to  contract,  1  "  Strictly,  perhaps,  corporations  should 
Eonbl.  Eq.  b.  1,  ch.  2,  §  3 ;  1  Story  Eq.  be  and  are  restricted  from  contracting 
ch.  6,  §  229,  et  seq.  ;  1  Pars.  Cont.  (5th  partnerships  with  individuals  or  cor- 
ed.) b.  1,  ch.  20  ;  2  Pothier  on  Obhga-  porations,  and  as  between  the  parties  to 
tions,  App.  No.  3,  p.  23.  the  contract,  acting  upon  equal  knowl- 

(^-)  In  Sharon  Canal   Co.  v.  Fulton  edge,  a  question  of  validity  might  be 

Bank,  7  Wend.  412,  the  court  say  :  "  It  raised  ;  but  a  corporation  may  contract 

cannot  be  necessary  to  decide  whether  with  an  individual  in  furtherance  of  the 

it  is  in  the  power  of  the  two  cori)ora-  object  of  its  creation,  the  effect  of  which 

tions,  who  are  the  plaintiffs,  to  consoli-  contract  may  be   to  impose  upon  the 

date  their  stock  or  to  form  a  partnership,  company,  as  respects  the  community, 

General  principles  are  against  the  power  the  liabilities  of  a  partner.     I  cannot 

of  corporations  to  do  such  acts.    They  think  that  a  corporation  may  so  shape 

have  no  powers  but  such  as  are  granted,  its  contracts,  relating  to  the  business 


32  THE    LAW   OF   PARTNERSHIP.  [CH.  III. 


SECTION    II. 

OF    THE    KINDS    OF    PARTNERS. 

Different  names  are  given  to  partners,  describing  tlieir  re- 
spective relations  to  the  partnership.  The  principal  names  are  : 
1.  Ostensible,  or  Public.  2.  Secret,  or  Unknown.  3.  Nominal. 
4.  Silent.  5.  Dormant.  6.  Retiring.  7.  Incoming.  8.  Gen- 
eral.    9.  Special. 

1.    Ostensible  or  Public  Partners. 

This  name  indicates  that  the  partner  is  "  shown  forth  "  to  the 
world  as  one.  If  this  is  done  with  his  own  consent,  all  the  lial)ility 
of  a  partner  attaches  to  him.  There  is  no  special  way  of  hold- 
ing such  partner  forth.  It  may  be  done  by  having  his  name  in 
the  firm  or  style  of  the  partnership,  or  on  the  signs  at  the  door, 
or  by  advertisement,  or  by  circular  letters.  (V)  Indeed,  we  ap- 
prehend that  if  a  partner  generally  unknown  is  made  known  as 
such  in  any  way  to  any  one  man,  with  his  own  consent,  he  is,  so 
far  as  that  man  is  concerned,  an  ostensible  partner  in  every 
legal  aspect  and  liability,  as  much  as  if  advertised  to  the  world. 
In  this  sense,  therefore,  there  would  be  a  difference  between  the 
words  "  ostensible  "  and  "  public,"  —  the  latter  meaning  shown 
as  a  partner  to  all  the  world,  —  although  these  two  words  are 
commonly  used  as  synonymous. 

2.  Secret  or  Unknown  Partners. 

He  is  a  secret  partner  who  keeps  himself  concealed  from 
the    public,   and    from    all    the    customers   of    the   partner- 

for  which   it  was   incorporated,  as   to  reason  why  a  corporation,  more  than  a 

share  jointly  with  an  individual  in  the  natural  person,  who  participates  in  the 

profits  of  such  business  ;    subtract  its  profits  as  such  of  a  particular  business 

interest  in  the  profits  from  the  fund  on  in  which  it  may  lawfully  engage,  should 

which  the  creditors  of  the  concern  had  not  be  holden  to  the  public  for  losses." 

a  riglit  to  rely  for  the  payment  of  the  See   Marine   Bank   v.    Ogden,    29  111. 

debts  due  to  them ;   and,  when  called  248. 

upon  by  such  creditors,  be  permitted  (/)  Partners  whose  names  are  not  ex- 
to  escape  liability  altogether,  on  the  pressed  in  the  firm,  but  who  are  simply 
ground  that  the  profits  were  realized  indicated  by  the  word  "  Co.,"  are  not 
as  the  partner  of  an  individual,  which  dormant,  but  ostensible,  partners.  God- 
relation  the  corporation  could  not  le-  dard  v.  Pratt,  10  Pick.  428. 
gaily   occupy.     I  know   of  no   sound 


CH.  III.]  PARTNERS.  33 

ship,  (m)  We  *  shall  hereafter  see  that  neither  the  *  31 
word  *'  Co.,"  nor  any  other  public  designation  of  a  co- 
partnership is  necessary  to  bind  all  the  partners.  But  this 
important  distinction  is  to  be  taken  :  A  partner  is  liable  either 
because  he  is  one  in  fact,  or  because  he  holds  himself  out  or 
suffers  himself  to  be  held  out  as  one.  In  the  latter  case,  he  is 
liable  whether  actually  a  partner  or  not,  as  we  shall  presently 
see.  But,  in  the  former  case,  he  is  not  liable,  unless  it  can  be 
shown  that  he  is  actually  a  partner.  If  he  is,  he  has  gained 
nothing  by  being  secret.  Of  course,  so  long  as  he  is  undis- 
covered he  is  safe  :  but  as  soon  as  he  is  found  to  be  a  partner, 
even  if  this  be  not  until  after  an  action  has  been  brought  against 
the  other  partners,  he  becomes  liable  ;  because,  although  he 
added  no  credit  to  the  firm,  and  permitted  no  debt  to  be  in- 
curred on  his  credit,  he  is  equally  liable  as  if  he  had  done  this, 
from  the  mere  fact  that  he  shared  the  advantages  of  the  part, 
nership. 

If  a  secret  partner  is  announced  as  a  partner  to  a  customer, 
without  his  own  consent  or  connivance  or  ratification,  his  rights 
are  wholly  unaffected  by  the  customer's  knowledge,  and  depend 
entirely  upon  the  fact  of  his  partnership.  Not  so,  as  we  have 
seen  in  the  preceding  subsection,  if  he  permits  himself  to  be 
made  known  as  a  partner  to  a  customer. 

3.  Nomiyial  Partner. 

Every  ostensible  partner  is  a  nominal  or  known  partner ; 
but  by  this  designation  is  usually  meant,  that  the  partner  is 
only  nominally  one.  (n)  That  is,  he  is  so  held  forth  as  a  part- 
ner, with  his  own  consent,  by  any  of  the  means  usually  em- 
ployed for  that  purpose,  as  to  make  him  liable  as  a  partner 
on  the  ground  that  he  has  given  his  credit  to  the  firm,  and 
authorized  engagements  on  his  account,  (o)     It  follows,  there- 

(m)  United  States  Bank  v.  Binney,  5  a  nominal  partner  with  another  man 

Mason,  185.  may  be  called  by  him  as  witness.     He 

(n) /?.r /jarte  Chuck,  8  Bing.  469.    See  is   not   incompetent   on   the    score   of 

Currier  v.  Silloway,  1  Allen,  19 ;  Lind-  interest.     Parsons    v.    Crosby,   5  Esp. 

sey  V.  Edminston,  25  111.  o59  ;  Jacobsen  199  ;  Mawman  v.  Gillett,  2  Taunt.  327. 
V.  Hennekenius,  1  Bro.  P.  C.  432;  Fox         (o)  Tiie  ground  of  the  liability  of  a 

V.  Clifton,  6  Bing.  795  ;   Hicks  v.  Cram,  nominal  partner  is  thus  stated  in  a  lead- 

17  Vt.  449.     Hence  one  who  is  merely  ing  case,  Waugh  v.  Carver,  2  H.   Bl. 


34 


THE   LAW   OF   PARTNERSHIP. 


[CH.  III. 


*  32  fore,  that  if  a  person  *  suffers  himself  to  be  regarded  as 
a  partner  by  any  customer  of  the  firm,  to  him  he  is 
liable  as  if  he  were  one,  although  he  is  in  fact  no  partner,  and 
not  generally  supposed  to  be  one.  The  nominal  partner  is  the 
converse  of  the  secret  partner. 

4.  Silent  Partner. 

Tliis  name  is  properly  and  generally  applied  to  those  who 
take  no  active  part  whatever  in  the  business  of  the  firm,  and 
exercise  none  of  the  rights  of  a  partner,  except  that  of  receiv- 
ing their  share  of  the  profits  from  time  to  time.  He  is  a  silent 
partner,  whether  his  name  be  made  known  in  any  way  as  a 
partner  or  not.  There  is,  however,  a  very  common  use  of  the 
word  "  silent,"  which  differs  somewhat  from  that  above  stated. 
It  seems  to  be  thought  tliat  he  only  is  a  silent  partner  who  is 
silent  to  the  world  in  respect  to  his  interest  in  the  firm,  as  well 
as  silent  within  the  firm  in  its  transaction  of  business.  In  this 
sense,  a  silent  partner  is  one  who  is  both  inactive  and  unknown. 
And  there  are  those  who  go  so  far  as  to  think  the  silence  to 


235  :  "  A  case  may  be  stated,  in  which 
it  is  the  clear  sense  of  the  parties  to 
the  contract  that  they  shall  not  be 
partners ;  that  A.  is  to  contribute 
neither  labor  nor  money,  and,  to  go 
still  farther,  not  to  receive  any  profits. 
But,  if  he  will  lend  his  name  as  a  part- 
ner, he  becomes  as  against  all  the  rest 
of  the  world  a  partner,  not  upon  the 
ground  of  the  real  transaction  between 
them,  but  upon  principles  of  general 
policy,  to  prevent  the  frauds  to  which 
creditors  would  be  liable,  if  tliey  were 
to  suppose  that  they  lent  their  rasney 
upon  the  apparent  credit  of  three  or 
four  persons,  wlien  in  fact  they  lent 
it  only  to  two  of  them,  to  whom,  with- 
out the  others,  they  would  have  lent 
notliing."  So  in  Ex  parte  Watson,  19 
Ves.  461,  Lord  Eldon  says  :  "  There  is 
a  wide  difference  between  a  dormant 
and  nominal  partner.  The  former  is 
liable  in  respect  of  the  profits  ;  .  .  . 
but  if  one,  retiring  or  coming  into  the 
trade,  suffers  his  name  to  be  used,  it  is 
of  no  consequence,  whether  he  has  a 


salary,  or  simi  of  money,  to  be  paid  by 
others,  or  to  be  got  out  of  the  profits. 
It  is  the  use  of  the  name  that  makes 
him  liable,  as  one  of  the  persons  by 
and  to  whom  every  thing  is  bought 
and  sold."  So,  in  Hicks  v.  Cram,  17 
Vt.  449,  the  court  say :  "  It  is  the 
representing  one's  self,  or  suffering 
one's  self  to  be  represented,  as  a  part- 
ner, that  creates  a  liability  to  third 
persons  ;  and  tliis  is  sufficient  to  create 
a  liability,  notwithstanding  the  truth 
should  prove  to  be,  tliat  the  person  so 
suffering  himself  to  be  held  out  as  part- 
ner, in  fact  was  not  so.  This  is  in 
order  to  preserve  good  faith  and  pre- 
vent fraud,  and  is  almost  the  only 
ground  of  an  estoppel  in  pais.  If  one 
man  has  made  a  representation  whicli 
he  expects  another  may  or  will  act 
upon,  and  the  other  does  in  fact  act 
upon  it,  he  is  estopped  to  deny  tlie  truth 
of  the  representation.  So,  too,  equally, 
when  one  remains  silent,  and  suffers 
another  to  make  the  representation." 


CH.  III.]  PARTNERS.  35 

the  world  to  be  the  main  thing,  understanding  by  the  phrase 
"  silent  partner  "  one  who  is  not  known  as  such,  whether  active 
or  otherwise  ;  thus  making  the  word  "  silent "  synony- 
mous with  the  word  "  secret.''     We  prefer  *  the  defi-      *  33 
nition  we  have  first  above  given,  as  the  most  reasonable, 
and  as  that  which  is  best  sustained. 

5.  Dormant  Partner. 

This  phrase  also  is  used  in  somewhat  different  senses.  Indeed, 
there  is  much  confusion  and  inaccuracy  in  the  common  use  of 
the  three  words,  —  "  secret,"  "  silent,"  and  "  dormant."  Many 
use  this  word  as  if  it  meant  only  unknown  and  secret ;  and 
apply  the  designation  of  dormant  or  sleeping  to  partners  whose 
names  are  concealed,  however  awake  and  active  they  may  be 
in  the  business  of  the  firm.  Others  consider  the  word  as 
properly  applied  to  those  only  who  are  wholly  inactive  in  the 
business,  whether  known  to  have  an  interest  or  not.  We  think, 
however,  the  word  implies  both  the  qualities  of  secrecy  and 
inactivity,  (p)     It  seems  to  be  most  common  and  most  con- 

(/')  These  two  qualities  are  attributed  Winship  v.  Bank  of  the  United  States, 
to  the  dormant  partner  in  tlie  following  5  Pet.  573.  In  Mitchell  v.  Dall,  2 
expression  of  the  difference  between  a  Harris  &  G.  159,  however,  and  Bank 
dormant  and  an  open  partnership.  "  It  of  St.  Mary's  v.  St.  John,  25  Ala.  566, 
seems  to  me  to  be  this  :  when  the  persons  seem  to  have  been  held  dor- 
names  of  the  partners  do  or  do  not  mantpartners.wlio,  though  their  names 
appear  in  their  accounts,  their  adver-  were  concealed,  took  an  active  part  in 
tisements,  or  their  paper  ;  when  the  the  business  of  the  firm.  See  Lloyd 
business  is  carried  on  in  the  name  of  v.  Archbowle,  2  Taunt.  32J: ;  Kelly  v. 
all,  it  is  open  ;  but,  i/ani/  are  kept  hack,  Hurlburt,  5  Cowen,  534  ;  Hoare  v. 
it  is  dormant ;  that  the  knowledge  which  Dawes,  1  Doug.  371 ;  Ex  parte  Watson, 
the  public  may  have  is  not  the  test,  19  Ves.  461 ;  Shropshire  v.  Shepherd, 
when  it  is  acquired  from  the  declara-  3  Ala.  733.  The  definition  and  il- 
tions  of  the  acting,  avowed  partners ;  lustration  of  dormant  partnership  in 
it  may  enable  them  to  reach  the  dor-  Watson  on  Partnership,  p.  46,  seems 
mant  one,  if  the  transaction  is  one  in  accurate  :  "  Sometimes  all  the  partners 
which  he  had  an  interest,  but  does  not  in  trade  do  not  appear  ostensibly  to  the 
alter  its  nature.  The  partnership  re-  world,  though  they  share  in  tlie  profits 
mains  dormant  as  to  all  whose  names  and  loss  ;  and  it  is  not  unusual  for 
do  not  appear  on  its  transactions.  The  gentlemen  of  large  and  independent 
dormant,  sleeping,  inarJive  partner  may  fortunes  to  embark  very  considerable 
be  known  by  reputation,  or  the  decla-  sums  of  money  in  trade,  they  being 
ration  of  his  copartner  ;  but  these  do  not  oftentimes  ignorant  of  the  science  of 
make  him  an  avowed  or  active  one,  commerce,  and  meaning  to  depend  en- 
without  the  avowal  and  pledge  of  his  tirely  upon  the  skill  of  merchants  or 
name  or  paper."    Per  Baldwin,  J.,  in  traders  with  whom  they  engage  in  a 


36  THE   LAW   OP   PARTNERSHIP.  [CH.  III. 

*  34  venient  to  use  the  word  as  indicating  *  a  partner  who 
both  keeps  himself  concealed,  and  who  also  refrains 
from  any  active  interference  with  the  business  or  management 
of  the  firm.  But  the  word  is  so  often  used  as  merely  synony- 
mous with  "  unknown,"  that  we  shall  frequently  be  obliged  to 
employ  it  or  refer  to  it  in  this  sense. 

6.  Retiring  Partner. 

He  is  one  who  leaves  an  existing  firm.  In  law,  as  we  shall 
see,  the  going  out  of  a  partner,  by  his  own  act,  or  decree  of 
court,  or  by  death,  terminates  that  partnership.  But  in  prac- 
tice it  is  otherwise.  Some  old  firms  have  continued  to  use  the 
same  style,  and  to  transact  their  business  as  one  and  the  same 
copartnership,  with  all  the  continuity  of  a  corporation,  although 
not  only  all  the  original  members,  but  all  who  immediately 
succeeded  them,  have  passed  away.  In  some  of  the  commercial 
cities  of  Europe,  there  are  said  to  be  active  firms  established 
under  their  present  names  by  the  great  grandfathers  of  those 
who  are  now  members.  In  this  country  it  is,  however,  more 
common  to  announce  these  changes  by  a  corresponding  change 
in  the  style  of  the  firm. 

7.  hicoming  Partner. 

This  phrase  designates  a  person  who  enters  into  an  existing 
copartnership,  and  becomes  a  member  of  it.  Here  it  may  be 
said,  as  before,  that  any  such  change  as  the  addition  of  a  new 
member  terminates  the  former  copartnership  in  law  and  creates 
a  new  one.  (^pp)  But  in  practice  it  is  not  so ;  the  old  firm 
being  "  kept  up,"  as  the  common  phrase  is,  by  former  members 
going  out  from  time  to  time,  and  new  members  coming  in. 


general  partnership  of  all  their  stock  v.  Bloss,  30  N.  Y.  374 ;  Waite  v.  Dodges, 

and  effects,  yet  not  suffering  their  names  34  Vt.  181. 

to  appear  in  the  copartnership  firm,  but  (pp)    Mudd   v.    Bast,   34    Mo.    465. 

at  the  same  time  receiving  a  propor-  [When  two  partners  enter  into  another 

tionate  share  of  the  profits  arising  out  partnership  with  a  third  person,  they 

of  their  joint   trade,   bearing   equally  are  in  the  new  partnership  as  individ- 

their  risk  of  loss  ;  and  such  are  usually  uals,  and  the  profits  are  to  be  divided 

styled  dormant  partners."     See  North  equally  amongst  the  three.    Warner  v. 

Smith,  9  Jur.  n.  s.  168.] 


CH.  III.]  PARTNERS.  37 


8.  General  Partner. 

This  is  a  new  phrase  with  us,  and  is,  at  least  in  our  sense  of 
it,  unknown  in  the  English  law.  It  means  one  who  is  that 
member  of  a  Limited  Partnership,  under  our  statutes,  who 
transacts  the  business,  whose  name  is  used  in  the  firm,  and  who 
is  liable  for  all  the  debts  and  obligations  of  the  firm,  to  their 
full  amount. 

9.  Special  Partner. 

*  He  is  one  who  supplies  a  certain  amount  of  capital,      *  35 
and  who,  if  he  complies  with  all  the  requirements  of 
the  statutes,  is  not  liable  for  the  debts  of  the  firm  beyond  the 
amount  which  he  contributes  to  the  capital. 

We  have  been  somewhat  precise  in  defining  these  different 
classes  or  kinds  of  partners,  because  it  will  be  seen  in  our  sub- 
sequent chapters  that  especial  rights,  obligations,  liabilities, 
and  remedies  belong  to  them  severally. 


38 


THE   LAW   OF   PARTNERSHIP. 


[CH. IV. 


CHAPTER    IV. 

OF   THE   PURPOSES    AND    KINDS   OF   PARTNERSHIP. 

Although  partnerships  are  usually  formed  for  commercial 
purposes,  they  are  not  always  so,  and  there  is  scarcely  any 
occupation  which  an  individual  can  legally  pursue  that  may 
not  be  the  subject  of  partnership.  In  this  country  we  have  a 
far  wider  extent  in  the  variety  of  purposes  for  which  partner- 
ships are  established,  than  anywhere  else.  Thus,  we  have 
partnerships  not  only  for  every  known  branch  of  commercial 
business,  but  for  all  kinds  of  farming,  (a)  or  manufacturing, 
mining,  (6)  stage-driving,  fishing,  hunting,  lumbering,  and  the 
like,  as  well  as  the  business  of  lawyers,  (c)  physicians,  (c?) 
mechanics,  artists,  laborers,  and,  indeed,  of  almost  all  other 
employments.  («) 


(a)  See  opinion  of  Gould,  J.,  in 
Coope  V.  Eyre,  1  H.  Bl.  37  ;  Allen  v. 
Davis,  13  Ark.  28  ;  Lansdale  v.  Brash- 
ear,  3  T.  B.  Men.  330  ;  Quine  v.  Quine, 
9  Smedes  &  M.  155 ;  Roach  v.  Perry, 
16  111.  37.  [Jointly  buying  and  selling 
cattle  may  constitute  a  trading  part- 
nership. Smith  V.  CoUins,  115  Miss. 
388 ;  and  see  post,  p.  *  54.] 

(b)  In  England,  mines  have  never 
been  regarded  in  equity  as  real  estate, 
but  uniformly  as  the  regular  subject 
and  substratum  of  a  trade.  In  Wil- 
liams V.  Attenborough,  Turn.  &  Russ. 
70,  the  language  of  the  Lord  Chancel- 
lor is  :  "  Collieries  and  landed  estates 
are  quite  different  in  the  contempla- 
tion of  this  court ;  a  colliery  being 
always  considered  as  a  trade,  the 
profits  accruing  from  day  to  day  as 
in  all  trading  concerns."  Storj'  v. 
Ld.  Winsor,  2  Atk.  630 ;  Wren  v.  Kir- 
ton,  8  Ves.  502 ;  Crawshay  v.  Maule, 
1  Swanst.  495,  518;  Fereday  v.  Wight- 


wick,  Tamlyn,  250  ;  Jeffreys  v.  Smith, 

1  Jac.  &  Wal.  298.  See  Beatty  v. 
Bates,  4  Younge  &  C.  Exch.  182; 
Roberts  v.  Everhardt,  1  Kay,  148. 
The  whole  subject  of  partnership  in 
mines,  as  treated  in  the  English  courts, 
is  considered  in  a  separate  chapter  in 
CoUyer  on  Part.  b.  5,  ch.  2. 

(c)  Marsh  v.  .Gold,  2  Pick.  286; 
Westerlo  v.  Evertson,  1  Wend.  532; 
Warner  v.  Griswold,  8  id.  665 ;  Liv- 
ingston V.  Cox,  6  Barr,  360  ;  Smith  v. 
Hill,  13  Ark.  173.  See  Jones  v.  Cap- 
erton,  15  La.  Ann.  475. 

(d)  Allen  v.  Blanchard,  9  Cow. 
631;  Thompson  v.  Howard,  2  Cart. 
(Ind.)  245. 

(e)  Thus,  there  may  be  a  partner- 
siiip  in  a  ferry.     Bowyer  v.  Anderson, 

2  Leigh,  550.  An  association  for 
carrying  personal  property  for  hire 
in  vessels  is  a  commercial  partnership 
by  the  laws  of  Louisiana.  Hefferman 
V.   Brenham,   1   La.   Ann.    146.     Ship 


CH.  IV.]       OP  THE   PURPOSES    AND   KINDS   OF   PARTNERSHIP.  39 


*  After  some  question,  it  seems  to  be  settled,  that  *  37 
there  may  be  a  partnership  for  the  buying  and  selling  of 
land.  (/)  It  is  to  be  remembered,  however,  that  the  Statute 
of  Frauds,  and  our  Statutes  of  Conveyance,  which  require 
that  all  interests  in  land  should  be  transferred  by  a  writing 
signed  and  sealed  by  the  grantor,  and  acknowledged  and 
recorded,  thus  determine  the  legal  title  by  different  evidence 
and  on  different  principles  from  those  which  apply  to  per- 
sonalty. This  has  sometimes  an  important  effect  upon  the 
rights  and  ol)ligations  of  partners  in  land  speculations,  and  of 
those  who  deal  with  them.  We  have  already  alluded  to  this 
subject,  and  shall  consider  it  more  fully  hereafter.  (^) 

It  is  obvious  that  there  can  be  no  partnership  in  a  mere  per- 
sonal office,  or  in  the  discharge  of  its  duties ;  as  in  the  office 
of  guardian,  trustee,  executor,  or  the  like.  (A)     These  offices 


agents  and  ship  brokers  may  be  in 
partnership  as  to  the  profits  of  tiieir 
respective  commissions.  Waugli  v. 
Carver,  2  H.  Bl.  235.  See  Bovill  v. 
Hammond,  9  D.  &  R.  186;  Cheap 
V.  Cramond,  4  B.  &  A.  663.  Private 
associations  and  clubs  for  benevolent 
and  other  purposes,  have  been  re- 
garded so  far  as  partnerships,  that 
their  members  are  subject  to  liabilities 
similar  to  those  of  partners.  Beau- 
mont V.  Meredith,  3  Ves.  &  B.  180. 
See  Delauney  v.  Strickland,  2  Stark. 
416.  But  their  liability  seems  to  rest 
on  the  authority  given  to  the  agents, 
rather  than  on  partnership.  The 
points  of  difference  between  such  as- 
sociations and  trading  partnerships 
are  stated  and  illustrated  in  Flemyng 
V.  Hector,  2  M.  &  W.  172.     See  ch.  5, 

§  1- 

( /)  Lands  being  now  so  far  subject 
to  commercial  conditions,  by  the  aid 
of  equity,  as  to  be  capable  of  being 
held  as  incident  to  commercial  partner- 
sliips,  there  would  seem  to  be  no  suffi- 
cient reason  why  they  may  not,  on  the 
same  principles,  and  by  the  same 
equitable  conversion,  be  the  substra- 
tum itself  of  a  copartnersliip.  The 
later  cases,  both  in  England  and  in 
this  country,  leave  little  or  rather  no 
room  for  doubt  upon  this  point.     Dale 


V.  Hamilton,  5  Hare,  369;  Potts  ?,'. 
Waugh,  4  Mass.  424 ;  Fall  River  Wh. 
Co.  V.  Borden,  10  Cush.  458;  Smith 
V.  Burnhara,  3  Sumn.  435 ;  Kramer 
V.  Arthurs,  7  Barr,  165 ;  Brady  v.  Cal- 
houn, 1  Penn.  140 ;  Olcott  v.  Wing,  4 
McLean,  15 ;  Smith  v.  Jones,  12  Me. 
332;  Dudley  v.  Littlefield,  21  Me.  418; 
hi  re  Warren,  Daveis,  320;  Ludlow  v. 
Cooper,  4  Ohio  St.  1  ;  [Chester  v. 
Dickenson,  54  N.  Y.  1].  See  Patter- 
son V.  Brewster,  4  Edw.  Ch.  352 ; 
Claggett  V.  Kilbourne,  1  Black  U.  S. 
S.  C.  346. 

(q)  See  ante,  ch.  2,  §  2,  and  post, 
ch.  12. 

{h)  Thus,  the  office  of  sheriff's  bail- 
iff is  personal,  and  cannot  be  held  by 
two  in  partnership.  .Jons  i'.  Perchard, 
2  Esp.  507.  See  Canfield  v.  Hard,  6 
Conn.  180.  Upon  tlie  same  principle, 
a  mercantile  partnership,  though  it 
may  act  as  executor,  cannot  be  ap- 
pointed guardian.  De  Mazar  c.  Pybus, 
4  Ves.  644.  Where,  by  the  usage  of 
the  herald's  office,  a  herald  and  pur- 
suivant were  always  in  attendance, 
who  sliared  tlie  profits  of  any  business 
which  was  begun  while  they  were 
jointly  on  duty,  it  was  held  that  they 
were  in  the  situation  of  copartners, 
and  might  maintain  a  joint  action  (for 
making   out   a   pedigree)   against    tiie 


40  THE   LAW   OF   PARTNERSHIP.  [CH.  IV. 

*  38  arc  often  *  held  by  two  or  more  persons  together ; 
but  tlieir  powers  and  duties,  and  relations  generally, 
arc  governed  by  rules  entirely  distinct  from  those  of  partner- 
ship. 

Tliere  are  additional  and  decisive  reasons  against  the  exer- 
cise of  the  powers  or  the  discharge  of  the  duties  of  any  public 
office  by  a  partnership.  It  might  seem  as  if  there  were  some 
offices,  as  that  of  postmasters,  or  of  examiners  of  steaniljoats, 
or  the  like,  which  might  be  given  to  a  firm  ;  but  the  principle 
of  personal  selection  and  personal  responsibility  make  it  diffi- 
cult, if  not  impossible,  that  a  firm  should  hold  such  an  appoint- 
ment, although  persons  holding  it  sometimes  become  partners, 
and  share  in  the  profits  of  the  appointment,  (i) 

Partnerships  may  be  general  or  special.  In  theory,  it  is  said 
they  may  be  universal ;  but  an  instance  can  seldom  occur  in 
which  the  partners  own  every  thing  in  common,  without  the 
reservation  of  any  private  and  exclusive  property  of  either  of 
them,  (y)  We  have,  however,  in  this  country,  some  associa- 
tions which  might  perhaps  be  regarded  as  universal  partner- 
ships, (k)     Special  partnerships  relate  only  to  an  ownership  or 

defendant,  thougli  he  had  contracted  as  being  an  agreement  for  the  sale  of 

only  with  the   herald.      Townsend   v.  an  office,  either  within  the  5  &  6  Edw. 

Neall,   2   Camp.   190.      On   the   other  6,  ch.  16,  or  within  the  49  Geo.  3,  ch. 

hand,  the  appointment  of  one  of  a  firm  126.     Sterry  v.  Clifton,  9  C.  B.  110. 

to  the  office  of  sheriff's  replevin  clerk  (/)  See  Caldwell  v.  Lieber,  7  Paige, 

will  not   enable   the   firm    to   bring  a  483. 

joint  action  for  the  e.xpenses  of  prepar-  (j)  United  States  Bank  v.  Binney, 

ing  a   replevin  bond,  although  it  was  5  Mason,  183.    Story,  J.,  said  :  "  Tliere 

executed,  and   the   stamp   for  it  pro-  is  probably  no  such  thing   as  a   uni- 

vided,   in    their    office.      Brandon    v.  versal  partnership,  if  by  the  terms  we 

Hubbard,   4  J.   B.    Moore,    367.      See  are    to   understand    that   every   thing 

Clarke   i'.   Richards,   1   Younge  &   C.  done,  bought,  or  sold  is  to  be  deemed 

Exch.    351.     A.,   an   attorney  holding  on    partnership   account.      Most   men 

numerous   lucrative   clerkships,    stew-  own    some    real    or    personal    estate 

ardships,    and    other    offices,   entered  which    they   manage    exclusively   for 

into   copartnership  with  B.      By   the  themselves." 

articles  of  agreement  it  was  stipulated  (k)  A  recent  case,  Goesele  v.  Bi- 
that  B.  should  be  a  partner  with  A.  in  meler,  14  How.  589,  would  seem  to 
his  business,  and  "  that  the  emoluments  establish,  not  only  that  such  a  partner- 
arising  from  the  said  offices,  clerkships,  ship  may  exist,  but  that,  under  able 
and  stewardsliips  as  should  be  held  administration  and  conduct,  it  is  not 
by  either  of  them,  the  said  A.  and  B.,  inconsistent  with  a  high  degree  of  in- 
during  the  partnership,  should  be  con-  dividual  social  prosperity.  The  de- 
sidered  as  partnership  property,  and  fendants  in  the  case  were  members  of 
be  distributable  accordingly."  Held,  a  society  called  Separatists,  which  emi- 
that  the  above  contract  was  not  void  grated  from  Germany  to  the  United 


CH.  IV.]       OP   THE   PURPOSES   AND    KINDS    OF    PARTNERSHIP.         41 


use  or  employment  by  partners  of  one  thing,  or  one 
cargo,  or  one  mercantile  *  adventure.  (/)     It  has  been      *  39 
said  that  if  a  note  or  bill  of  exchange  be  signed  or 
indorsed   by  two   or  more   persons  jointly,  this  is  a  case  of 
special  partnership  between  those  persons  as  to  that  note  or 
bill,  (m)     The  name,  however,  or  the  distinction,  is  of  little 

mechanic  arts,  in  manufacturing  by 
machinery.  The  value  of  the  property 
is  now  estimated  by  complainants' 
counsel  to  be  more  than  a  million  of 
dollars."  Further :  "  The  people  .  .  . 
are  proved  to  be  moral  and  religious. 
It  is  said,  that,  although  the  society 
has  lived  at  Zoar  for  more  than  thirty 
years,  no  criminal  prosecution  has 
been  instituted  against  any  one  of  its 
members."  There  is  no  legal  objec- 
tion, it  seems,  to  such  an  association. 
See  an  example  of  a  similar  associa- 
tion called  "  The  Harmony  Society." 
Baker  v.  Nachtrieb,  19  How.  126.  See 
Lyman  v.  Lyman,  2  Paine  C.  C.  11. 

(/)  The  authority  which  is  usually 
referred  to  for  the  distinction  between 
general  and  special  partnerships  is  a 
diciitm  of  Lord  Mansfield  in  Willett  v. 
Chambers,  Cowp.  814.  "Let  us  see, 
then,"  said  he,  "  what  was  the  nature 
of  the  partnership  afterwards  entered 
into  between  Dodley  and  the  present 
defendant :  whether  it  was  a  general 
partnership  in  all  Dodley's  business, 
or  confined  to  one  particular  branch  of 
it  only  ;  for,  to  be  sure,  there  may  be 
such  a  confined  partnership."  Very 
many  cases  have  since  recognized  and 
illustrated  the  distinction.  Salmons 
V.  Nissens,  2  T.  R.  674  ;  Robey  v.  How- 
ard, 2  Stark.  557 ;  Holmes  v.  Higgins, 
1  B.  &  C.  74 ;  De  Berkom  v.  Smith,  1 
Esp.  29;  Livingston  v.  Roosevelt,  4 
Johns.  265,  270 ;  Post  v.  Kimberly,  9 
id.  470;  Mumford  v.  NicoU,  20  id.  611 
Ensign  v.  Wands,  1  Johns.  Cas.  171 
Reynolds  v.  Cleveland,  4  Cow.  282 
Cumpston  v.  McNair,  1  Wend.  457 
Mifflin  V.  Smith,  17  S.  &  R.  105 ;  Bent- 
ley  V.  White,  3  B.  Mon.  263  ;  Benson 
V.  McBee,  2  ^McMull  01 ;  Solomon  v. 
Solomon,  2  Kelly,  18  ;  Ripley  v.  Colby, 
3  Fost.  438;  Petripin  v.  Collier,  1 
Barr,  247. 

(m)  Gow   on  Part.  6 ;  3  Kent  (8th 


States  in  1817,  and  settled  in  Ohio. 
In  1819,  articles  of  association  were 
drawn  up  and  signed  by  the  members 
of  the  society,  consisting  of  fifty-three 
males  and  one  hundred  and  four  fe- 
males. By  these  articles,  the  signers 
surrendered  all  their  individual  prop- 
erty, real  or  personal,  present  or  fut- 
ure, into  the  hands  of  three  directors, 
elected  annuallj-  by  themselves.  These 
oflScers  were  to  conduct  the  business 
of  the  society,  to  manage  all  its  prop- 
erty, and  to  account  to  the  society  for 
all  their  transactions.  In  1824,  the 
original  articles  were  amended.  An 
entire  union  of  property,  and  an  abso- 
lute renunciation  of  private  owner- 
ship, were  declared.  Provisions  were 
made  for  the  admission  of  new  mem- 
bers. The  directors  were  to  conduct 
the  affairs  of  the  society ;  to  apply 
themselves  for  its  benefit ;  to  provide 
for  the  boarding,  lodging,  and  clothing 
of  its  members  ;  to  provide  for  the 
children ;  to  determine  disputes,  &c. 
Other  of  the  new  provisions  related  to 
the  general  welfare  of  the  society. 
In  1832,  a  charter  of  incorporation  was 
granted  them,  in  accordance  with 
which  they  adopted  a  constitution, 
embodying,  with  others,  substantially 
the  same  provisions  as  those  contained 
in  the  articles  of  association  above  re- 
ferred to.  The  extent  of  the  prosper- 
ity, which,  under  this  modified  species 
of  communism,  the  association  had 
attained  in  the  space  of  about  thirty 
5-ears,  may  be  seen  in  the  following 
extracts  from  the  opinion  of  Mr.  Jus- 
tice McLean:  "It  appears,  by  great 
industry,  economy,  good  management, 
and  energy,  the  settlement  at  Zoar 
has  prospered  more  than  any  part  of 
the  surrounding  county.  It  surpasses 
probably  all  other  neighborhoods  in 
the  State  in  the  neatness  and  produc- 
tiveness   of    its    agriculture,    in    the 


42  THE   LAW   OF    PARTNERSHIP.  [CH.  IV. 

*  40  *  use,  for  all  the  laws  of  partnership  apply  as  far,  and 
only  as  far,  as  the  partnership  extends ;  and  there  is 
no  distinct  dividing  line  between  general  partnerships  and 
those  which  have  Ijeen  called  special.  And  the  designation,  by 
statute,  of  the  partner  in  a  limited  partnership,  who  is  liable 
only  to  the  extent  of  the  capital  he  supplies,  as  "  special  part- 
ner," is  an  additional  reason  for  the  disuse  of  the  phrase  "  spe- 
cial partnership,"  in  the  sense  above  stated. 

Joint-stock  companies  will  be  treated  by  themselves.  They 
are  much  used  in  England,  and  are  there  regulated  by  statute. 
Here  they  were  quite  common  formerly.  But  incorporation 
may  here  be  obtained  with  great  facility  for  any  legitimate 
purpose  ;  and  wise  and  practical  laws,  in  many  of  our  States, 
give  to  corporations  all  the  freedom  and  all  the  facilities  they 
can  desire,  and  limit  the  responsibility  of  members  as  narrowly 
as  a  due  regard  for  public  safety,  and,  indeed,  the  safety  of  the 
members,  permits  ;  and  joint-stock  companies  are  now  com- 
paratively rare. 

Limited  partnerships,  to  which  we  have  already  alluded,  we 
shall  speak  of  more  fully  in  a  subsequent  chapter,  (w) 

ecl.),p.  28.  The  only  authority  for  con-  ties  to  whom  the  bill  was  payable, 
sidering  such  joint  promise  or  indorse-  This  verdict  does  not  appear  to  have 
ment  as  constituting  a  partnership  is  been  disturbed.  So  that,  the  result  of 
the  case  of  Carvick  v.  Vickery,  3  the  case  being  considered,  it  can  hardly 
Doug.  653,  note.  There  the  action  be  said  to  be  authority  for  the  position 
was  by  the  indorsee  of  a  bill  of  ex-  that  joint  promisors  or  joint  indorsers 
change  drawn  upon  defendants,  the  of  a  bill  or  note  are  quoad  hoc  partners  ; 
Maydwells,  by  father  and  son,  and  since  the  second  verdict  could  only 
payable  "  to  us  or  our  order,"  but  in-  have  been  upheld  on  the  ground  that 
dorsed  only  by  the  son.  The  father  the  defendants  were  not  partners, 
and  son  were  admitted  not  to  be  part-  The  case  does  not  seem  to  rest  on 
ners.  At  tlie  first  trial  Ld.  Mansfield  sound  principles,  and  is  unsupported 
nonsuited  the  plaintiff,  because  the  by  any  other  English  authorities.  In 
bill  had  not  been  indorsed  by  both  this  country,  it  has  been  distinctly 
the  parties  to  whose  order  it  was  pay-  repudiated.  In  Willis  v.  Guen,  5  Hill, 
able.  But  a  rule  being  obtained  to  23'2,  Nelson,  C.  J.,  says :  "  It  was  once 
show  why  there  should  not  be  a  new  supposed,  in  a  like  case,  that  the  in- 
trial,  the  court  were  unanimously  of  dorsers  were  partners  quoad  the  par- 
opinion  that  the  Maydwells,  by  niak-  ticular  transaction  ;  but  that  doctrine 
ing  the  bill  payable  "  to  our  order,"  had  was  repudiated  when  the  case  after- 
made  themselves  partners  as  to  this  wards  came  on  for  trial  before  Lord 
transaction,  and  the  rule  was  made  Mansfield."  Sayre  v.  Herick,  7  Watts 
absolute.  Upon  the  second  trial,  be-  &  S.  883  ;  Hopkins  v.  Smith,  11  Johns, 
fore  Ld.  Mansfield,  a  verdict  was  161 ;  Shepard  v.  Hawley,  1  Conn.  367. 
again  found  for  the  defendants  on  the  See  Mifflin  v.  Smith,  17  S.  &  R.  165. 
same  ground,  that  the  indorsement  (n)  See /Jost,  ch.  17. 
should  have  been  made  by  both  par- 


CH.  V.J 


WHO  ARE  PARTNERS  AS  TO  EACH  OTHER. 


43 


CHAPTER  Y. 

WHO  ARE  PARTNERS  AS  TO  EACH  OTHER. 

The  power  of  partners  over  each  other,  and  the  responsibility 
of  partners  for  each  other,  and  their  mutual  rights  and  obliga- 
tions, often  make  it  extremely  important  to  determine  who 
stand  in  this  relation  to  each  other. 

The  basis  of  this  relation  is  community  of  interest.  But 
the  question  has  often  arisen,  and  been  much  discussed,  how 
far  this  community  must  extend  ;  whether,  for  example,  it 
must  cover  all  losses  as  well  as  all  profits.  And  although  it  is 
undoubtedly  true,  that  in  much  the  greater  number  of  partner- 
ships there  is  a  community  of  loss  as  well  as  of  profit,  the 
weight  of  authority  as  well  as  of  reason  seems  to  be  decidedly 
in  favor  of  the  rule  that  there  may  be  a  legal  and  valid  part- 
nership, although  one  or  more  of  the  partners  are  guaranteed 
by  the  others  against  loss,  (a)     And  even  if  one  of  the  parties 


(a)  The  doctrine,  that  persons  can- 
not be  partners  as  to  each  other  unless 
the}'  participate  in  the  losses  of  a 
trade,  is  founded  on  the  language  of 
the  judges  in  several  of  the  leading 
cases  upon  partnership.  It  is  also 
asserted  in  many  other  cases  which 
have  followed  them,  and  in  some  is 
made  the  apparent  ground  of  decision. 
Thus  in  Grace  v.  Smith,  2  W.  Bl.  998, 
De  Grey,  C.  J.,  says :  "  Every  man 
who  has  a  share  of  the  profits  of  a 
trade  ought  also  to  bear  his  share  in 
the  loss."  And  in  Hoare  v.  Dawes,  1 
Doug.  371,  and  Coope  v.  Eyre,  1  H. 
Bl.  37,  the  criterion  of  partnership 
laid  down  by  all  the  judges  is  a  par- 
ticipation in  "  profit  and  loss."  In 
Waugh  V.  Carver,  2  H.  Bl.  235,  Lord 
Chief  Justice  Eyre  gives  as  his  reason 
for  holding  that  the  parties  were 
clearly  not  actual  partners,  that  they 


were  not  to  be  liable  in  common  for 
losses.  Day  v.  Boswell,  1  Camp.  329. 
So  in  Green  v.  Beesley,  2  Bing.  N.  C. 
108,  the  court  lay  great  stress  upon 
the  fact  that  the  parties  sought  to  be 
charged  as  partners  were  to  participate 
in  losses  as  well  as  in  profits  ;  Tindal, 
C.  J.,  saying,  "  I  have  always  under- 
stood the  definition  of  partnership  to 
be  a  mutual  participation  in  profit  and 
loss."  In  Bond  i'.  Pittard,  3  M.  &  W. 
357,  A.  &  B.,  attorneys  and  solicitors, 
carried  on  business  together  under  an 
agreement  by  which  B.  was  to  have 
out  of  the  profits  300/.  annually,  but 
was  not  to  be  liable  for  any  losses,  and 
was  to  have  a  lien  on  the  profits  for 
any  losses  he  might  sustain  by  reason 
of  his  liability  as  partner  to  third 
persons.  A.  &  B.  joined  in  an  action 
of  debt  against  the  defendant,  for  work 
and  labor  done   as  his  attorneys,  and 


44 


THE   LAW   OF   PARTNERSHIP. 


[CH. 


agrees  to  be  liable  for  losses,  although  he  is  not  to  participate 
in  the  profits,  it  is  possible  that  there  may  be  a  partnership 
here,  (^aa') 


the  question  was,  whether  the  joint 
action  could  be  maintained.  Tiie 
judge,  at  the  assizes,  told  the  jury 
that  to  constitute  a  partnership  there 
ought  to  be  a  community  of  loss  as 
well  as  profit ;  that  a  third  party  was 
not  concluded  by  having  dealt  with 
them  as  partners,  if  it  turned  out  that 
they  were  not  at  the  time  partners  in 
law,  for  want  of  a  community  of  profit 
and  loss,  and  might  therefore  object  to 
their  having  been  joined  as  plaintiffs 
in  the  action.  And  he  left  two  ques- 
tions to  the  jury  :  first.  Was  there  a 
community  of  profit  ?  and,  secondly. 
Was  there  a  community  of  loss?  The 
jury  found  the  first  question  in  the 
affirmative,  and  the  second  in  the 
negative,  and,  under  the  direction  of 
the  judge,  the  verdict  was  entered  for 
the  defendant.  A  rule  being  obtained, 
the  precise  question,  whether  there 
must  be  a  sharing  of  loss  as  well  as  of 
profit,  to  constitute  a  partnership  inter 
se,  was  not  considered  by  the  court. 
Lord  Abinger,  C.  B.,  however,  in  his 
opinion,  intimates  that  B.  was  in  some 
degree  a  sharer  in  the  losses.  The  case, 
however,  was  disposed  of  on  other 
grounds.  See  Pott  v.  Eyton,  3  C.  B. 
32. 

To  the  same  effect  as  these  English 
cases,  are  apparently  many  American 
authorities.  See  the  language  of  the 
courts  in  Fehchy  v.  Hamilton,  1  Wash. 
C.  C.  491  ;  Putnam  v.  Wise,  1  Hill, 
239 ;  Burckle  v.  Eckhart,  1  Denio,  341, 
842;  Ambler  v.  Bradley,  6  Vt.  119; 
Bowman  v.  Bailey,  10  id.  170 ;  Buck- 
nam  v.  Barnum,  15  Conn.  72 ;  Church- 
man V.  Smith,  6  Whart.  148,  149 ; 
Lowry  v.  Brooks,  2  McCord,  422  ; 
Simpson  v.  Feltz,  1  McCord  Ch.  218, 
219;  Beecham  v.  Dodd,  3  Harr.  485; 
Pollard  V.  Stanton,  7  Ala.  761 ;  Eman- 
uel V.  Droughn,  14  Ala.  306  ;  Buckner 
V.  Lee,  8  Ga.  288 ;  Wood  v.  Vallette,  7 
Ohio  St.  172.  But  of  these  cases  it  is  to 
be  observed,  first,  that  the  remarks  of 
judges,  to  the  effect  that  partners  inter 


se  must  participate  in  losses  as  well  as 
profits,  are  frequently  general  ones,  not 
strictly  applicable  to  the  facts  before 
them  ;  and,  secondly,  that  the  real 
meaning  of  such  observations  is  often 
nothing  more  than  that  a  party's  ex- 
emption from  the  losses  of  a  trade  is 
a  fact,  which,  though  not  conclusive, 
tends  to  show  that  he  is  not  an  actual 
partner,  and,  taken  in  conjunction  with 
other  circumstances,  may  clearly  estab- 
lish that  fact.  In  Vanderburgh  v. 
Hall,  20  Wend.  71,  the  court,  deeming 
one  of  the  parties  before  them  to  be 
merely  an  agent,  paid  out  of  profits, 
and  not  a  partner,  add  :  "  He  was  not 
to  be  answerable  for  losses,  wliich  con- 
Jirms  the  vieiv  that  the  arrangement 
was  made  simply  in  reference  to  the 
measure  of  compensation."  The  true 
principle  seems  to  be  laid  down  by 
Lord  Eldon  in  Ex  parte  Langdale,  18 
Ves.  301  :  "  A  man,  who  is  to  have  no 
profit,  may  be  a  partner,  if  holding 
himself  out  as  such  ;  as  by  lending  his 
name.  He  may  also  be  a  partner 
when  the  contract  is  that  he  shall 
suffer  no  loss  ;  and,  I  agree,  it  is  not 
the  less  a  partnership  because  part  of 
the  contract  is,  that  they  are  not  to 
suffer  by  bad  debts,  the  personal  negli- 
gence of  him  who  has  the  custody  of 
the  articles,  by  fire,  &c."  See  Brig- 
ham  V.  Dana,  29  Vt.  1.  So  in  Gilpin 
V.  Enderby,  5  B.  &  Aid.  954,  where, 
though  one  of  the  parties  was  guaran- 
teed against  all  debts  and  losses,  there 
being  no  usury  in  the  case,  the  court 
held  that  there  was  a  partnership, 
tliough  of  a  peculiar  kind  ;  and  the  cir- 
cumstance that  one  of  the  parties  was 
not  to  bear  any  losses  was  not  adverted 
to.  See  Fereday  v.  Hordern,  Jacob, 
144.  The  distinction  between  partici- 
pation in  gross  and  in  net  proceeds 
arises  more  frequently  with  respect  to 
partnership  as  to  third  persons. 

(aa)  For  such  a  case,  see  Mandeville 
V.  Mandeville,  35  Ga.  243. 


CH.  v.] 


WHO    ARE   PARTNERS   AS   TO    EACH    OTHER. 


45 


It  would  *  seem  that  there  must  be  a  community  of     *  42 
interest  for  business  purposes,  (b}     It  cannot  be  said 
that  partnership  exists  only  for  *  buying  and  selling ;      *  43 
for,    as   we   have   seen,  physicians  and    lawyers,   who 
neither  buy  nor  sell  professionally,  may  yet  form  a  professional 


(b)  Hence,  voluntary  associations  or 
clubs,  for  social  and  charitable  pur- 
poses, and  the  like,  are  not  proper  part- 
nerships ;  nor  have  their  members  the 
powers  and  responsibilities  of  partners. 
In  Flemjng  v.  Hector,  2  M.  &  W.  172, 
the  defendant,  a  member  of  the  "  West- 
minster Reform  Club,"  was  sought  to 
be  charged  as  partner  for  goods  sup- 
plied and  work  done  for  the  club  at 
the  order  of  its  committee.  Lord 
Abinger,  C.  B.  :  "I  had  thought,  but 
without  much  consideration,  at  the 
Assizes,  that  these  sort  of  institutions 
were  of  such  a  nature  as  to  come  under 
the  game  view  as  a  partnership,  and 
that  the  same  incidents  might  be  ex- 
tended to  them  ;  that  where  there  was 
a  body  of  gentlemen  forming  a  club, 
and  meeting  together  for  one  common 
object,  what  one  did  in  respect  of  the 
society  bound  the  others,  if  he  had 
been  requested  and  had  consented  to 
act  for  them.  .  .  .  Trading  associa- 
tions stand  on  a  very  different  footing. 
Where  persons  engage  in  a  community 
of  profit  and  loss  as  partners,  one 
partner  has  the  right  of  property  for 
the  whole:  so  any  of  the  partners  has 
a  right  in  any  ordinary  transaction,  un- 
less the  contrary  be  clearly  shown,  to 
bind  the  partnership  by  a  credit;  — he 
might  accept  a  bill  of  exchange  in  the 
name  of  the  firm,  and  as  between  the 
firm  and  strangers  the  partnership 
would  be  bound,  although  there  might 
be  an  understanding  in  the  firm  that 
he  was  not  to  accept.  It  appears  to 
me  that  this  case  must  stand  upon  the 
ground  on  which  the  defendant  put  it, 
as  a  case  between  principal  and  agent ; 
.  .  ."  Gurney,  B. :  "  The  discussion 
which  has  taken  place  in  this  case  has 
convinced  me  that  this  is  not  the  case 
of  a  partnership,  but  of  principal  and 
agent ;  .  .  ."  So,  "  clubs  "  are  neither 
"  partnerships  "    nor    "  associations  " 


within  the  meaning  of  the  Winding-up 
Acts.  In  re  The  St.  James  Club,  2  Ue 
G.,  M.  &  G.  383,  13  Eng.  L.  &  Eq.  589. 
See  ajite,  p.  *  36,  note  (e).  Nor  is  a  com- 
pany, the  purpose  of  which  is  the  pur- 
chase of  lands  with  fund.s  raised  by 
subscription,  and  the  division  of  such 
lands  amongst  the  subscribers,  a  com- 
pany entitled  to  registration  under  7  & 
8  Vict.  ch.  110,  which  (§  2)  applies  only 
to  associations  formed  "for  any  com- 
mercial or  trading  purposes."  Queen 
i;.  Whitmarsh,  15  Q.  B.  600.  See 
Delauney  v.  Strickland,  2  Stark.  416; 
Caldicott  u.  Griffiths,  8  Exch.  898,  22 
Eng.  L.  &  Eq.  527 ;  Cockered  v.  Au- 
compte,  2  C.  B.  n.  s.  4'10;  Bright  v. 
Hultou,  3  H.  L.  Cas.  341,  12  Eng.  L.  & 
Eq.  1.  In  re  Worcester  Corn  Exchange 
Company,  3  DeG.,  M.  &  G.  180,  19 
Eng.  L.  &  Eq.  627 ;  Cheney  v.  Clark,  3 
Vt.  431.  Persons  who  subscribe  in 
writing  certain  sums,  for  the  purpose 
of  building  a  meeting-house,  which, 
when  completed,  is  to  be  the  property 
of  the  subscribers  in  the  projiortion  of 
their  subscriptions,  are  not  partners. 
Woodward  v.  Cowing,  41  Me.  1.  And 
the  members  of  a  telegraph  company 
are  not  partners,  but  only  tenants  in 
common.  Irvine  v.  Forbes,  11  Barb. 
587.  Nor  are  the  subscribers  and 
holders  of  stock  in  a  manufacturing 
corporation  which  has  been  defect- 
ively organized,  and  transacted  busi- 
ness under  such  defective  organization, 
thereby  made  partners,  general  or  spe- 
cial, in  such  business.  Eay  v.  Noble, 
7  Cush.  188.  [Nor  if  they  obtain  a 
certificate  of  incorporation  are  they 
liable  as  partners,  by  reason  of  having 
transacted  business  before  the  capital 
stock  was  paid  in,  contrary  to  the 
statute.  First  Nat.  Bk.,  &c.  v.  Almy, 
117  Mass.  476.  But  see  post,  p.*  542, 
note  ;  Whipple  v.  i'arker,  29  Mich.  370, 
contra.] 


46 


THE   LAW   OF   PARTNERSHIP. 


[CH.  V. 


partnership,  which  is  entirely  legal  and  to  which  all  the  rules 
and  privileges  of  the  law  of  partnership  apply. 

Usually,  the  purpose  of  the  partnership  is  to  buy  goods  and 
sell  them  again.  It  seems,  however,  that  if  the  intention  of 
acting  in  common  is  limited  to  buying  and  making,  or  if  a  valu- 
able product  arises  from  a  contribution  to  common  stock  of  one 
thing  by  one  and  another  thing  by  another,  and  a  working  on 
and  with  those  things  by  both,  this  may  constitute  a  partner- 
ship as  to  the  ownership  of  that  product,  and  in  all  the  trans- 
actions which  led  to  it,  although  the  product  itself  was 
*  44  not  to  be  sold  on  common  *  account,  but  divided  between 
the  parties  to  it.  This  would  be  a  manufacturing  part- 
nership ;  and  the  fact  that  the  parties  engage  in  common  labors 
for  the  purpose  of  producing  a  new  product  out  of  a  common 
stock,  which  is  to  belong  to  them  when  made,  is,  according  to 
some  authorities,  enough  to  make  it  a  partnership,  (c)    This  is 


(c)  Musier  v.  Trumpour,  5  Wend. 
274.  Tlie  plaintiff  was  the  owner  of 
a  lime-kiln,  and  agreed  with  the  de- 
fendant that  the  latter  should  fill  the 
kiln  with  stone,  furnish  the  necessary 
wood,  and  burn  the  kiln,  the  lime  to  be 
equally  divided  between  them.  Held, 
that  a  technical  partnership  existed  as 
to  the  lime.  In  Everitt  v.  Chapman, 
6  Conn.  347,  A.,  B.,  and  C.  carried  on 
jointly  the  business  of  tanning  hides, 
under  an  agreement  by  which  A.  fur- 
nished hides  for  one-half  of  the  stock, 
and  received  and  made  market  for  one- 
half  of  the  leather  ;  and  B.  and  C.  fur- 
nished the  other  half  of  the  stock,  and 
received  and  made  market  for  the  other 
half  of  the  leather.  One  of  the  ques- 
tions in  the  case  being  whether  a  part- 
nership existed  between  the  parties,  it 
was  objected  that  the  leather  when 
manufactured  was  to  be  divided  be- 
tween the  copartners,  that  is,  that  B. 
and  C.  were  to  receive  and  sell  one- 
half,  A.  the  other.  Daggett,  J.  :  "  Be 
it  so.  The  leather  was  to  be  divided 
into  moieties  in  quantity  and  quality. 
Such  is  the  clear  meaning  of  the  article. 
Is  it  not  the  same,  then,  as  if  the  whole 
leather  was,  by  agreement,  to  be  sold 
by  either  of  the  partners,  or  by  an 
agent,  and  the  avails  divided  ? "    Upon 


this  case  it  is  remarked,  however,  by 
the  court,  in  Loomis  v.  Marshall,  12 
Conn.  86,  that  "  it  is  not  entirely  clear 
that  when  the  leather  Avas  manufac- 
tured, it  was  to  be  equally  divided,  and 
a  moiety  to  be  taken  by  each,  as  his 
separate  property.  It  would  seem 
rather  to  have  been  the  intention  of 
the  parties,  that  both  should  bear 
equally  the  burden  of  disposing  of  the 
leather  in  market  for  the  equal  benefit 
of  both,  subject  to  accountability." 
See  15  Conn.  73.  In  Stoallings  v. 
Baker,  15  Mo.  481,  the  plaintiff  and 
defendant  had  entered  into  an  agree- 
ment for  getting  out  lumber,  by  the 
terms  of  which  one  of  the  parties  was 
to  furnisii  a  saw-mill  and  workmen, 
the  other  the  logs  to  be  sawed ;  and 
the  lumber  to  be  equally  divided  be- 
tween them.  Held,  that  those  facts 
did  not  constitute  a  partnership  i)iter  se, 
since  it  appeared  that  tlie  lumber  was 
to  be  sold,  not  on  joint  account,  but  by 
each  party  separately  on  his  own.  So 
also  in  Blue  v.  Leathers,  15  111.  31, 
where  the  object  of  the  joint  enteri)rise 
was  the  tillage  of  land,  and  the  crops 
were  to  be  equally  divided  by  the 
parties.  See,  however,  contra,  Allen  v. 
Davis,  13  Ark.  28.  And  see  Meaher 
V.  Cox,  1  Select  Cas.  Ala.  15G  ;  Martin 


CH.  v.] 


WHO    ARE   PARTNERS    AS   TO    EACH    OTHER. 


47 


open  to  some  question,  it  is  true ;  that  the  thing  thus  made, 
after  being  divided  among  them,  is  to  be  sold  by  each.     This 


V.  Tidwell,  36  Geo.  332.     [An  agree- 
ment between   two   persons  that  one 
shall  furnish  land  and  stock,  and  the 
other  the  labor,  each  to  pay  one-half 
the  cost  of  feeding  the  stock  and  la- 
borers, and  other  plantation  expenses, 
and  divide  the  crop  equally,  is  a  part- 
nership as  between  the  parties.     HoUi- 
field  V.  White,  62  Ga.  567.     Otherwise, 
if  there  be  no  community  of  expense. 
Holloway   v.    Brinkley,   42   Ga.    226; 
Smith   V.    Sumner,   48   Ga.    425.      So 
where  the  owner  of  a  tug  and  the  owner 
of   a   barge  went   into   the   freighting 
business,  w'ith  their  respective  vessels, 
wages  and  expenses  (except  for  repairs) 
to  be  paid  out  of  the  earnings,  and  the 
balance  of  the  profits  to  be  divided  in 
proportion  to  the  agreed  values  of  the 
respective  vessels,  tliis  was  held  to  be 
a  partnership.     Bowas  v.  Pioneer  Tow 
Line,  2   Sawyer,  21.     But  see  Fay  v. 
Davidson,  13  Minn.  523.     So  an  agree- 
ment that  A.  shall  furnish  a  stock  of 
goods,  shop  fixtures,  &c.,  and  that  B. 
shall  pay  the  rent  of  the  shop,  manage 
the  business, and  pay  A.  interest  on  one- 
half  of  the  fixtures,  the  profits  to  be 
divided   equally,   renders    A.   and    B. 
partners  as  to  third  parties,  although 
it  be  orally  imderstood,  at  the  time  of 
executing  the  agreement,  that  the  share 
of  profits  to  B.  shall  be  in  lieu  of  sal- 
ary.    Brigham  i'.  Clark,  100  Mass.  430. 
So  where  three  partners  agree  "  to  enter 
upon  an  operation  embracing  the  pur- 
chasing and  selling  of  shingles,"  —  one 
to  purchase,  and  the  other  two  to  re- 
ceive and  sell,  the  shingles,  to  be  the 
property  of  these   two,  who    were   to 
furnish    the    capital,  —  all    to     share 
equally  the  profits  and  losses,  they  are 
partners  as  to  third  parties.    Getchell 
V.   Foster,    106   Mass.  42.     An   agree- 
ment by  which  one  party  contributes 
his  inchoate   interest  in  an  invention, 
and   another    contributes   the    money 
necessary    to    procure    a   patent,   and 
both  are   to   render  their  services    in 
making  it  remunerative,  is  an  agree- 
ment for  a  partnership.    Somerby  v. 


Buntin,  118  Mass.  279.  Where  one 
contributes  the  use  of  real  estate,  and 
the  other  furnishes  capital  and  labor, 
whereby  the  former  is  utilized,  the 
profits  to  be  divided,  a  partnership  is 
constituted.  Wood  v.  Beath,  23  Wis. 
254;  Dalton  v.  Dalton,  33  Ga.  343. 
A.  and  B.  opened  a  joint  account  with 
a  bank ;  B.  guaranteeing  payment  of 
any  business  which  might  be  done  from 

A.  &  B.,  as  "  A.  &  Co."  A.  carried  on 
the  business  as  "  A'.  &  Co.,"  in  which 

B.  took  no  part.  Held  partners.  Ex 
parte  Good,  5  Ch.  D.  46 ;  reversing 
Ex  parte  Halifax,  &c.,  25  W.  R.  83. 
As  to  what  particular  facts  constitute 
a  partnership  in  special  cases,  see  fur- 
ther Duff  V.  McGuire,  99  Mass.  300; 
Decker  v.  Howell,  42  Cal.  636  ;  mining 
enterprises,  Pettee  v.  Appleton,  114 
Mass.  114  ;  Adams  v.  Carter,  53  Ga.  160 ; 
brickmaking,  Farmer's  Ins.  Co.  v.  Ross, 
29  Ohio  St.  429;  farming,  Beauregard 
V.  Case,  91  U.  S.  134  ;  leasing  a  rail- 
road. Wills  V.  Simmonds,  51  How. 
(N.  Y.)  48;  agreement  amongst  cred- 
itors to  continue  and  carry  on  the  busi- 
ness of  a  debtor,  Pettes  i-.  Atkins,  60 
111.  454 ;  agreement  between  tinner  and 
plumber  to  work  together,  Tyler  v. 
Scott,  45  Vt.  261 ;  jobbing,  Gillbank 
V.  Stephenson,  31  Wis.  592 ;  agree- 
ment to  purchase  and  man  a  ferry- 
boat. Whitman  v.  Porter,  107  Mass. 
522;  joint-stock  association,  unincor- 
porated, for  purchase  of  land  and  bor- 
ing for  oil,  Hedge's  Appeal,  63  Penn.  St. 
273  ;  agreement  between  two  railroad 
corporations,  Gill  «.  M.  &  L.  R.  R.,  L.  R. 
Q.  B.  186;  lumbering  enterprise,  Up- 
ham  V.  Hewett,  42  Wis.  85;  McComb 
V.  Credit  Mobilier,  34  Leg.  Int.,  29  U.  S. 
C.  Ct.  Dist.  Penn. ;  building  a  railroad ; 
lease  of  mill,  half  profits  as  rent, 
Dalton  &  Co.  v.  Hawes,  37  Ga.  115; 
(but  see  Parker  i-.  Fergus,  43  111.  437 ;) 
where  one  advances  capital,  and  the 
other  supplies  services,  the  profits  be- 
ing shared,  Wright  v.  Davidson,  13 
Minn.  449;  Parker  v.  Canfield,  37 
Conn.  250 ;   series  of  adventures,  El- 


48 


THE   LAW    OF   PARTNERSHIP. 


[CH.  V. 


may  constitute  it  a  business  transaction  ;  but  if  the  parties  thus 
combined  stock  and  work  for  a  product  to  be  divided  between 
them,  and  not  for  sale,  but  for  each  party  to  keep  and  use  the 
share  that  fell  to  him,  we  should  say  it  was  certg,inly  not  a 
partnership. 

It  is  not  perhaps  certain,  whether  the  law  of  partnership 

requires  a  community  of  interest  in  the  profits  resulting  from 

the  business  or  work  done.     We  think,  however,  that 

*  45      this  is  requisite,  ((i)    *  Thus,  if  persons  purchase  goods 


dredge  v.  Frost,  1  Rob.  (N.  Y.)  518. 
As  to  special  facts'  which  do  not  con- 
stitute a  partnership,  see  further  Mor- 
rison V.  Cole,  30  Midi.  102,  contract 
of  one  to  deliver  to  the  other  hay, 
which  the  latter  is  to  take  to  market 
and  sell;  Beckwith  v.  Talbot,  2  Col. 
T.  639,  contract  to  keep  and  sell 
cattle;  Anten  v.  Ellingwood,  51  How. 
(N.  Y.)  359,  editing  and  conducting 
a  newspaper  ;  Marsh  v.  N.  W.  Ins.  Co., 
3  Biss.  U.  S.  C.  Ct.  351;  Lewis  v. 
Greider,  51  N.  Y.  231,  single  mercan- 
tile adventure,  —  series  of  adventures; 
but  see  Smith  v.  Wright,  4  Abb.  (N.  Y.) 
App.  Dec.  274  ;  common  interests  in  a 
patent-right,  Bocklen  v.  Hardenburgh, 
37  N.  Y.  Supr.  Ct.  110;  cultivation  of 
land  on  shares,  Holloway  v.  Brinkley, 
42  Ga.  226 ;  cheese-factory  association, 
Hawley  v.  Keeler,  62  Barb.  (N.  Y.) 
231 ;  purchase  of  land  and  erecting 
buildings  thereon,  Kelshaw  v.  Jukes,  8 
L.  T.  N.  s.  387  ;  joint  contract  to  per- 
form labor  and  furnish  materials,  each 
a  specific  part.  Smith  v.  Moynahan,  44 
Cal.  53;  advance  of  money  for  pros- 
ecution of  business  to  be  reimbursed 
out  of  sales,  with  share  of  profits  in 
lieu  of  interest,  Lintner  v.  Millikin, 
47  111.  178.  See  also  Edwards  v.  Tracy, 
62Penn.  St.  374;  Dailey  o.  Hall,  5  Bush 
(Ky.),  549;  Freese  v.  Ideson,  49  111. 
191 ;  Parker  v.  Canfield,  37  Conn.  317, 
A  debt  of  A.  is  transferred  to  and 
assumed  by  B.,  who  is  to  pay  it  out 
of  the  profits  of  a  partnership.  This 
does  not  make  A.  a  member  of  the 
firm.  Delaney  v.  Timberlake,  Sup. 
Ct.  Minn.,  15  Abb.  L.  J.  513.  If  A. 
agrees  to  advance  B.  a  certain  sum,  to 
enable  the  latter  to  carry  on  business, 


who  is  to  pay  interest  on  the  average 
balance,  A.  receiving  his  share  of  the 
profits  after  expenses  are  paid,  but  not 
to  be  liable  for  losses,  is  not  a  partner- 
ship as  to  third  persons.  Smith  v. 
Knight,  71  111.  148.] 

{d)  Such  certainly  would  seem  to 
be  the  principle  of  many  adjudications, 
which,  coupled  with  the  numerous  opin- 
ions of  judges  to  the  same  efiect,  are 
apparently  decisive  of  the  point.  Thus, 
in  Hoare  v.  Dawes,  1  Doug.  371, 
several  persons  had  employed  a  broker 
to  purchase  a  lot  of  tea,  of  which  they 
were  to  have  a  separate  share.  The 
question  being  whether  the  employers 
of  the  broker  were  partners,  so  as  to 
make  any  one  of  them  liable  for  the 
price  of  all  the  tea  so  purchased,  it  was 
held,  that  they  were  not ;  since  there 
was  no  communion  of  profit  and  loss, 
but  merely  an  undertaking  with  the 
broker,  by  each,  for  a  particular  quan- 
tity. So  in  Coope  v.  Eyre,  1  H.  Bl. 
37,  where  Lord  Loughborough  says  : 
"  If  the  parties  be  jointly  concerned  iu 
the  purchase,  they  must  also  be  jointly 
concerned  in  the  future  sale  ;  otherwise, 
they  are  not  partners."  On  the  same 
principle,  joint  purchases  of  land, or  even 
of  merchandise,  by  two  or  more,  cannot 
have  the  effect  of  making  them  part- 
ners, nor  of  raising  a  presumption  that 
they  are  so.  Porter  v.  M'Clure,  15 
Wend.  187  ;  Ballon  v.  Spencer,  4  Cow. 
163;  Brady  v.  Calhoun,  1  Penn.  140; 
Gilmore  v.  Black,  2  Fairf.  485;  Put- 
nam V.  Wise,  1  Hill,  234 ;  Barton  v. 
Williams,  5  B.  &  Aid.  395;  Noyes  v. 
Cushman,  25  Vt.  390.  In  this  last 
case,  C.  and  N.  bought  a  grist-mill  and 
privilege,  and  agreed  to  share  the  ex- 


CH.  v.] 


WHO  ARE  PARTNERS  AS  TO  EACH  OTHER. 


49 


to  be  sent  on  a  mercantile  adventure,  the  proceeds  to  be 
reinvested  in  a  return  cargo,  the  question  may  arise.  When  and 
how  hjng  are  they  partners  ?  Here  it  would  seem  that,  if  there 
be  a  partnership  in  the  buying  of  the  goods,  and  in  the  sending 
of  them  abroad  and  there  selling  them,  there  may  still  be  no 
partnersliip  in  the  purchase  or  the  ownership  of  the  return 
cargo,  unless  that  cargo  was  to  l)e  sold  for  the  common  benefit. 
For  if  it  is  to  be  divided  in  specie,  each  of  the  company  taking 
in  severalty  his  share,  it  may  be  doubted  whether  it  could  be 
said  that  there  was  any  partnership  in  the  return  cargo,  (e) 


pense  of  refitting  and  repairing  the 
same.  They  afterward  sold  one-sixth 
of  the  mill  and  privilege  to  M.,  who 
agreed  to  bear  the  cost  of  repairing  and 
refitting  in  like  proportion.  Held,  that 
by  tliese  mutual  contracts  to  repair 
and  rebuild,  C,  N.,  and  M.  were  not 
made  partners  ;  but  that,  when  they 
thus  purchased  and  contracted,  with  a 
view  to  a  joint  enterprise  and  under 
an  agreement  to  share  in  the  profit  and 
loss  thereof,  a  partnership  was  tlien 
constituted  between  tlieni. 

(e)  See  preceding  note.  Holmes  v. 
United  Insurance  Company,  2  Johns. 
Cas.  329.  The  plaintiff  effected  a  policy 
of  insurance  upon  a  return  cargo  for 
$2.5,000,  from  Calcutta  to  Baltimore, 
"  intei'est  as  it  may  appear."  His 
actual  interest  in  the  cargo,  which  was 
owned  by  himself  and  four  other  per- 
sons, proved  to  be  about  $13,000.  He 
claimed  to  recover  in  the  present  action 
the  overplus  premium,  and  was  clearly 
entitled  so  to  do,  unless  the  other  co- 
owners  of  the  cargo  were  partners  with 
him,  and  might  therefore,  in  case  of 
loss,  have  covered  some  ^jart  of  their 
interest  under  his  policy.  The  only 
facts  tending  to  establish  a  partnership 
were  that  the  cargo  belonged  to  the 
plaintiff  and  the  four  other  persons,  and 
had  been  purchased  with  the  proceeds 
of  an  outward  cargo,  which  belonged 
to  the  same  persons.  The  plaintiff  was 
not  cimnected  in  trade  with  the  other 
co-owners  of  the  cargo,  an<l  effected 
the  insurance  for  himself  alone,  with- 
out their  direction  or  concern.  The 
court  held,  that  the  plaintiff  was  not  a 


partner,  since  there  was  no  agreement 
to  share  in  the  profit  and  loss  resulting 
from  the  sale  of  the  return  cargo.  The 
same  question  arose  and  was  similarly 
decided  in  Post  u.  Kimberly,  9  Johns. 
470.  There,  A.  &  M.,  owners  of  three- 
fourths  of  a  ship,  purchased  three- 
fourths  of  a  cargo  for  a  joint  adventure 
from  New  York  to  Laguira.  B.  &  K., 
owners  of  the  other  fourtli,  separately 
purchased  and  shipped  the  other  fourth 
of  the  cargo.  The  two  shijiments  were 
not  distinguished  from  each  other  by 
any  particular  marks,  and  were  to  be 
sold  at  Laguira  by  M.,  who  went  out  as 
supercargo,  for  the  joint  account  and 
benefit  of  A.  &  M.  and  B.  &  K.,  accord- 
ing to  their  respective  shares  in  the 
cargo.  M.  sold  the  cargo  at  Laguira, 
and  invested  the  proceeds  in  a  return 
cargo.  The  ship  being  driven  bj'  stress 
of  weather  into  Norfolk,  M.  there  sold 
the  greater  part  of  the  return  cargo, 
and  remitted  and  indorsed  bills  of  ex- 
change therefor  to  P.  &  R.,  to  whom 
A.  &  M.  were  jointly  indebted,  and  A. 
on  his  private  account,  for  advances 
made  at  the  time  of  the  purchase  of 
the  outward  cargo.  The  portion  of 
the  cargo  not  sold  at  Norfolk  was  also 
forwarded  to  P.  &  R.,  who  applied  it, 
togetlier  with  the  bills  of  exchange,  to 
the  payment  of  the  debts  due  to  them 
from  A.  &  M.  Before  this  was  done, 
however,  notice  was  given  to  P.  &  R. 
of  the  interest  of  B.  &  K.  in  the  cargo 
thus  disposed  of  by  M.  Upon  this 
state  of  facts  it  was  held,  by  a  majority 
of  the  court,  1st,  that,  if  any  partner- 
ship at  all  existed  between  A.   &   M. 


50 


THE    LAW    OF    PARTNERSHIP. 


[CH. 


And  where  one  party  let  another  have  all  the  timber  on  his 
land,  and  the  other  was  to  saw  it,  and  pay  to  the  first  one-fifth 
of  the  gross  proceeds,  this  constituted  them  partners  as  be- 
tween themselves,  (ee) 

*  riiysicians  or  lawyers  are  partners,  if  the  earnings 
of  all  come  into  a  common  stock  or  fund,  and  not  until 
then  are  divided  and  held  in  severalty.  (/)  They  may 
call  themselves  partners  ;  but  if  *  each  charges  in  his 
own    favor   what  he  earns,   and   each    has   a  right  to 


*4G 


47 


and  B.  &  K.,  it  was  in  the  outward 
cargo,  so  far  as  respected  its  transpor- 
tation and  sale,  for  joint  profit  and  loss, 
and  began  with  the  lading  on  board  of 
tiie  goods ;  2d,  but  that  there  was  no 
partnership  between  A.  &  M.  and  B.  & 
K.  in  the  return  cargo,  since  there  was 
no  agreement  for  its  sale  on  joint  ac- 
count, and  for  sharing  in  the  profit 
and  loss  thereof;  and  hence,  that  the 
acts  of  M.  were  not  binding  upon  B.  & 
K.,  as  being  partners  ;  that  they  were 
entitled  to  recover  their  proportion  of 
Jb".  &  R.,  who  had  not  received  the  bills 
in  the  course  of  trade,  and  had  taken 
them  with  a  knowledge  of  the  interest 
of  B.  &  K.  So  where  an  abandonment 
of  a  ship  was  made,  and  separately 
accepted  by  underwriters  who  liad  sep- 
arately insured,  they  were  lield  not  to 
be  made  partners  tiiereby,  so  as  each 
to  be  liable  for  the  whole  amount  of 
the  expenses  incurred  in  repairing  and 
refitting  the  vessel.  And  this,  on  the 
ground  on  which  the  above  cases  were 
decided,  that  there  was  no  conuiiunily 
of  interest  in  the  results  of  the  joint 
undertaking.  United  Insurance  Com- 
pany V.  Scott,  1  Johns.  106.  See 
Thorndike  v.  De  Wolf,  6  Pick.  120. 
The  same  principle  is  frequently  illus- 
trated in  cases  where  goods,  purchased 
either  with  joint  or  separate  funds, 
are  sent  on  a  common  adventure,  but 
are  to  be  sold  by  the  consignee  or 
agent  on  separate  account.  Harding 
V.  Foxcroft,  6  Greenl.  76 ;  Jackson  v. 
Robinson,  3  Mason,  138 ;  Hall  v.  Leigh, 
8  Cranch,  50.  See  also  Felichy  v. 
Hamilton,  1  Wash.  C.  C.491 ;  Osborne 
t\  Brennan,  2  Nott  &  McC.  427  ;  Gibson 
V.  Lupton,  9  Bing.  297;  Sims  v.  Will- 
ing, 8  S.  &  R.  103. 


(ee)  Failu.  McRee,  36  Ala.  61.  See  also 
Whitney  v.  Ludington,  17  Wis. 140 ;  and 
Schoeffling  v.  Schwarting,  id.  320. 

( /)  Bond  V.  Pittard,  3  M.  &  W.  357. 
The  principal  question  in  this  case  was 
whether  A.  and  B.,  attorneys  and  so- 
licitors, admitted  to  be  partners  as  to 
third  persons,  were  partners  hiter  se,  so 
that  their  assignees  might  join  in  main- 
taining the  present  action.  The  agree- 
ment under  which  they  entered  into 
business  together  was  that  B.  should, 
in  each  and  every  year,  be  entitled  to 
receive,  in  the  first  place,  out  of  such 
profits  the  sum  of  300/. ;  but  he  was 
not  to  bear  any  of  the  losses  of  the  said 
business,  and  was  to  have  a  lien  on  the 
profits  for  any  losses  he  might  incur  as 
partner ;  though,  in  case  of  failure  of 
profits,  he  was  to  sustain  not  only  the 
loss  of  his  stipulated  sliare  therein,  but 
also  losses  in  respect  of  his  liability 
as  a  partner  to  third  persons.  Parke, 
B.  :  "  According  to  the  agreement  be- 
tween them,  it  appears  that  P.  H.  Watts 
was  to  receive  300/.  a  year  out  of  the 
profits,  that  is,  out  of  the  net  profits, 
which  could  not  be  ascertained  until  a 
view  was  taken  of  the  real  state  of  the 
accounts  at  the  end  of  the  year.  But, 
in  the  mean  time,  doubtless  the  money 
recovered  in  this  action  would  be  the 
joint  property  of  both,  and  would  go 
into  the  general  fund  for  the  benefit  of 
both,  until  that  state  of  things  should 
arise  when  a  division  would  take  place  ; 
and  for  this  reason  lam  of  opinion  that 
in  this  case  the  contract  is  with  both." 
In  Darracott  v.  Penington,  34  Ga.,  the 
court  consider  the  nature  and  objects 
of  a  law  partnership.  See  Atkinson  v. 
Mackreth,  Law  Rep.  2  Eq.  Cas.  570. 


CII.  v.]     WHO  ARE  PARTNERS  AS  TO  EACH  OTHER,         51 

demand  and  sue  for  this  in  severalty,  tliej  are  not  partners  inter 
se,  however  liable  they  might  be  to  others  from  calling  them- 
selves so.  (^) 

So  if  three  or  four  persons  agree  to  buy  jointly  all  of  a  cer- 
tain commodity  in  the  market,  and  agree  that  one  only  shall 
buy  for  all,  and  that  what  he  buys  shall  be  divided  between 
them,  they  are  not  partners,  for  the  want  of  a  community  in  the 
disposition  of  the  merchandise.  (A) 

There  may  be  a  partnership  both  in  the  property  and  in  the 
profits,  although  it  is  all  bought  by  the  funds  of  one,  and  even 
if  it  be  a  single  business  transaction.  Thus,  if  a  merchant 
directs  a  broker  to  buy,  store,  and  sell  a  certain  quantity  of 
specified  merchandise,  the  broker  not  to  charge  his  usual  com- 
mission, or  any  commission  whatever,  but  instead  of  this  to  be 
interested  in  the  business  in  a  certain  proportion,  here  it  might 
be  thought  that  the  broker  has  no  interest  in  the  property  so 
bought;  but,  when  it  is  sold,  the  original  cost  and  charges  are 
to  be  repaid  to  the  merchant,  and  the  balance,  being  profits,  is 
to  be  owned  by  the  two  as  partners,  in  the  agreed  proportions. 
It  seems,  however,  to  be  held,  and  for  reasons  not  without  their 
force,  that  the  broker  is  interested  as  a  partner  in  the  property 
itself;  that  it  is  a  partnership,  limited  to  a  single  transaction, 
in  which  he  contributes  skill  and  care,  and  the  other  partner 
money  ;  and  that  the  broker  has  all  the  rights  and  powers  of 
a  partner  in  respect  to  the  merchandise  as  soon  as  it  is  bought, 
at  least  as  to  third  parties,  (i  ) 

((/)  Finckle  r.  Stacy,  Sel.  Ca.  Ch.  9,  Ward  jj.  Gaunt,  6  Duer,  257.    See  notes 

where  joint  articles  were  entered  into  (d)  and  (e),  ante. 

by  two  persons  for  the  doing  a  particu-  (i)  Reid  v.  Hollinshead,  4  B.  &  C. 
lar  piece  of  work,  on  account  of  which  867.  Tiie  case  of  Bradbury  v.  Smith, 
several  sums  of  money  were  jointly  21  Me.  117,  see7ns  to  have  been  decided 
received  by  them,  and  immediately  upon  the  same  ground.  There,  B.  & 
divided  between  them  ;  though  the  C.  had  intended  and  attempted  to  form 
court  was  of  opinion  that  it  was  not  to  a  limited  statutory  partnership;  C. 
be  considered  a  partnership,  but  only  contributing  all  the  capital,  and  re- 
an  agreement  to  do  a  particular  act,  ceiving  a  certain  percentage  of  the 
between  which  there  was  great  dif-  profits,  B.  performing  all  tiie  labor, 
ference  ;  and  that  it  was  so  was  plain,  and  receiving  the  remainder  of  the 
for  the  money  wiiich  they  received  they  profits.  There  was  some  doubt  whether 
immediately  divided,  and  did  not  lay  the  provisions  of  tiie  statute  had  been 
out  on  a  common  account.  See  also  complied  with,  and  whetlier  the  part- 
Porter  V.  M'Clure,  15  Wend.  187.  nership    was   not   therefore   a   general 

(h)  Coope  V.  Eyre,  1  H.  Bl.  37.     See  one.     But  the  court  held,  that,  whether 


52 


THE    LAW    OF    PARTNERSHIP. 


[CH.  V. 


*  48  *  There  seems  no  sufficient  objection  to  the  doctrine 

lield  in  some  cases,  that  there  may  be  a  partnership  in 

the  profits,  where  there  is  none  in  the  property.  (/)     Thus,  in 


the  partnership  was  general  or  special, 
under  the  statute  of  Maine,  the  goods 
bought  witli  tlie  capital  furnished  by 
C.  were  partnership  property,  and 
therefore  liable  to  attachment  for  the 
separate  debt  of  B.  See  Doane  v. 
Adams,  15  La.  Ann.  350. 

(  /)  In  such  cases,  though  the  prop- 
erty itself  is  not  owned  by  the  partner- 
ship, yet  the  use  of  it  forms  part  of  the 
capital  stock,  and  is  the  contribution 
of  that  partner  to  whom  the  property 
belongs.  In  Meyer  v.  Sharpe,  5  Fount. 
74,  G.,  a  merchant  in  London,  con- 
signed a  cargo  to  his  agents,  K.  &  L., 
in  Russia,  with  the  proceeds  of  which 
they,  according  to  his  directions,  pur- 
chased and  fitted  out  a  return  cargo. 
K.  &  L.  were  interested  in  one-third  of 
the  profit  and  loss  of  the  outward 
adventure,  and  in  one-half  of  the  i)rofit 
and  loss  of  the  homeward  adventure. 
Tlie  bills  of  lading  for  the  return  cargo 
were  forwarded  to  G.,  who  thereupon 
pledged  them  to  S.  as  security  for  ad- 
vances. G.  became  bankrupt.  The 
return  cargo  being  prevented  from 
leaving  Russia,  K.  &  L.  afterwards, 
and  without  the  knowledge  of  G.  or 
S.,  took  out  and  sold  part  of  tlie  return 
cargo,  which,  however,  at  the  instance 
of  G.,  they  afterwards  replaced.  The 
substituted  goods  were,  at  G.'s  request, 
assigned  by  K.  &  L.  to  S.,  and  the  bills 
of  lading  therefor  forwarded  to  him 
by  G.  The  main  question  presented 
was,  Who  were  entitled  to  the  substi- 
tuted goods,  S.  to  whom  they  had  been 
assigned,  and  wiio  held  the  bills  of  lad- 
ing, or  the  assignees  of  G  ^  The  court 
held  that  they  belonged  to  G.'s  as- 
signees :  for  that  K.  &  L.  coidd  not 
make  a  valid  assignment  of  the  goods, 
unless  they  were  partners  therein  with 
G. ;  but  that  there  was  a  clear  dis- 
tinction between  the  being  partners  in 
the  goods,  and  being  interested  in  the 
adventure ;  and  that,  in  this  case,  the 
intention  of  the  parties  was  not  that 
K.  &  L.  should  have  any  interest  in 


the  goods  themselves,  but  that  they 
should  be  interested  in  the  profits  of 
the  concern  only.  See  Ex  parte  Ilodg- 
kinson,  19  Ves.  291 ;  Dry  v.  Boswell, 
1  Camp.  329 ;  Wish  v.  Small,  id.  331, 
note  ;  Patterson,  J.,  in  Burnell  v.  Hunt, 
5  Jur.  650 ;  Mair  v.  Glennie,  4  M.  &  S. 
240 ;  Ward  v.  Thompson,  1  Newb. 
Adn).  95 ;  Bryant  v.  Wardell,  2  Exch. 
479 ;  Brigham  v.  Dana,  3  Williams,  1. 
In  Chase  v.  Barrett,  4  Paige,  148,  how- 
ever, the  doctrine  is  distinctly  asserted 
by  Walworth,  Chancellor,  that,  to  "  con- 
stitute a  partnership  as  between  the 
parties  themselves,  there  must  be  a 
joint  ownership  of  the  partnership 
funds,  according  to  the  intention  of 
the  parties."  The  facts  of  that  case, 
and  the  ground  upon  which  it  was  de- 
cided, are  exhibited  in  the  following 
extract  from  the  opinion  of  the  court : 
"What,  then,  was  the  nature  of  the 
agreement  into  which  the  parties  en- 
tered in  this  case,  according  to  the 
manifest  intention,  as  apparent  from 
the  agreement,  when  taken  in  connec- 
tion with  the  situation  and  relationship 
of  the  several  parties  tliereto  ?  The 
father,  a  man  of  considerable  wealth, 
consisting  principally  of  real  estate, 
agrees  with  his  three  sons  and  his  son- 
in-law,  who  appear  to  have  had  but 
little  property  of  their  own,  that  they 
shall  work  such  farms  as  he  then  owns, 
or  as  he  may  afterwards  purchase,  for 
the  term  of  five  years,  and  sliall  put  in 
all  their  property  for  his  benefit,  ex- 
cept their  household  furniture ;  that  he 
would  23ut  on  to  the  farms  all  the  teams, 
tools,  and  implements  of  husl  andry  he 
then  owned ;  that  his  younger  sons 
should  also  work  on  the  farms;  that, 
at  the  expiration  of  the  five  years,  the 
three  sons  and  the  son-in-law,  who  were 
parties  to  the  agreement,  should  have 
the  one-half  of  the  chattels  which  the 
father  owned  at  the  time  of  making 
the  agreement,  and  one-half  of  the 
property  produced  by  carrying  on  the 
farms,  deducting  the  expenses,  and  also 


CH.  v.] 


WHO  ARE  PARTNERS  AS  TO  EACH  OTHER. 


53 


a  case  similar  to  that  just  *  stated,  if  it  could  be  shown      *  49 

that  the  broker  was  always  spoken  of  as  such,  and  called 

and  treated  as  an  agent,  it  would  seem  that  he  has  no  interest 

in,  no  control  over,  and  no  right  to  demand  or  receive, 

any  thing  more  than  his  share  in  the  profits.  (k~)    *  And      *  50 


one-half  of  the  real  estate  he  then 
owned,  or  which  he  sliould  own,  at  the 
expiration  of  the  agreement.  In  the 
mean  time,  the  several  parties  were  to 
have  tiieir  living  and  expenses  out  of 
the  product  of  the  farms ;  and  the 
teams  and  other  implements  of  hus- 
bandry, which  might  be  wanting  dur- 
ing the  five  years,  were  to  be  paid  for 
out  of  the  produce  of  the  farms.  I 
think  it  is  evident,  from  the  provisions 
of  this  agreement,  that  it  was  the  in- 
tention of  the  father  to  keep  the  legal 
title  to  the  whole  real  and  personal 
property  in  his  own  hands  during  the 
five  years  ;  and  that  the  performance 
of  the  services  by  the  sons  and  son-in- 
law  was  a  condition  precedent  to  the 
conveyance  to  them  of  a  share  of  the 
property."  And,  apparently,  upon  this 
ground,  that  the  property  employed  in 
the  joint  enterprise  belonged  to  one  of 
the  associates  alone,  and  not  to  them 
all  jointly,  the  court  held,  that  the 
father  was  not  a  partner  with  his  three 
sons  and  his  son-in-law.  The  same 
position  would  seem  to  be  taken  in 
Dwinel  v.  Stone,  '60  Me.  384.  There, 
the  defendant  denied  that  he  could  be 
summoned  as  trustee  of  S.  on  the 
ground  that  S.  was  a  partner  with  him 
in  the  particular  business,  that  of  get- 
ting out  lumber,  out  of  which  his  in- 
debtedness arose.  The  defendant  in 
his  answers  stated  that  he  paid  for  and 
furnished  a  permit  to  cut  and  haul 
logs  ;  that  S.  made  no  advance,  except 
his  labor ;  that  the  business  of  the  con- 
cern was  transacted  in  his,  the  defend- 
ant's name,  without  any  understanding 
as  to  whose  name  the  concern  should 
be  in ;  that  himself,  S.,  and  a  third 
person  agreed  to  take  said  permit,  and 
go  on  with  the  operation  as  partners, 
sharing  profit  and  loss  ;  that  S.  had  no 
interest  except  as  partner.  The  court, 
after  premising  that  the  declarations  of 


the  parties  would  not  suffice  to  make 
them  partners,  said :  '  Those  answers 
clearly  show  that  the  defendant  alone 
paid  for  the  permit ;  .  .  .  that  the 
title  to  it,  and  to  the  lumber  cut  under 
it,  were  in  him.  There  could,  there- 
fore, be  no  community  of  interest 
between  the  defendant,  Sawtelle  & 
Spaulding,  in  the  capital  upon  which 
the  labor  was  performed  and  the  busi- 
ness transacted.  The  labor  was  per- 
formed upon  the  lumber,  and  its  price 
or  value  became  immediately  incorpo- 
rated with  it.  There  were  no  funds, 
no  effects,  no  means,  for  profit  and 
loss  separate  from  the  lumber  or  capi- 
tal. There  could,  therefore,  be  no 
profit  and  loss  or  interest  separate 
from  the  capital,  in  which  there  was 
a  community  of  interest,  and  which 
could  constitute  a  partnership  proper. 
No  one  but  the  defendant  could  have 
disposed  of  any  thing  pertaining  to  the 
business."  And  the  court  held,  that 
the  transaction  was  similar  in  principle 
to  cases  in  which  persons  receive  a 
share  in  profits  by  way  of  wages  ;  and 
that,  therefore,  there  was  no  partner- 
ship. Qucere,  Whether  in  this  case  the 
lumber  was  to  be  sold  on  joint  account, 
or  to  be  divided  between  the  parties  ? 
See  Lowry  v.  Brooks,  2  McCord,  421 ; 
Ogden  V.  Astor,  4  Sandf.  322 ;  Beecham 
V.  Dodd,  3  Harrison,  485. 

(Ic)  Hence  the  creditors  of  one  who 
is  partner  only  in  the  profits  cannot 
take  in  execution  the  property  which 
is  contributed  as  capital  wholly  by 
tlie  other  partner.  Thus,  in  Ex  parte 
Hamper,  17  Ves.  404,  Lord  Eldon  says  : 
"  Suppose  two  persons  concerned  in  a 
cargo  in  this  manner,  the  whole  being 
the  property  of  one,  but  a  profit  out 
of  the  proceeds  to  go  to  the  other ;  it 
would  be  extremely  difficult  to  main- 
tain that  the  creditors  of  the  latter 
could   take  in   execution  a  moiety  of 


54 


THE   LAW   OF   PARTNERSHIP. 


[CH.  V. 


if  more  be  paid  him  by  a  debtor  of  the  merchant,  that  debtor 
must  pay  it  over  to  the  merchant  or  his  representatives.  (Z) 
Such  cases  cannot  always  be  reconciled.  But  the  apparent 
conflict  comes  perhaps  from  the  fact  that  the  person  acting  as 
broker  or  agent  may  be  a  partner  as  to  third  persons,  which  he 
certainly  is  if  held  out  to  them  either  in  words  or  by  acts  in 


that    cargo,   subject    to    the    account 
which  we  hear  of  in  these  cases."    And 
again,  in  the  same  case,  p.  411  :  "  It  is 
clear  that  a  man  ma}'  not  be  a  partner 
as  between  himself  and  another,  though 
he  must  be  so  considered  with  refer- 
ence to  third  persons  ;  but  was  it  ever 
decided  that,  on  the  ground  tliat  he  is 
a  partner  as  to  third  persons,  he  has  a 
property  in  the  effects  of  the  partner- 
ship ?  "    Ex  parte  Rowlandson,  1  Rose, 
89.     So  in   Blanchard  v.   Coolidge,  22 
Pick.  151,  where  a  father  and  son  en- 
tered into  an  agreement  by  which  the 
father  was  to  carry  on  business  in  the 
name  and  on  the  account  of  the  son, 
and  to  receive  half  the  profits  as  com- 
pensation for  his  services.     A  separate 
creditor  having  attached  certain  prop- 
erty purchased  under  this  agreement, 
held,  that  the  attachment  was  tortious. 
By   the   court,  Wilde,   J.,    giving   the 
opinion:  "But  it  is  not  necessary  to 
decide   in   the   present    case    whether 
Natlianiel   Blanchard    is    liable    as    a 
partner   or  not.     For,  admitting  that 
he  is  so  liable,  it  does  not  follow  that 
he  has  any  interest  in  the  stock,  which 
was  attachable  by  his    separate  cred- 
itors,  for   the   security   of    debts  con- 
tracted before  his  connection  with  the 
plaintiff  in  business."    Further  :  "  But 
there  is  another  objection  to  the  de- 
fence, which  is  equally  conclusive.    By 
the   agreement   between    the    plaintiff 
and  his  father,  the  stock  was  to  be  the 
property  of  the  plaintiff,  and  his  father 
in  no  event   to  have  any   title  to   it. 
He  could  claim  only  his  share  in  the 
profits,  and  had  no  right  to  appropriate 
to  his  own  use  any  part  of  the  capital 
stock."     See,  to  the  same  effect,  Bart- 
lett  V.  Jones,  2  Strobh.  471. 

(/)  Smith  V.  Watson,  2  B.  &  C.  401. 
The  leading  facts  of  the  case,  and  the 
points   of   difference   between   it    and 


Reid  V.  Hollinshead,  cited  sj/pra,  p.  *47, 
note    [i),   are   thus   stated  by  Abbott, 
C.  J.,  in  his  opinion  in  that  case,  4  B. 
&  C.  878:  "It  is  true  that  the  plain- 
tiffs in  their  first  letter  stipulate  that 
Davidson  &  Co.  shall  act  in  the  busi- 
ness free  of  commission,  and  this  cir- 
cumstance   was   relied   on   as  making 
the   present   case   parallel    to   that   of 
Smith  V.  Watson  ;  but  the  facts  of  the 
two  cases  are  very  different.     In  that 
case,  it  was  stated  to  have  been  agreed 
between    Sampson,   a    merchant,    and 
Gill,  a  broker,  that  Sampson  should  buy 
whalebone  through  Gill  as  his  broker, 
and  that,    as  a   remuneration   for  his 
trouble.  Gill  should  receive  one-fourth 
of  the  profits  arising  from  the  sale,  and 
bear  one-eighth  proportion  of  the  losses. 
Goods  were  bought  under  this  agree- 
ment, which  produced  a  profit.     After 
the  close  of  the  transactions  under  it, 
Sampson  entered   into   other   specula- 
tions, and  continued  to  employ  Gill  as 
a  broker;  and  upon  these  Gill  was  to 
receive   one-third    of    the   profits,   but 
whether  he  was  to  bear  any  portion  of 
the  losses  did  not  appear.    All  the  wit- 
nesses state   that   Sampson   employed 
Gill  as  a  broker,  and  never  spoke  of 
him  otherwise  than  as  his  agent.    Upon 
this  state  of  facts  it  was  held,  that  Gill 
had    no    interest    in    the    goods,    and 
rightly   so ;  for  upon  the   evidence   it 
plainly  appeared  that  tiie  share  of  the 
profits  was  merely  a  substitute  for  the 
broker's  commission,  intended  probably 
to  stimulate  the  exertions  of   Gill  in 
buying  and  selling  to  the  greatest  ad- 
vantage.    In  the  present  case,  David- 
son &  Co.  were  not  brokers ;  the  cor- 
respondence   is,   in    our    opinion,   the 
language  of  persons  to  be  jointly  in- 
terested in  the  purchase  as  well  as  the 
sale  of  the  goods." 


CH.  v.]  WHO    ARE   PARTNERS    AS    TO    EACH    OTHER.  £5 

such  a  way  as  to  justify  their  considering  him  as  a  part- 
ner, wliile  in  reference  to  *  the  mercliant  himself  he  has      *  51 
only  the  rights  which  spring  from  liis  em])loyment  and 
the  bargain  for  his  compensation,  l)ecause  he  himself  knows 
precisely  how  this  is. 

Nor  would  the  merchant  or  party  supplying  funds  have  any 
other  rights  as  to  him  who  uses  them.  Thus,  if,  in  such  an 
arrangement,  it  was  provided  that  one  should  find  all  the  money, 
and  the  other  do  all  the  work,  and  that  the  profits  should  he 
divided,  and  the  transaction  resulted  in  no  profit  whatever, 
hut  in  a  considerable  loss, —  the  party  supplying  funds  would 
be  obliged  to  sustain  the  whole  of  this  loss :  he  could  not  call 
on  the  other  party  to  contribute  to  him  any  portion  of  it ;  for, 
as  between  themselves^  they  were  partners  only  as  to  profits, 
although  the  person  buying  and  selling  might  have  been  liable 
in  solido,  as  a  partner,  for  the  debts  incurred  by  the  purchase, 
or  for  the  transport  or  sale  of  the  merchandise,  (wi) 

It  is  now  quite  settled  that  one  acting  for  another  as  agent 
or  servant  does  not  become  a  partner  with  liabilities  as  such, 
merely  by  receiving  a  certain  proportion  of  the  profits  as  his 
compensation,  and  should  not  join  or  be  joined  in  an  action  as 
partner.  (?nm)  But  it  is  said  that  an  agreement  for  a  division 
of  profits  raises  a  presumption  of  partnership,  (^mmm) 

It  not  unfrequently  happens,  that  persons  enter  into  partner- 
ship without  knowing  it  ;  that  is,  they  make  a  bargain  together, 
without  knowing  that  it  creates  or  involves  a  partnership,  and 
subjects  them  to  the  law  of  partnership.  This  occurs  most 
frequently  when  the  agreement  relates  to  a  single  transaction, 
or  to  one  or  two  only.  There  is  a  common  impression  that 
nothing  is  a  partnership  at  law  which  does  not  cover  the 
whole  ground  of  some  kind  of  business ;  but  this  is  not  so. 
If,  for  example,  one  has  goods  in  the  hands  of  a  factor  or  com- 
mission merchant,  and  he  and  another  person  enter  into  an 
agreement  for  a  valid  consideration  to  share  the  profit  and  loss 

(m)  Heran  v.  Hall,  1  B.  Mon.  159.  Barb.  317;  Miller  v.  Price,  20  Wis. 
See  Irving  v.  Excelsior  Fire  Ins.  Co.,     117. 

1   Bosw.   507;    Hitchings  v.   Ellis,    12  [mm)  Lewis   v.   Greider,   49    Barb. 

Gray,    449 ;     Newbrau    v.    Snider,    1     606.     See  post,  ch.  6,  §  2. 
West   Va.  153;  Lamb    v.  Grover,   47  (mmm)  NiehofE   v.   Dudley,   40    111. 

406. 


56  THE   LAW   OF   PARTNERSHIP.  [CH.  V. 

of  those  goods,  this  constitutes  them  partners ;  and  the  rule 
has  been  applied  in  such  a  case,  where  the  owner  of  the 
goods  agreed  to  guarantee  to  the  other  party  the  solvency  of 
the  commission  house,  (vt)  So  persons  associating,  and 
*52  *  contributing  money  to  obtain  a  bill  for  a  railroad,  in 
Parliament,  were  held  to  be  partners  in  this  enter- 
prise, (o)  A  known  and  acknowledged  partnership,  doing  a 
regular  business,  may  enter  into  a  bargain  for  purchase,  sale, 
and  joint  profit,  with  a  third  party,  in  regard  to  some  single 
transaction,  which  makes  them  all  partners  therein.  In  such 
case,  the  third  person  is  not  admitted  into  the  former  partner- 
ship ;  nor  is  the  partnership  which  is  created  by  the  bargain 
one  between  the  old  partnership  and  the  new  man ;  but  the 
members  of  the  old  partnership,  and  the  third  person,  all  as 
individuals,  constitute  a  new  partnership.  (|j>) 

But  if  two  or  more  creditors  take  an  assignment  of  their 
debtor's  stock  in  trade,  and  agree  together  and  with  him  to 
carry  on  the  business  and  apply  the  profits  to  the  payment  of 
their  debts  due  them,  this  does  not  of  itself  make  them  part- 
ners as  between  themselves,  (pp) 

There  is  nothing  to  prevent  the  same  person  from  being  a 
partner  in  several  distinct  firms,  {q')  This  may  involve  difficult 
questions  of  fact,  or  perhaps  of  law,  arising  from  the  compli- 
cation of  interests,  especially  in  case  of  bankruptcy.  (^^)     A 

(«)  Salomons  tJ.  Nissen,  2  T.  R.  674.  tion.     Cumpston  v.  McNair,   1  Wend. 

So,  if  two  mercantile  houses  recom-  457.    In  like  manner,  if  the  proprietors 

mend  consignments  to  each  other,  and  of  separate  lines  of  stage-coaches  hire 

divide   the   gross   commissions   on  all  and  keep  a  stable  in  common  for  their 

sales  of  goods  so  recommended,  quoad  coach  horses,  and  employ  and  pay  a 

hoc  they  are  partners.     Cheap  v.  Cra-  hostler  at  their  joint  expense,  a  part- 

mond,  4  B.  &  Aid.  663.    So,  also,  where  nership  exists  between  them  for  these 

two  jointly   undertake   to   procure    a  purposes.     Ripley    v.   Colby,    3   Fost. 

cargo    for    a   vessel,   the    commission  438.     See  Bentley  v.  White,  3  B.  Mon. 

therefor  to  be  divided  between  them.  268  ;  Benson  v.  M'Bee,  2  McMull.  91. 
Bovill   V.   Hammond,    6   B.    &  C.  149.  (o)  Holmes  v.  Higgins,  1  B.  &  C.  74. 

And  where  D.  &  W.  were  owners  of  a  (;>)  Ex  parte  Cellar,  1  Rose,  297. 

quantity  of  salt,  taken  to  secure  them-  (pp)  Taylor  v.   Herring,  10  Bosw. 

selves  against  their  joint  liability  as  447. 

indorsers  of  a  note,  and  by  agreement  (q)  Swan    v.    Steele,   7   East,   210 ; 

between  them  D.  took  tlie  salt  to  mar-  Bosanquet  v.   Wray,   1  B.  &  C.  597 ; 

ket  to  sell  on  joint  account,  and  did  Elderkin  v.  Winne,  1  Chand.  27. 
sell  it,  and  the  proceeds  were  applied  (qq)  See  post,  ch.  8,  §  3 ;  and  Steele 

for  the  joint  benefit,  it  was  held,  that  v.  Stuart,  Law  Rep.  2  Eq.  Cas.  84. 
D.  &  W.  were  partners  in  this  transac- 


CH.  v.]     AVHO  ARE  PARTNERS  AS  TO  EACH  OTHER. 


67 


firm  cannot  sue  a  firm,  if  one  person  is  a  partner  in  both.  But 
one  member  of  a  firm  may  sue  another  firm  of  which  his  co- 
partners were  members,  on  a  covenant  executed  to  him  by  that 
firm,  {qqq)  Some  of  these  questions  we  shall  hereafter  con- 
sider, when  we  treat  of  bankruptcy  and  the  settlement  of  a 
partnership  estate.  It  seems,  however,  not  only  that  a  member 
of  one  partnership  may  become  a  member  of  another,  but  a 
member  of  one  firm  may  enter  into  such  a  bargain  with  a  third 
party,  in  respect  to  the  interest  of  tlie  first  in  the  stock,  busi- 
ness, or  profits  of  his  partnership,  as  shall  constitute  this 
third  person  and  himself  partners  as  to  the  interest  of  the  first, 
although  the  partnerships  are  entirely  distinct,  the  new  from 
the  old,  and  the  third  person  acquires  no  rights  and  in- 
curs no  obligations  in  reference  to  the  first  partnership,  (r) 


(1777)  MuUany  v.  Kernan,  10  Iowa, 
224. 

(r)  To  this  effect  is  the  language  of 
Eyre,  C.  J.,  in  Bolton  r.  Puller,  1  B.  & 
P.  546  :  "  There  can  be  no  doubt,  that, 
as  between  themselves,  a  partnership 
may  have  transactions  with  an  indi- 
vidual partner,  or  with  two  or  more  of 
the  partners  having  their  separate  es- 
tate engaged  in  some  joint  concern  in 
whicli  the  general  partnership  is  not 
interested  ;  and  that  they  may  by  tlieir 
acts  convert  the  joint  property-  of  the 
general  partnership  into  the  separate 
property  of  an  individual  partner,  or 
into  the  joint  property  of  two  or  more 
partners,  or  e  conrerso.  And  their 
transactions  in  this  respect  will,  gener- 
ally speaking,  bind  third  persons,  and 
third  persons  may  take  advantage  of 
them  in  tlie  same  manner  as  if  the 
partnership  were  transacting  business 
with  strangers  ;  for  instance,  suppose 
the  general  partnersliip  to  have  sold  a 
bale  of  goods  to  the  particular  partner- 
ship, a  creditor  of  the  particular  part- 
nersliip might  take  those  goods  in 
execution  for  the  separate  debt  of  that 
particular  partnership.  In  some  re- 
spects, therefore,  an  individual  partner, 
or  a  particular  partnershii)  consisting 
of  two  or  more  of  those  persons,  who 
are  partners  in  some  larger  partner- 
ship, may  be  considered  as  third  per- 


sons in  transactions  in  which  the 
general  partnership  may  happen  to  be 
engaged  with  their  correspondent." 
The  court  proceeded  upon  the  same 
principle  in  Brown  v.  De  Tastet,  Jac. 
284.  There  A.,  B.,  and  C.  being  in 
partnership,  A.  agreed  with  D.  to  give 
him  a  moiety  of  his  share  in  the  firm. 
It  was  liihl,  that  an  account  might  be 
decreed  between  A.  and  D.  without 
making  B.  and  C.  parties.  See  Glass- 
ington  V.  Thwaites,  1  Sim.  &  S.  124. 
In  Ex  parte  Barrow,  2  Rose,  255,  the 
two  Slyths,  father  and  son,  were  in 
partnership.  They  agreed  to  dissolve  ; 
that  the  affairs  of  the  partnership 
should  be  settled  by  arbitration ;  and 
that  Slyth  the  younger  should  have 
one-third  out  of  the  profits  of  the  busi- 
ness, until  some  situation  should  be 
foimd  for  him.  The  affairs  of  the  part- 
nership were  never  adjusted ;  but, 
shortly  after,  Slyth  the  elder,  who  re- 
mained in  possession  of  the  effects  of 
the  firm,  formed  a  new  partnership 
with  Gyles.  A  commission  of  bank- 
ruptcy having  issued  against  the  two 
Slyths,  their  assignees  took  possession 
of  the  effects  of  Slyth  and  Gyles,  to 
an  amount  more  than  sufficient  to  pay 
the  creditors  of  that  firm.  The  ques- 
tion in  the  present  case  was  to  whom 
tlie  surplus  belonged,  whether  to  the 
joint  creditors  of  Slyth  the  elder  and 


58 


THE    LAW    OP    PARTNERSHIP. 


[CH.  V. 


*  53  *If  the  new  partnership  becomes  insolvent,  it  would 
affect  the  old  partnership  only  as  the  insolvency  of  any 
member  thereof  would,  (s)  If  a  person  belongs  to  two  firms, 
he  may  transfer  to  the  credit  of  one  of  them  liis  interest  in  the 
other,  against  the  wishes  of  his  partners  in  the  second  firm; 
nor  would  tliis  necessarily  operate  a  dissolution  of  the  second 
firm,  (ss)  But  it  is  so  obvious  that  such  complicated  arrange- 
ments may  bring  upon  the  parties  great  inconvenience  and 
embarrassment,  that  they  will  continue  to  be  very  rare,  even 
if  they  take  place  at  all. 

Where  property  is  left  to  two  or  more  persons  by  a  will,  in 
such  a  way  that  they  would  take  it  as  joint  tenants,  or  as  ten- 
ants in  common,  and  they  take  it  as  partners,  and  continue  to 
hold  and  use  it  as  partnership  stock,  their  rights  to  and  in  the 
property,  and  against  each  other  in  relation  to  the  property, 
are  governed  by  the  law  of  partnership.  Qf)     To  this  it  may 


Slyth  the  younger,  or  to  the  separate 
creditors  of  Slyth  the  elder.  The  court 
hfld,  that  it  was  the  separate  property 
of  Slyth  the  elder.  Lord  Chancellor 
Eldon,  in  the  course  of  his  opinion, 
said:  "Now  Slyth  the  son  was  no 
partner  in  this  (the  new)  partnership; 
for  althougli  Slyth  the  father  might  be 
obliged  to  give  one-third  of  his  profits 
to  Slyth  the  son  under  this  arrange- 
ment, yet  I  take  it  to  liave  been  long 
since  clearly  established,  that  a  man 
maj'  become  a  partner  with  A.,  where 
A.  and  B.  are  partners,  and  yet  not  be 
a  member  of  that  partnership  which 
existed  between  A.  and  B.  In  the 
case  of  Sir  Charles  Raymond,  a  banker 
in  the  city,  a  Mr.  Fletcher,  agreed  with 
Sir  Charles  Raymond  that  he  should 
be  interested  so  far  as  to  receive  a 
share  of  his  profits  of  the  business, 
and  which  share  he  had  a  right  to 
draw  out  of  the  firm  of  Raymond  & 
Co.  But  it  was  held  that  he  was  no 
partner  in  that  partnership,  had  no  de- 
mand against  it,  had  no  account  in  it, 
and  that  he  must  be  satisfied  with  a 
share  of  the  profits  arising  and  given 
to  Sir  Charles  Raymond."  See  Fre- 
ligh  V.  Miller,  16  La.  Ann.  418. 
(s)  See  preceding  note. 


{ss)  Russell  I'.  Leland,  12  Allen,  349. 

(t)  Jackson  v.  Jackson,  7  Ves.  535. 
Same  case  on  Appeal,  9  "Ves.  591.  In 
this  case,  personal  property,  including 
leaseholds,  property  in  trade,  &c.,  was 
left  to  A.  &  B.,  as  residuary  legatees. 
By  both  the  Master  of  the  Rolls,  and 
the  Lord  Chancellor  on  appeal,  it  was 
held,  that  they  took  it  originally  as 
joint-tenants.  But  the  Master  thought 
the  bequest  positive,  and  that  there 
were  no  circumstances  by  which  he 
could  be  guided  in  giving  to  the  words 
of  the  will  any  other  than  their  literal 
import.  Therefore  he  decreed  that,  on 
the  death  of  A.,  all  the  property  thus 
bequeathed,  excepting  a  portion  of  the 
accrued  profits,  belonged  to  B.,  the 
survivor.  The  Lord  Chancellor,  on 
the  other  hand,  held,  that  the  will 
had,  neither  from  the  obvious  inten- 
tion, the  purposes  to  which  the  testator 
had  devoted  his  property,  nor  from 
any  other  consideration,  gone  the 
length  of  providing  that  the  residuary 
legatees  should  not  have  any  power  of 
destroying  the  original  joint-tenancy 
by  their  acts  and  agreements.  A.  &  B. 
then  possessing  the  power  of  severing 
the  joint-tenancy,  he  held,  that  they 
had  exercised  it,  both  as  to  the  capital 


CH.  v.] 


WHO  ARE  PARTNERS  AS  TO  EACH  OTHER. 


59 


be  said,  by  way  of  *  exception,  that  if  the  will   con-      *  54 
tained  distinct  expressions  which   would    give  to   the 
property  the  quality  of  joint-tenancy,  even  when  it  should  be 
held  in  partnership,  these  words,  in  reference  to  the  legatees, 
would  take  effect,  (w) 

Questions  of  partnership  are  far  more  frequent,  and  generally 
more  important,  when  they  arise  from  relations  between  the 
firm,  or  an  alleged  member  of  it,  and  third  persons.  These 
questions  will  be  considered  in  the  next  chapter.  Here  we  will 
sum  up  what  seem  to  us  the  true  principles  of  partnership  as 
between  the  partners,  as  follows:  — 

Persons  are  partners  in  regard  to  each  other,  if  each  of  them 
contributes  either  capital  (money,  merchandise,  chattels,  or 
choses  in  action),  or  credit,  or  skill  and  care,  or  labor,  or  two 
or  more  or  all  of  these,  and  all  the  contributions  are  put  together 
into  common  stock,  to  be  used  for  the  purpose  of  carrying  on 
business,  or  for  one  or  more  business  transactions,  for  the  com- 
mon benefit,  (y) 


and  the  profits,  by  acting  for  twelve 
years  as  partners  in  trade  tiierein  ;  and 
that,  therefore,  they  were  to  be  con- 
sidered as  tenants  in  common  of  the 
property  embarked  in  trade,  from  tlie 
time  tliey  were  let  into  possession.  See 
2  Hov.  Supp.  66. 

(«)  As  where  a  testator,  after  mak- 
ing considerable  pecuniary  and  otlier 
legacies,  witliont  making  any  express 
disposition  of  the  residue  of  his  per- 
sonal estate,  constituted  his  two  eldest 
sons  his  executors.  Though  tlie  exec- 
utors had  carried  on  trade  together 
with  a  portion  of  the  residue,  it  was, 
nevertheless,  held,  that,  upon  the  death 
of  one  of  them,  the  whole  of  the  re- 
siduum survived  to  the  other.  Hall  v. 
Digby,  4  Bro.  P.  C.  224.  In  9  Ves. 
59G,  the  Lord  Chancellor  thus  states 
tlie  principle  upon  which  the  case  was 
decided  :  "  In  that  case  Mr.  Fazaker- 
ley,  Sir  John  Strange,  and  the  otlier 
considerable  persons  who  signed  the 
reasons  upon  the  appeal,  all  agreed 
that  actual  dealing  in  partnership  with 
effects  left  to  two  jointly,  with  intent 
that  it  should  be  a  dealing  in  partner- 
ship, though  they  had  taken  under  the 


will  as  joint-tenants,  yet  having  once 
begun  to  act  with  the  property  as  mer- 
chants, would  sever  the  joint-tenancy, 
unless  the  will  contains  something  that 
would  clothe  the  property,  though  en- 
gaged in  trade,  with  the  quaHty  of 
joint-tenancy." 

(f)  The  proposition  of  the  text  is 
illustrated  by  a  great  variety  of 
cases.  The  most  unmistakable,  and 
perhaps  the  most  common,  form  of 
partnership,  is  where  two  or  more  per- 
sons agree  to  contribute  both  capital 
and  labor,  and  to  share  in  both  profit 
and  loss,  equally  or  in  certain  specified 
proportions.  Such  an  agreement  being 
executed,  there  can  be  no  question  as 
to  the  existence  of  a  complete  partner- 
ship inter  se.  See  Metcalf  v.  Royal 
Exchange  Assurance  Co.,  Barnard. 
343;  Goddard  v.  Pratt,  16  Pick.  412 
Green  v.  Beesley,  2  Bing.  N.  C.  108 
Wilson  V.  Whitehead,  10  M.  &  W.  503 
Doak  V.  Swann,  8  Greenl.  170;  Griffith 
V.  Buffam,  22  Vt.  181  ;  Cumston  v. 
MeXair,  1  Wend.  457;  Halsted  v. 
Shnielzel,  17  Johns.  80;  Brown  v. 
Tapscott,  6  M.  &  W.  119;  Quine 
V.  Quine,  9  Sined.  &   M.  155;   Goule 


60 


THE   LAW   OF   PARTNERSHIP. 


[CH.  V. 


55  *  It  is  certainly  not  necessary  that  each  partner  should 

bring  into  the  common  stock  both  labor  and  property. 


V.  Hayward,  1  Cal.  345;  Wadswortli 
V.  Manning,  4  Md.  59;  Emanuel  v. 
Drauglin,  14  Ala.  303.  Where  parties 
agree  to  enter  into  an  association  for 
the  purpose  of  buying  and  selling,  and 
carrying  on  a  joint  business,  indefi- 
nitely, no  stipulation  for  dividing  profit 
and  loss  is  necessary,  as  that  is  an  in- 
cident to  the  prosecution  of  their  joint 
business.  Barrett  v.  Swann,  17  Me. 
180.  As  to  where  there  is  a  partner- 
ship in  a  patent,  see  Parkhurst  v.  Kins- 
man, 1  Blatch.  C.  C.  488 ;  Penniman 
V.  Munson,  26  Vt.  164.  The  partners 
need  not  all  contribute  money,  nor  in 
equal  proportions.  An}^  thing  of  value 
for  the  use  of  the  partnership,  as  for 
example  a  license  to  trade,  is  a  suffi- 
cient contribution  to  the  joint  funds. 
The  Herkimer,  Stewart  Adm.  23,  24. 
Nor  need  the  property  itself  be  put 
into  the  common  stock.  On  the  other 
hand,  the  capital  of  a  firm  may  consist 
of  the  mere  use  of  property  owned  by 
the  individual  partners  separately. 
Chancellor  Walworth,  in  Champion  v. 
Bostwick,  18  Wend.  183.  Thus,  car- 
riers of  passengers  and  goods  some- 
times divide  among  themselves  a  line 
of  road,  each  of  them,  at  separate  ex- 
pense, furnishing  the  means  of  trans- 
portation for  a  particular  portion  of  it. 
If,  then,  they  share  proportionably  in 
the  profits  and  losses  accruing  from  the 
running  of  the  whole  line,  they  are  part- 
ners inter  se,  and  the  capital  contributed 
by  each  is  tlie  use  of  the  vehicles,  and 
other  property  wliich  each  provides  for 
his  separate  part  of  the  route.  Cham- 
pion V.  Bostwick,  supra;  Fromont  v. 
Coupland,  2  Bing.  170  ;  Cobb  v.  Abbot, 
14  Pick.  289  ;  The  Steamboat  Swallow, 
Olcott  Adm.  334.  See  Waland  v.  El- 
kins,  1  Stark.  307 ;  Wetmore  v.  Baker, 
9  Johns.  307,  and  the  comments  of  the 
court  thereon  in  Champion  v.  Bost- 
wick. See  Cotter  v.  Bettner,  1  Bosw. 
490.  But  if  in  such  cases  the  carriers 
do  not  own  the  profits  resulting  from 
the  whole  road,  as  a  common^fund  out 
of  which  each  is  entitled  to  draw  a  cer- 


tain share,  but  each  one  of  tliem  re- 
ceives only  those  profits  and  bears  only 
those  losses  which  accrue  from  his 
own  particular  piece  of  road,  tliere  is 
now  no  such  community  of  interest 
between  them  as  to  make  them  part- 
ners. Mohawk  &  Hudson  R.  R.  Co.  v. 
Niles,  8  Hill,  162;  Briggs  v.  Vander- 
bilt,  19  Barb.  222;  Bonsteel  v.  Vander- 
bilt,  21  id.  26 ;  Pattison  v.  Blanchard, 
1  Seld.  186;  Ellsworth  v.  Tartt,  26 
Ala.  733.  [Where  several  common 
carriers  on  a  continuous  route  divide 
the  proceeds  of  the  joint  transporta- 
tion in  an  agreed  proportion,  this 
does  not  constitute  them  partners  as 
to  the  carriage  of  the  goods,  there 
being  no  general  agreement  to  share 
the  proceeds  of  the  whole  business 
on  all  their  lines.  Goss  v.  N.  Y.  &  P. 
R.  R.  Co.,  99  Mass.  220.]  In  French 
V.  Styring,  2  C.  B.  n.  s.  357,  two  joint 
owners  of  a  race-horse  had  entered 
into  an  arrangement  by  which  one  of 
them  liad  the  entire  management  of 
the  horse,  and  paid  in  advance  all  the 
expenses  of  keeping,  training,  &c.  The 
other  co-owner  was  to  pay  a  moiety  of 
these  expenses,  and  to  share  equally 
in  the  earnings.  One  of  the  questions 
raised  in  the  case  was,  wliether  that 
agreement  constituted  a  pnrtnership. 
Cockburn,  C.  J.  :  "I  think  the  fair  re- 
sult of  the  evidence  is,  that  there  was 
no  partnership  in  the  horse ;  but  that 
the  plaintiff"  and  defendant  were  owners 
in  common,  each  being  entitled  to  an  un- 
divided moiety,  —  part-owners,  but  not 
partners.  But,  although  they  were  not 
partners  in  the  horse,  I  concur  in  the 
argument  of  the  defendant's  counsel 
that  they  were  partners  in  the  manage- 
ment and  working  of  the  horse." 
Crowder,  J. :  "  There  was  certainly  no 
partnership  in  tlie  horse;  but  it  is  con- 
tended that  there  was  a  partnership  so 
far  as  regarded  tlie  running  and  the 
managing  of  the  horse.  If  tiiat  be  so, 
then  what  was  the  capital  1  It  con- 
sisted of  the  money  necessary  to  train, 
feed,  convey  the  horse  to  races,  and 


CH.  v.] 


WHO  ARE  PARTNERS  AS  TO  EACH  OTHER. 


61 


It  is  a  familiar  *  principle,  quite  frequently  put  in  prac-      *  56 
tice,  tliat  one  or  more  of  the  partners  may  contribute 
money  alone,  while  one  or  two  others  may  contribute  labor  and 
money,  or  labor  alone,  (if)     And  indeed  all  may  contribute 
labor,  and  none  money,  (a:) 

The  principles,  or  rules  above  stated,  as  defining  or  describ- 
ing a  partnership,  may  be  further  illustrated  by  cases  in  which 
joint  business  transactions  have  been  conducted,  but  were  held 
not  to  constitute  a  partnership,  for  the  want  of  some  essential 
ingredient,  as  where  the  contributions  of  all  the  parties  were 
not  mingled  into  common    stock.  (?/)     So  where  the  capital 


other  matters  ;  that  is,  of  the  money 
necessary  to  be  expended  to  i)Ut  the 
horse  in  a  condition  to  win  liis  stakes." 
See  aufe,  page  *48,  note  (j),  for  furtiier 
illustrations  of  partuersliips  in  whicli 
tlie  use  of  property  alone  constitutes 
the  capital.  See  also  Bulfinch  v. 
Winclienpack,  3  Allen,  161. 

{w)  Keid  V.  HoUinshead,  4  B.  &  C. 
867;  Ex  parte  Chuck,  8  Bing.  46'J; 
Candler  v.  Candler,  6  Madd.  141 ;  Bovill 
V.  Hammond,  6  B.  &  C.  149  ;  Dob  v. 
Halsey,  16  Johns.  34;  Gregg  Town- 
sliip  1-.  Half-Moon  Township,  2  Watts, 
342;  Simpson  i-.  Fetz,  1  McCord  Ch. 
218;  Potter  v.  Moses,  1  R.  I.  430; 
Winship  v.  Bank  of  the  United  States, 
5  Pet.  529;  Tibbatts  v.  Tibbatts,  6 
McLean,  80;  Brace  v.  Washburn,  43 
Me.  564 ;  Wood  r.  Vallette,  7  Ohio  St. 
122.     See  Dwinel  i-.  Stone,  30  Me.  384. 

(.r)  Not  only  may  one  partner  con- 
tribute labor  alone  to  the  joint  under- 
taking, but  the  contributions  of  all 
the  partners,  and  the  whole  capital  of 
the  firm,  may  consist  substantially  of 
personal  services,  as  is  generally  the 
case  in  professional  partnerships  be- 
tween solicitors,  physicians,  &c.  See 
Tench  v.  Roberts,  6  Madd,  145,  note  (a). 
So  where  two  commission  houses,  one 
in  London,  the  other  in  Rio  Janeiro, 
in  accordance  with  mutual  stipulations, 
recommend  customers  to  each  other, 
and  divide  equally  the  commissions  on 
the  sale  of  all  goods  thus  recommended 
by  the  one  house  to  the  other,  quoad  hue 
they  are  partners,  the  capital  of  the 


partnership  being  the  partners'  mutual 
exertion  of  influence  in  each  other's 
favor.  Cheap  v.  Cramond,  4  B.  iSL  Aid. 
663.     See  Dix  v.  Otis,  5  Pick.  38. 

(y)  In  Smith  v.  Wright,  5  Sandf. 
113,  two  mercantile  houses  had  carried 
on  a  joint  business  under  the  following 
arrangement :  Each  firm  agreed,  in  its 
own  name  and  with  its  own  funds,  to 
make  puixhases  and  sales  of  flour  and 
other  produce.  But  all  such  contracts 
were  to  be  made  for  the  joint  account 
and  benefit  of  the  two  firms,  who  were 
to  share  equally  in  the  profits  and 
losses  resulting  from  the  separate  deal- 
ings of  each  firm  in  this  particular 
line  of  business.  Upon  the  question 
whether  this  agreement  constituted 
the  parties  to  it  partners,  Sandford, 
J.,  said:  "There  was  no  union  of 
funds  contemplated  by  the  agreement. 
Each  firm  was  to  make  and  fulfil  its 
own  contracts.  There  was  no  union 
of  services,  because  it  might  so  happen 
that  one  of  the  firms  would  be  unable, 
or  deem  it  unwise,  to  make  any  con- 
tracts at  all ;  and  yet,  in  the  absence 
of  bad  faith,  it  would  participate  in 
the  profits,  and  would  certainly  be 
liable  to  share  the  losses  of  the  con- 
tracts made  by  the  other  firm.  The 
whole  effect  of  the  agreement  was  to 
bind  two  distinct  mercantile  houses, 
acting  in  tlieir  own  names,  separately 
and  independently  of  each  other,  to 
share  the  profits  and  losses,  when  they 
should  be  ascertained,  arising  from 
one    particular    department    of    their 


62 


THE   LAW    OF   PARTNERSHIP. 


[CH.  V. 


*  67  and  labor  employed  *  were  not  combined  together 
for  business  purposes  and  a  common  profit,  {z")  And 
it  seems  that  there  is  a  difference  between  an  enterprise 
undertaken  by  a  number  of  persons  jointly,  with  the  intent 
thereby  to  diminish  a  loss,  and  one  for  the  sake  of  profit, 
properly  speaking,  (a)  Tlie  capital  may  be,  and  remain 
throughout  the  partnership,  the  property  of  only  a  part  of 
the  partners ;  (6)  but  all  must  own  in  community  the  profits 
resulting  from  the  business,  (c) 


trade.  We  think  that  this  did  not 
constitute  tiie  two  firms  copartners  in 
tlie  contracts,  wliicli  the  respective 
separate  firms  made  in  the  transaction 
of  that  portion  of  tlieir  business." 
Benson  v.  M'Bee,  2  McMullen,  91. 

(z)  Thus  a  deed  of  assignment  by 
a  debtor  of  all  his  property  to  trustees 
for  the  benefit  of  creditors,  containing 
a  clause  by  which  the  trustees  are 
authorized  to  carry  on  the  trade  of 
the  debtor,  will  not  make  the  creditors 
who  sign  the  deed  partners,  if  the 
carrying  on  of  the  business  is  merely 
auxiliary  to  winding  up  the  debtor's 
affairs,  and  has  in  view  merely  the 
realization  of  his  property.  Other- 
wise, if  the  object  of  the  deed  is  to 
carry  on  the  trade  in  a  spirited  and 
extensive  manner,  for  the  purpose  of 
making  a  profit  for  the  parties  to  it. 
Owen  0.  Body,  5  Ad.  &  El.  28 ;  Janes 
V.  Whitbread,  11  C.  B.  406,  5  Eng.  L. 
&  Eq.  431;  Coate  v.  Williams,  9  id. 
481;  Hickman  v.  Cox,  18  C.  B.  617, 
36  id.  400,  3  C.  B.  n.  s.  523. 

(a)  As  where  underwriters,  having 
separately  insured,  and  separately  ac- 
cepted an  abandonment  of  a  vessel, 
then  unite  in  prosecuting  the  original 
voyage,  "it  is  carrying  the  general 
principle  too  far  to  consider  them  in 
the  light  of  common  partners,"  since 
they  take  the  vessel  only  for  the  pur- 
pose of  diminishing  a  loss,  and  with 
no  other  view  than  to  sell  her  at  its 
termination.  Livingston,  J.,  in  United 
Ins.  Co.  V.  Scott,  1  Johns.  112.  So, 
where  a  debtor,  in  consideration  of 
his  indebtedness,  transfers  the  control 
of  his  business  to  his  creditors,  the 
latter  to  receive  a  large  share  of  the 


profits  until  the  indebtedness  of  the 
former  shall  be  reduced  to  a  specified 
amount,  the  debtor  and  his  creditors 
are  not  partners.  Brandred  v.  Muzzy, 
1  Dutch.  208.  See  Price  v.  Groom,  2 
Exch.  542. 

{b)  See  last  note  ;  also  ante,  p.  *  44 
and  note  (c).  Where  partners  in  a 
mercantile  house  enter  into  an  ar- 
rangement by  which  they  admit  other 
parties  to  share  in  their  present  profits 
and  losses,  and  further  agree,  at  the 
end  of  a  certain  period  and  upon  cer- 
tain considerations,  to  transfer  to  those 
parties  certain  shares  in  the  capital, 
such  present  participation  in  the  prof- 
its, with  a  right  to  the  use  of  the 
capital,  and  an  inchoate  title  to  it, 
constitutes  a  full  partnership.  Vassar 
V.  Camp,  14  Barb.  341. 

(c)  The  courts  have  not  perhaps 
precisely  defined  a  partner's  interest 
in  accruing  profits,  as  an  ownership  of 
them.  But  it  is  evident  that  in  all 
cases  of  actual  partnership,  such  is 
the  fact.  Further,  an  ownership  of  a 
part  of  the  capital  of  a  firm  will  not 
alone  make  a  man  a  partner,  nor  the 
n)ere  reception  of  a  share  of  the  profits 
of  a  trade.  But  if  there  be  an  owner- 
ship of  the  profits,  while  they  are 
profits,  that  one  circumstance  alone 
will  constitute  a  complete  partnership. 
See  p.  *  44  and  note.  Hence,  a  joint 
ownership  of  profits  seems  to  be  the 
real  test  of  partnership,  since  it  is  that 
thing  which  by  itself  is  sufficient  to 
constitute  an  actual  partnership,  and 
without  which  none  ever  exists.  And 
in  some  cases  this  criterion  of  partner- 
ship appears  to  be  recognized  by  the 
courts.      Thus,  in  Bond  v.  Pittard,  3 


CH,  v.] 


WHO  ARE  PARTNERS  AS  TO  EACH  OTHER. 


63 


*  It  should  be  added,  that  whether  two  or  more  persons  *  58 
are  partners  as  to  each  other  must  generally,  and  per- 
haps always,  be  determined  by  the  intention  of  the  parties,  as 
the  same  is  expressed  in  the  words  of  their  contract,  or  may 
be  gathered  from  the  acts  and  from  all  the  circumstances 
which  are  available  for  the  interpretation  or  construction  of 
the  contract.  (cZ) 


M.  &  W.  357,  G.  F.  Watts  &  P.  H. 
Watts  carried  on  business  as  attorneys 
and  solicitors,  under  an  agreement  by 
wliicli  v.  H.  Watts  was  to  receive  in 
tiie  first  place,  out  of  the  profits  of  the 
business,  the  sum  of  300/.  annually. 
But  lie  was  not  to  be  liable  for  any 
losses,  and  was  to  have  a  lien  on 
profits  to  indemnify  him  for  any  losses 
he  might  sustain,  by  reason  of  his 
liability  as  partner,  to  third  persons. 
G.  F.  Watts  being  bankrupt,  the  ques- 
tion was  whether  his  assignees  and 
P.  H.  Watts  could  join  in  an  action 
against  the  defendant  for  the  price  of 

work  and  labor  done.     Parke,  B. 

"  To  whom  would  this  money  belong 
if  recovered  ?  —  It  would  belong  to 
botli  till  the  end  of  the  year,  when 
the  amount  of  profits  would  be  ascer- 
tained ;  and  then  in  one  event  300/. 
would  be  due  to  P.  H.  Watts,  and  the 
other  would  be  entitled  to  the  bal- 
ance." Again  :  "  I  have  no  doubt  that 
the  contract  could  have  been  entered 
into  by  both  the  Messrs.  Watts, 
whether  they  were  partners  or  not ; 
and,  if  it  were,  both  would  be  entitled 
to  sue.  If  it  were  entered  into  by  one 
only,  then  the  question  would  be, 
whether  the  other  was  jointly  inter- 
ested in  the  contract.  According  to 
the  agreement  between  them,  it  ap- 
pears that  Pliilip  Henry  Watts  was  to 
receive  300/.  a  j'ear  out  of  the  profits, 
that  is,  out  of  the  net  profits,  which 
could  not  be  ascertained  imtil  a  view 
was  taken  of  the  real  state  of  the 
accounts  at  the  end  of  the  year.  But 
in  the  mean  time,  doubtless  the  money 
recovered  in  this  action  would  be  the 
joint  property  of  both,  and  would  go 
into  the  general  fund  for  the  benefit 
of    both,   until    that   state   of    things 


should  arise  when  a  division  would 
take  place,  and  for  this  reason  I  am  of 
opinion  that  in  this  case  the  contract 
is  with  both."  See  Wish  v.  bmall,  1 
Camp.  331  ;  Barry  v.  Nesham,  3  M., 
G.  &  Sc.  657,  opinion  of  Maule,  J.  In 
subsequent  notes  the  subject  is  dis- 
cussed at  greater  length. 

{d)  Hence,  if  persons  who  unite  in 
a  joint  undertaking  expressly  declare 
that  they  do  not  mean  to  become  part- 
ners, the  law  will  not  hold  them  part- 
ners as  to  each  other,  unless  the 
actual  relations  into  which  they  enter 
neutralize  and  negative  their  declara- 
tions. Gill  V.  Kuhn,  6  S.  &  R.  337 ; 
Kerr  v.  Potter,  6  Gill,  404 ;  Gilpin  v. 
Enderby,  5  B.  &  Aid.  954 ;  [Freeman 
V.  Bloomfield,  43  Mo.  391.]  But  the 
controlling  infiuence  which  the  courts 
give  to  the  intention  of  the  parties,  in 
questions  of  this  kind,  is  best  illus- 
trated by  a  large  class  of  cases  in 
Avhich  the  inquiry  is,  whether  as  be- 
tween thetnselces  a  person  who  receives 
a  share  of  the  profits  is  a  partner  with 
another  person,  or  only  his  agent  and 
servant.  Thus,  if  A.  &  B.  are  engaged 
in  a  particular  trade,  of  which  A.,  who 
finds  capital,  receives  a  part  of  the 
profits,  and  B.,  who  manages  the  busi- 
ness, receives  another  part,  the  real 
relation  between  A.  &  B.  may  be  that 
of  partners,  or  that  of  principal  and 
agent,  and  can  be  determined  only  by 
discovering  from  the  whole  character 
of  their  connection  the  intention  with 
which  they  formed  it.  Thus,  in  Muzzy 
V.  Whitney,  10  Johns.  2^:0,  A.  &  B.  had 
agreed  with  a  turnpike  corporation  to 
build  and  complete  a  certain  road. 
They  afterwards  contracted  with  C. 
"  to  let  him  have  a  share  of  the  profits, 
if  any,  in  making  the  second  ten  miles 


64 


THE   LAW   OF   PARTNERSHIP. 


[CH.  V. 


of  the  road,  in  proportion  to  the  lu'lp 
he  affortleil  in  completing  the  same, 
tiie  one-lialf  of  it  to  be  taken  from  A.'s 
part,  and  the  other  from  B.'s  part." 
It  was  hekl  that  this  agreement  consti- 
tiited  no  partnershij)  between  the  par- 
tics,  but  only  apjiearcd  to  be  a  mode 
of  paj'ing  C.  for  his  lielp  and  labor. 
In  Rawlinson  v.  Clarke,  15  M.  &  W. 
292,  A.,  a  surgeon  and  apothecary, 
sold  out  his  business  to  B.,  and  further 
agreed  to  employ  himself  for  a  year  in 
transferring  his  business  to  B.,  —  in 
consideration  whereof  B.  agreed  to 
give  A.  during  the  year  a  moiety  of 
the  clear  profits  of  the  trade.  Held, 
that  by  this  agreement  A.  &  B.  were 
not  made  partners  ;  and  that,  upon  a 
view  of  the  whole  deed,  it  would  bear 
no  other  construction  than  that  A.  was 
to  receive  nothing  more  than  a  salary 
for  the  services  he  was  to  afford  to  B., 
in  helping  him  to  continue  the  busi- 
ness. See  Salter  v.  Ham,  .31  N.  Y. 
321.  In  Stocker  v.  Brockelbank,  o 
Mac.  &  G.  250 ;  5  Eng.  L.  &  Eq.  67 ;  the 
main  question  was  whether  the  plain- 
tiff and  the  defendants  were  partners. 
The  defendants  were  licensees  of  a 
patent,  and,  with  the  view  of  exercis- 
ing and  making  a  profit  out  of  their 
patent  privilege,  entered  into  a  con- 
tract with  the  plaintiff  for  the  manage- 
ment of  their  business.  By  the  deed 
executed  by  the  parties,  the  defendants 
were  to  furnish  all  the  capital,  and  the 
plaintiff  was  to  manage  and  generally 
superintend  the  business ;  receiving 
therefor  by  way  of  compensation  and 
as  "salary  "a  "sum  of  money  equal 
to  40  per  cent  upon  the  net  profits." 
The  deed  everywhere  and  in  a  care- 
ful and  studied  maimer  excluded  the 
plaintiff  from  any  interest  in  the  prof- 
its. His  remuneration  was  always 
spoken  of  as  his  "  salary,"  and  it  was 
further  declared  that  the  contract 
should  not  inure  as  a  contract  of 
partnership,  and  that  the  word  "  part- 
ners," when  used  in  the  deed,  should 
be  held  to  apply  solely  to  the  defend- 
ants. There  were  also  other  provi- 
sions as  to  what  should  be  done  on  the 
happening  of  certain  contingencies. 
The  Lord  Chancellor,  in  deciding  the 


question  of  partnersliip,  considered  it 
material  to  take  into  consideration  the 
whole  character  of  the  agreement  be- 
tween the  parties ;  to  examine  the 
general  state  of  the  business,  the  na- 
ture of  the  plaintiff's  interest  given 
him  by  the  deed,  the  nature  of  his 
remuneration,  and  the  nature  of  his 
service.  In  conclusion  of  this  part  of 
the  case,  he  said  :  "  I  have  stated  the 
nature  of  the  parties'  interests ;  I  have 
stated  the  nature  of  the  services,  and 
the  express  declaration  that  no  part- 
nership should  arise  out  of  the  con- 
tract. Does,  then,  the  interest  which 
the  party  had  in  the  amount  of  the 
profits  (because  his  remuneration  was 
to  be  measured  by  that  amount)  con- 
stitute him  a  partner  }  I  think  it  does 
not,  and  I  tliink  the  authorities  are 
decisive.  ...  I  tiierefore  am  clearly 
of  opinion  that  in  this  case  there  was 
no  partnersliip ;  that  it  was  simply  a 
contract  of  hiring  and  of  service,  the 
remuneration  to  be  measured  witli  ref- 
erence to  the  amount  of  the  profits  of 
the  business."  So,  in  Hazard  v.  Haz- 
ard, 1  Story,  371,  where  A.  allowed  to 
B.,  for  his  services,  one-third  of  the 
profits  of  his  business  for  one  year, 
and  one-fourth  for  another;  the  court 
hekl,  that  the  parties,  not  liaving  in- 
tended by  this  agreement  to  become 
partners,  did  not  become  so,  and  that 
B.'s  share  of  tlie  profits  was  merely  a 
mode  of  paying  him  for  his  services 
as  agent.  See,  to  the  same  point, 
Wilkinson  v.  Erazier,  4  Esp.  182  ;  Mair 
V.  Glennil,  4  M.  &  S.  240 ;  Geddes  v. 
Wallace,  2  Bligli,  270  ;  Baxter  v.  Rod- 
man, 8  Pick.  435 ;  Ross  v.  Drinker, 
2  Hall,  415 ;  Allen  v.  Dunn,  15  Me. 
292;  M'Arthur  v.  Ladd,  5  Ohio,  431; 
Motley  V.  Jones,  3  Ired.  144 ;  Kellogg 
V.  Griswold,  12  Vt.  291 ;  Stearns  v. 
Haven,  16  id.  87 ;  Mason  v.  Potter,  26 
id.  722;  Norment  v.  Hull,  1  Humph. 
320  ;  Lowry  v.  Brooks,  2  McCord,  421 ; 
Bull  V.  Schuberth,  2  Md.  38 ;  Wilkin- 
son V.  Jett,  7  Leigh,  115;  Potter  v. 
Moses,  1  R.  I.  430 ;  Nutting  v.  Colt,  3 
Halst,  Ch.  539;  Ogden  v.  Astor,  4 
Sandf.  311 ;  Price  v.  Alexander,  2 
Greene,  427;  Goode  v.  McCartney,  10 
Texas,    193.      The   case  of   Tench  v. 


cii.  v.] 


WHO    ARE   PARTNERS    AS   TO    EACH    OTHER. 


65 


Roberts,  6  Madd.  145,  note,  at  first 
eiglit  seems  to  hold  tliat  persons  may 
be  made  partners  inter  se,  contrary  to 
tlieir  avowed  and  real  intentions. 
There  the  contract  of  tlie  parties  was 
in  this  form  :  "  Mr.  Gregory  Koberts 
and  Mr.  James  Tench  agree  as  fol- 
lows :  Mr.  James  Tench  to  become 
an  assistant  to  Mr.  Roberts,  and  to 
take  one-third  part  of  the  profits  of 
the  business,  by  way  and  in  lieu  of  a 
salary  ;  not  to  be  considered  as  a  part- 
nership. Mr.  Roberts  agrees  to  allow 
Mr.  Tench  the  above  for  his  sliare  as 
an  assistant."  The  Vice-Chancellor 
held,  that  this  agreement  constituted 
a  partnership  which  was  contrary  to 
statute  (22  Geo.  2,  ch.  46,  §  11),  as 
being  between  an  attorney  and  an  un- 
qualified person ;  and  that  the  neces- 
sary and  legal  effect  of  the  agreement, 
and  the  policy  of  the  statute,  could  not 
be  escaped  by  the  declaration  of  the 
party  that  a  partnersliip  should  not  be 
constituted.  But  the  case  is  not  nec- 
essarily to  be  regarded  as  deciding 
that  there  was  a  partnership  between 
the  parties  to  the  above  contract, 
though  they  were  also  the  only  par- 


ties to  the  present  suit.  According  to 
the  common  understanding  of  Ex  parte 
Hamper,  17  Ves.  404,  to  which  case 
the  court  referred  as  its  authority,  an 
agreement  of  the  above  nature  would 
undoubtedly  have  made  the  parties 
partners  as  to  third  persons.  Conse- 
quently the  decision  in  this  case  may 
be  regarded  as  only  declaring  that  a 
contract  between  an  attorney  and  an 
unqualified  person,  which,  being  exe- 
cuted, made  them  partners  as  to  third 
persons,  was  as  much  forbidden  by  the 
statute  of  Geo.  2,  ch.  40,  §  11,  as  one 
wliich  made  such  persons  partners  as 
to  each  other.  See  further,  in  illus- 
tration of  the  general  principle,  Hes- 
keth  V.  Blanchard,  4  East,  144  ;  Gibson 
V.  Lupton,  9  Bing.  297;  Bailey  v. 
Clark,  6  Pick.  372 ;  Drake  v.  Ramey, 
3  Rich.  37;  McCauley  v.  Cleveland, 
21  Miss.  438;  Taylor  v.  Perkins,  26 
Wend.  124;  Hawes  v.  Tillinghast,  1 
Gray,  289 ;  Chase  v.  Barrett,  4  Paige, 
148;  French  v.  Price,  24  Pick.  19; 
Moore  v.  Smith,  19  Ala.  774;  01m- 
stead  I'.  Hill,  2  Ark.  346 ;  Newman  v. 
Bean,  1  Post.  93 ;  Barnett  v.  Smith,  17 
111.  565. 


66  THE   LAW    OF   PARTNERSHIP.  [CH.  VI. 


CHAPTER   VI. 

WHO    ARE    PARTNERS    AS    TO    THIRD    PARTIES. 
SECTION  I. 

GENERAL    GROUNDS    OF    LIABILITY. 

As  we  have  seen  that  it  is  one  of  the  essential  qualities  of 
partnersliip  that  upon  each  partner  rests  an  absolute  liability 
for  the  whole  amount  of  every  debt  due  from  the  partnership, 
it  is  of  the  utmost  consequence,  both  to  the  creditors  of  a  part- 
nership and  to  actual  or  alleged  members  of  it,  to  determine 
with  certainty  who  they  are  upon  whom  this  liability  rests  ;  or, 
in  other  words,  who  are  partners  in  respect  to  third  parties 
dealing  with  the  firm.  And  this  question  is  sometimes  as  dif- 
ficult as  it  is  important.  It  will  be  seen,  as  we  go  farther  in 
this  chapter,  that  the  authorities  are  quite  irreconcilable,  and 
that  it  is  extremely  difficult  to  draw  from  them  distinct  and 
certain  principles  or  rules.  It  is  certain  that  persons  may  be 
held  as  partners  as  to  third  parties,  who  would  not  be  deemed 
partners  as  between  themselves,  (aa) 

The  first  thing  to  be  remembered  is,  that  persons  may  be 
charged  as  partners  of  a  firm  on  either  one  of  two  perfectly 
distinct  grounds,  to  both  of  which  we  have  already  referred. 
One  of  these  is,  that  the  person  actually  is  a  partner.  The 
other  is,  that  he  has,  with  his  own  knowledge  and  consent, 
been  held  forth  as  a  partner,  to  the  person  having  a  claim,  or 
to  the  public  generally.  In  the  great  majority  of  cases  these 
two  causes  unite ;  that  is,  he  is  held  forth  as  a  partner  who 

(aa)  Grieff   v.  Boudousquie,  18   La.  held  as  partner,  even  though  there  be 

Ann.  631.     [A  person  may  be  so  neg-  no  community  of  interest  or  participa- 

ligent  as  to  be  estopped  to  deny  that  a  tion  in  profits.     In  re  Jevvett,  15  N.  B. 

person  wlio  is  managing  his  property  R.  12(}.] 
is  acting  by  his  authority,  and  may  be 


CH.  Vr.]       WHO    ARE    PARTNERS   AS   TO    THIRD   PARTIES. 


67 


actually  is  one.  The  secret  partner,  on  the  one  hand,  or  the 
merely  nominal  partner,  on  the  other,  are  exceptions  to  the 
prevailing  custom ;  but  such  exceptions  do  occur,  and  not  very 
unfrcquently :  and  then  the  question  is,  What  are  the  rules  of 
law  in  regard  to  them  ? 

The  first  which  we  state  is,  that  the  liability  of  a  partner  is 
fastened  upon  any  person  just  as  absolutely,  and  to  all  intents 
and  purposes,  by  either  one  of  these  causes  alone,  as  by 
both  of  them  *  together.  And  the  reason  is  obvious.  *  62 
If  a  man  is  in  fact  a  partner  in  a  mercantile  or  other 
partnership,  the  mere  circumstance  that  he  has  been  able  to 
conceal  this  partnership  from  the  world  affords  no  reason 
whatever  why  he  should  not  share  in  the  liabilities  of  the 
known    partners,  (a)       We    hold    that   a   secret    partner    is 


(a)  Tliat  one  who  is  a  partner  in  fact, 
though  not  known  to  be  so,  is  Hable 
upon  all  the  partnership  engagements 
to  tlie  same  extent  as  tliougli  his  name 
had  never  been  concealed,  is  one  of 
the  oldest  and  best-established  doc- 
trines of  partnership  law.  In  Hoare  v. 
Dawes,  2  Doug.  371,  Lord  Mansfield 
said  :  "  I  considered  them  at  first  as  a 
sort  of  dormant  partners.  The  law 
with  respect  to  them  is  not  disputed, 
namely,  that  they  are  liable  when  dis- 
covered, because  they  would  otherwise 
receive  usurious  interest  without  risk." 
And  in  Saville  v.  Robertson,  4  T.  R. 
725,  Lord  Kenyon,  C.  J.,  said,  "  It  is 
clear  that  if  all  these  parties  had  been 
partners  at  the  time  when  these  goods 
were  furnished,  though  that  circum- 
stance were  not  known  to  the  plaintiff, 
they  would  all  have  been  liable  for  the 
value  of  the  goods.  It  is  equally  clear 
that  such  an  action  might  be  main- 
tained against  the  dormant  partners 
alone,  unless  they  pleaded  in  abate- 
ment." Coope  i\  Eyre,  1  H.  Bl.  48; 
Gonthwaite  v.  Duckworth,  12  East, 
421  ;  Swan  v.  Steele,  7  id.  210 ;  Ex 
parte  Raleigh,  3  Mont.  &  Ayr.  670; 
Evans  v.  Drunimond,  4  Esp.  89 ;  Ex 
parte  Gellar,  1  Rose,  297 ;  Dyke  v. 
Brewer,  2  C.  &  Kir.  828.  The  whole 
doctrine  on  the  subject  is  thus  stated 
by    Marshall,    C.    J.,    in    Winship    v. 


Bank  of  the  United  States,  5  Pet. 
561  ;  "  Partnerships  for  commercial 
purposes,  for  trading  with  the  world, 
for  buying  and  selling  from  and  to 
a  great  number  of  individuals,  are 
necessarily  governed  by  many  gen- 
eral principles,  which  are  known  to  the 
public,  which  subserve  the  purpose  of 
justice,  and  which  society  is  concerned 
in  sustaining.  One  of  them  is,  that  a 
man  who  shares  in  the  profits,  although 
his  name  may  not  be  in  the  firm,  is 
responsible  for  all  its  debts.  Another 
more  applicable  to  the  subject  under 
consideration  is,  that  a  partner,  cer- 
tainly the  acting  partner,  has  power  to 
transact  the  whole  business  of  the  firm, 
whatever  thatmay  be, and, consequently, 
to  bind  his  partners  in  such  transac- 
tions as  entirely  as  himself.  This  is  a 
general  power,  essential  to  the  well 
conducting  of  business,  which  is  im- 
plied in  the  existence  of  a  partnership. 
Wlien,  then,  a  partnership  is  formed  for 
a  particular  purpose,  it  is  understood 
to  be  in  itself  a  grant  of  power  to  the 
acting  members  of  the  company  to 
transact  its  business  in  the  usual  way. 
If  that  business  be  to  buy  and  sell, 
then  the  individual  buys  and  sells  for 
the  company  ;  and  every  person  with 
whom  he  trades,  in  the  way  of  its  busi- 
ness, has  a  right  to  consider  him  as  the 
company,  whoever  may  compose  it.   It 


68 


THE   LAW    OF    PARTNERSHIP. 


[CH.  VI. 


*  63  *  liable  upon  all  the  acting  partner's  contracts  made 
within  the  usual  scope  of  the  partnership  business, 
whether  such  contracts  are  really  on  partnership  account  or 
not.  It  might  perhaps  be  said,  that  as  no  credit  is  given  to 
the  secret  partner,  and  as  his  liability  is  wholly  founded  upon 
his  interest,  if  it  were  shown  that  in  fact  he  had  no  interest  in 


is  usual  to  buy  and  sell  on  credit ; 
and,  if  it  do  so,  the  partner  who  pur- 
chases on  credit  in  the  name  of  tlie 
firm  must  bind  the  firm.  This  is  a 
general  authority  held  out  to  tiie  world, 
to  which  the  world  has  a  right  to  trust. 
Tlie  articles  of  copartnership  are  per- 
haps never  published.  They  are  rarely 
if  ever  seen,  except  by  the  partners 
themselves.  The  stipulations  they  may 
contain  are  to  regulate  the  conduct 
and  rights  of  the  parties  as  between 
themselves.  The  trading  world,  with 
whom  the  company  is  in  perpetual  in- 
tercourse, cannot  individually  examine 
these  articles,  but  must  trust  to  the 
general  power  contained  in  all  partner- 
ships. The  acting  partners  are  iden- 
tified with  the  company,  and  have  a 
right  to  conduct  its  usual  business  in 
the  usual  way.  This  power  is  conferred 
by  entering  into  the  partnership,  and 
is  perhaps  never  to  be  found  in  the 
articles.  If  it  is  to  be  restrained,  fair 
dealing  requires  that  the  restriction 
should  be  made  known.  These  stipu- 
lations may  bind  the  partners,  but 
ought  not  to  atTect  those  to  whom  they 
are  unknown,  and  who  trust  to  the 
general  and  well-established  commer- 
cial law.  See  Richardson  v.  Farmer, 
36  Mo.  35. 

"  The  counsel  for  the  plaintiff  in  error 
supposes,  that,  though  these  principles 
may  be  applicable  to  an  open  avowed 
partnership,  they  are  inapplicable  to 
one  that  is  secret.  Can  this  distinction 
be  maintained?  If  it  could,  there 
would  be  a  difference  between  the  re- 
sponsibility of  a  dormant  partner,  and 
one  whose  name  was  to  the  articles. 
But  their  responsibility,  in  all  partner- 
ship transactions,  is  admitted  to  be  the 
same.  Tliose  who  trade  with  a  firm 
on  the  credit  of  individuals  whom  they 


believe  to  be  members  of  it,  take  upon 
themselves  the  hazard  that  their  belief 
is  well  founded.  If  they  are  mistaken, 
they  must  submit  to  the  consequences 
of  their  mistake;  if  their  belief  be 
verified  by  the  fact,  their  claims  on 
the  partners,  who  were  not  ostensible, 
are  as  valid  as  on  those  whose  names 
are  in  the  firm.  This  distinction  seems 
to  be  founded  on  the  idea,  that,  if  part- 
ners are  not  qpenly  named,  tlie  resort 
to  them  must  be  connected  with  some 
knowledge  of  the  secret  stipulations 
between  the  partners,  which  may  be 
inserted  in  the  articles.  But  this  cer- 
tainly is  not  correct.  The  responsibil- 
ity of  unavowed  partners  depends  on 
the  general  principles  of  commercial 
law,  not  on  the  particular  stipulation 
of  the  articles."  s.  c.  5  Mason,  176; 
Armstrong  v.  Hussy,  12  S.  «&  R.  315 ; 
Mifflin  V.  Smith,  17  id.  165;  Graeff  ;;. 
Hitchman,  5  Watts,  454 ;  Given  v. 
Albert,  5  W.  &  S.  333  ;  Bisel  v.  Hobbs, 
6  Blackf.  479 ;  Braches  v.  Anderson, 
14  Mo.  441 ;  Church  v.  Sparrow,  5 
Wend.  223;  Baxter  v.  Clark,  4  Ired. 
127  ;  Everitt  v.  Chapman,  6  Conn.  347  ; 
Reynolds  v.  Cleaveland,  4  Cow.  282; 
Kelley  v.  Hurlburt,  5  id.  534  ;  In  re 
Warren,  Daveis,  324 ;  Hadfield  v.  Jame- 
son, 2  Munf.  66  ;  Grosvenor  v.  Lloyd, 
1  Mete.  19  ;  McDonald  v.  Millandon,  5 
Louis.  406,  408  ;  Lea  v.  Gnice,  13  S.  & 
M.  656 ;  Smith  v.  Smith,  7  Fost.  244  ; 
Brooke  v.  Washington,  8  Gratt.  248; 
Hill  V.  Voorhies,  22  Penn.  680;  Griffith 
V.  Buffum,  22  Vt.  181 ;  Pratt  v.  Lang- 
don,  12  Allen,  544.  A  secret  partner 
cannot  avoid  his  liability  to  creditors, 
by  showing,  that,  according  to  the  law 
of  the  place  where  it  was  made,  the 
contract  of  partnership  as  between  the 
parties  was  void.  Oakley  v.  Aspin- 
wall,  2  Sandf.  7. 


CH.  VI. J         WHO    ARE    PARTNERS    AS    TO    THIRD    PARTIES. 


69 


a  particular  transaction,  he  ought  not  to  be  bound  with  refer- 
ence to  it,  even  though  it  were  apparently  within  the  regular 
course  of  the  business  carried  on  by  the  partnership.  And 
there  are  cases  in  which  the  court  seems  to  adopt  this  view. 
But  we  think  the  rule  we  have  above  stated  rests  upon 
the  better  reason  and  the  stronger  authority.  (^)   It  *  has      *  64 

(i)  In  Etheridge  v.  Binney,  9  Pick. 
272,  where  llie  two  Binneys  and  John 
Winship  carried  on  the  manufacture 
of  soap  and  candles  in  partnersliip,  but 
in  the  name  of  John  Winship  alone, 
the  princij)al  question  in  tlie  case  being 
whether  tiie  Binneys  were  liable  for 
moneys  borrowed  by  Winship,  the  court 
instructed  the  jury  that  "the  name  of 
the  firm  here  being  only  the  name  of 
the  individual,  a  note  offered  in  that 
name,  unaccompanied  by  any  represen- 
tation, would  of  course  import  only  a 
promise  of  John  Winship  alone ;  and 
the  credit  being  given  to  him  alone,  the 
creditor  would  not  recover  against  the 
firm,  without  proving  that  the  money 
actually  went  into  the  funds  of  the 
firm.  But  if  the  borrowing  partner 
states  that  he  is  one  of  a  company,  and 
that  he  borrows  money  for  the  com- 
pany, or  purchases  goods  for  their  use, 
then,  as  there  is  such  company,  and  as 
they  have  given  him  authority  to  use 
the  company  credit  to  a  certain  extent, 
and  as  the  creditor  will  have  no  means 
of  knowing  whether  he  is  acting  hon- 
estly towards  his  associates  or  other- 
wise, and  he  lends  the  money  or  sells 
the  goods  on  the  faith  of  such  represen- 
tation, the  company  will  be  bound, 
unless  they  prove  that  the  contract 
was  for  his  private  benefit,  and  known 
to  be  so  by  the  creditor."  [When  two 
persons,  under  a  private  agreement,  be- 
come partners  as  to  third  parties,  the 
contract  specifying  no  firm  name,  but 
allowing  each  partner  to  purchase  goods 
on  his  own  individual  credit,  —  one  to 
transact  the  business,  and  the  other  to 
be  unknown,  —  the  dormant  partner  is 
not  liable  on  a  note  for  goods  put  into 
the  concern  by  the  other,  and  by  him 
signed  in  his  own  name  ;  tlie  signature 
not  being  intended  as  the  firm  signa- 
ture, and  the  payee  not  having  reason 


to  suppose  it  to  be  such.  Palmer  v. 
Elliot,  1  Clif.  C.  Ct.  63.  See  also 
Mercantile  Bk.  v.  Cox,  38  Me.  500. 
But  see  Hendrick  v.  Gunn,  35  Ga. 
234.]  In  Lloyd  v.  Ashby,  2  C.  &  P. 
138,  assumpsit  was  brought  on  a  bill 
of  exchange,  accepted  by  "  Ashby  & 
Rowland."  The  question  was  whether 
Shaw,  a  dormant  partner  with  Ashby 
&  Rowland,  was  liable  on  the  above 
acceptance.  Shaw  was  not  known  as 
a  partner,  nor  did  his  name  appear  in 
the  partnership  transactions.  The  bill 
in  question  was  accepted  in  a  matter 
having  no  relation  to  the  partnership 
business.  Abbott,  C.  J. :  "  If  Shaw  had 
been  known  to  be  a  partner,  I  should 
have  held  that  it  was  taken  on  liis 
credit ;  and  that,  unless  there  was  fraud 
in  the  plaintiff,  he  would  be  entitled  to 
recover  on  it  against  Shaw  ;  but  as  the 
plaintiff  did  not  know  that  Shaw  was 
a  partner,  and  as  he  could  not  have 
taken  the  bill  on  Shaw's  credit,  I  am 
of  the  opinion  that  the  plaintitt' cannot 
recover.  I  ground  myself  on  these 
circumstances,  that  Mr.  Shaw  was  an 
unknown  partner,  and  that  the  bill 
was  not  accepted  for  a  debt  from  him, 
but  for  the  raising  of  money  from  which 
he  had  no  benefit."  See  also  Young 
V.  Hunter,  4  Taunt.  5»3,  opinion  of 
Gibbs,  J. ;  Ex  parte  Bolitho,  Buck,  100. 
See  Miller  v.  Maince,  b  Hill,  lU.  But 
the  doctrine  of  these  decisions  is  cer- 
tainly controverted  by  better  consid- 
ered and  more  weighty  adjudications. 
Lloyd  V.  Ashby,  sujua,  was  afterwards 
reconsidered  in  the  King's  Bench ;  and 
the  court  were  of  opinion  that  the 
plaintiff  was  entitled  to  recover,  and  a 
new  trial  was  granted.  2  B.  &  Aid. 
23.  The  principle  of  the  decision  in 
Vere  v.  Ashby,  10  B.  &  C.  288,  is  the 
same  with  that  in  2  B.  &  Aid.  23  ;  and 
in  Wintle  v.  Crowther,  1  C.  &  G.  316, 


70 


THE   LAW    OF  PARTNERSHIP. 


[CH.  VI. 


been  held  that  a  judgment  obtained  against  an  ostensible 
partner,  upon  a  note  given  by  him  in  his  own  name  in 
*  65  the  course  *  of  the  partnership  business,  his  copartner 
being  unknown  to  the  creditor,  was  no  bar  to  a  joint 
action  upon  the  same  note  against  both  the  ostensible  and  the 
secret  partner,  (c)  But  we  think  this  doctrine  opposed  to  the 
weight  of  American  authority ;  and  upon  the  ground  that  a 
partnership  debt  is,  in  this  respect,  joint  only,  and  not  joint  and 
several,  a  judgment  against  the  ostensible  partner  or  partners, 
though  unsatisfied,  may  be  pleaded  in  bar  to  a  subsequent  suit 
upon  the  same  cause  of  action,  where  both  the  ostensible  and 
the  secret  partners  are  joined  as  defendants,  (c?)     It  has,  how- 


Bayley,  B.,  referring  to  the  above  cases, 
said  :  "  Notwithstanding  tliese  cases, 
we  are  of  opinion,  that  when  a  partner- 
sliip  name  is  pledged,  the  partnership, 
of  wliomsoever  it  may  consist,  and 
whether  tlie  partners  are  named  or  not, 
and  whether  they  are  known  or  secret 
partners,  will  be  bound,  unless  the  title 
of  the  person  who  seeks  to  charge  them 
can  be  impeached."  See  Nichols  v. 
Cheairs,  4  Sneed,  229.  In  Ross  v.  Decy, 
2  Esp.  469,  the  action  was  for  goods 
sold  and  delivered  ;  plea  set  oflP.  The 
plaintiffs  entered  into  partnership  as 
grocers,  Ross  to  keep  the  shop  in  his 
own  name  only.  He  solci  to  the  de- 
fendant the  goods  for  the  price  of  which 
the  present  action  was  brought.  The 
defendant  had  done  business  for  Ross 
on  his  separate  account  to  a  greater 
amount  than  the  demand  now  made 
against  him  by  the  partnership;  and 
this  he  offered  to  set  off.  Lord  Ken- 
yon  was  of  opinion  that  the  set-off  was 
good.  His  lordship  said,  the  plaintiffs 
had  subjected  themselves  to  it,  by  hold- 
ing out  false  colors  to  tlie  world,  by 
permitting  Ross  to  appear  as  the  sole 
owner  ;  that  it  was  possible  the  defend- 
ant would  not  have  trusted  Ross  only, 
if  he  had  not  considered  the  debt  due 
to  himself  as  a  security  against  the 
counter  demand.  Furthermore,  not 
only  is  a  secret  partner  bound  by  all 
transactions  within  the  scope  of  the 
partnership  business,  whether  on  part- 
nership account  i?i  fact  or  not,  but  in 


Robinson  v.  Wilkinson,  3  Price,  538, 
it  is  said  to  be  "  clear  law  that  a  dor- 
mant partner  cannot  discharge  himself 
from  liability  to  pay  the  debts  of  a 
creditor  through  the  medium  of  his 
ostensible  partner  by  any  acts  of  his 
during  the  concealment  of  the  unknown 
partner."  There,  Wilkinson  was  a 
secret  partner  with  Cay  in  a  vessel. 
Tiie  plaintiif  supplied  the  vessel  with 
stores  on  the  credit  of  Cay  ;  took  Cay's 
sole  bills  for  tiie  amount  of  his  debt ; 
allowed  him  to  renew  them  when  due, 
and  afterwards,  Cay  proving  insolvent, 
compounded  with  him  for  the  unpaid 
portion  of  the  debt,  and  received  as 
security  the  acceptance  of  a  third  per- 
son. But  the  fact  of  Wilkinson's  inter- 
est in  the  ship  being  unknown  to  the 
plaintiff  during  the  time  of  these  sev- 
eral transactions,  it  was  held  that  he 
was  not  discharged  by  any  thing  that 
had  taken  place.  A  similar  decision 
was  made  in  Chamberlain  v.  Madden, 
7  Rich.  395. 

(c)  Sheehy  v.  Mandeville,  6  Cranch, 
253  [overruled  in  Mason  y.  Eldred,  6 
Wall.  (U.  S.)  231].  See  Van  Ness  v. 
Forrest,  8  id.  30;  Watson  v.  Owens,  1 
Rich.  HI ;  Brozel  v.  Poyntz,  3  B.  Mon. 
178;  Scott  V.  Colmesuil,  7  J.  J.  Marsh. 
416 ;  Dennett  v.  Chick,  2  Greenl.  191 ; 
Nichols  V.  Cheairs,  4  Sneed,  229. 

((/)  Robertson  v.  Smith,  18  Johns. 
459;  Ward  r.  Johnson,  13  Mass.  148; 
Smith  V.  Black,  9  S.  &  R.  142;  Moale 
V.  Hollins,  11  Gill  &  Johns.   11 ;  Will- 


CH.  VI.]         WHO    ARE    PARTNERS    AS    TO    THIRD    PARTIES. 


71 


ever,  been  said,  that  the  law  as  to  dormant  partners  is  confined 
to  commercial  partnerships,  and  does  not  extend  to  specula- 
tions in  land,  (e) 

If  such  be  the  law  in  regard  to  one  who  is  an  actual  but  a 
secret  partner,  on  the  other  liand,  if  he  be  not  a  partner  in 
fact,  but  has,  for  or  without  a  reason,  suffered  those  who  dealt 
with  the  firm,  or  any  one  of  them,  to  believe  that  the  firm  had 
the  guaranty  of  his  liability  as  partner,  and  thus  gave  to  the 
firm  his  credit,  there  are  no  grounds  whatever  for  permitting, 
him  to  refuse  to  satisfy  that  guaranty,  merely  because  the 
actual  relation  between  him  and  the  partnership  would  not  of 
itself  have  created  it.  (/)     To  give  to  such  a  circumstance 


ings  V.  Consequa,  1  Pet.  C.  C.  301 ; 
Anderson  v.  Levan,  1  W.  &  S.  334. 
Hee  further  Pierce  v.  Kearney,  5  Hill 
(N.  Y.),  \)i;  Moss  v.  McCuUough,  id. 
135,  136  ;  Ward  v.  Motter,  2  Rob.  (Va.) 
559,  560;  Nichols  v.  Anguera,  2  Mills, 
290 ;  Grafton  v.  The  United  States,  3 
Story,  649  ;  United  States  v.  Cushman, 
2  Sumn,  438 ;  Gibbs  v.  Bryant,  1  Pick. 
121 ;  Peters  v.  Sandford,  1  Uenio,  224  ; 
Van  Valen  v.  Russell,  13  Barb.  593 ; 
Ledam  v.  Hodges,  4  McLean,  51 ;  How 
V.  Kane,  2  Chand.  222 ;  Philson  v. 
Bampfield,  1  Brevard,  202.  Whether, 
if  a  creditor  has  lost  his  right  of  action 
against  all  the  partners,  by  obtaining 
judgment  against  the  ostensible  partner 
alone,  equity  will  relieve  him  as  against 
the  dormant  partners  when  discovered, 
see  Penny  v.  Morton,  4  Johns.  Ch. 
566 ;  Willings  v.  Consequa,  1  Peters  C. 
C.  301 ;  Smith  r.  Black,  9  S.  &  R.  142 ; 
Ledam  v.  Hodges,  4  McLean,  51 ;  How 
V.  Kane,  2  Chand.  222. 

(e)  Pitts  V.  Waugh,  4  Mass.  424 ; 
Smith  V.  Jones,  3  Fairf.  332  ;  Smith  v. 
Burnham,  3  Sumn.  470.  See  post,  ch. 
11,  §  3. 

{/)  Young  V.  Axtell,  cited  in  Waugh 
V.  Carver,  2  H.  Bl.  235.  There  the 
question  was,  whether  Mrs.  Axtell  was 
liable  as  partner  with  the  defendant, 
for  coals  sold  and  delivered  by  the 
plaintiff.  An  agreement  was  in  evi- 
dence, from  which  a  partnership  intei-  se 
was  attempted  to  be  proved ;  but,  it 
being  shown  that  bills  were  made  out 
for  goods  sold  to  her  customers  in  their 
joint     names,    Lord    Mansfield    said : 


"  However,  as  she  suffered  her  name 
to  be  used  in  the  business,  and  held 
herself  out  as  a  partner,  she  was  cer- 
tainly liable,  though  the  plaintiff  did 
not,  at  the  time  of  deahng,  know  that 
she  was  a  partner,  or  that  her  name 
was  used."  The  ground  upon  which 
persons  held  out  as  partners  are  made 
liable,  as  such,  to  third  persons,  is  thus 
stated  by  Lord  Chief  Justice  Eyre  in 
Waugh  V.  Carver,  supra  :  "  Kow,  a  case 
may  be  stated  in  which  it  is  the  clear 
sense  of  the  parties  to  the  contract 
that  they  shall  not  be  partners ;  that 
A.  is  to  contribute  neither  labor  nor 
money ;  and,  to  go  still  further,  not  to 
receive  any  profits.  But,  if  he  will 
lend  his  name  as  a  partner,  he  becomes, 
as  against  all  the  rest  of  the  world,  a 
partner,  not  upon  the  ground  of  the 
real  transaction  between  them,  but 
upon  principles  of  general  policy,  to 
prevent  the  frauds  to  which  creditors 
would  be  liable,  if  they  were  to  suppose 
that  they  lent  their  money  upon  the 
apparent  credit  of  three  or  four  per- 
sons, when,  in  fact,  they  lent  it  only 
to  two  of  them,  to  whom,  without  the 
others,  they  would  have  lent  nothing." 
See  further,  in  illustration  of  the  gen- 
eral principle,  De  Berkom  v.  Smith, 
1  Esp.  29  ;  Guidon  v.  Robson,  2  Camp. 
302;  Parsons  v.  Crosby,  5  Esp.  199; 
Ex  parte  Watson,  19  Ves.  461;  Ex 
parte  Matthews,  3  Ves.  &  B.  125;  Dol- 
man V.  Orcliard,  2  C.  &  P.  104  ;  Stearns 
V.  Haven,  14  Vt.  540 ;  Cottrill  v.  Van- 
duzen,  22  id.  511 ;  Eurber  v.  Carter,  11 
Humph.  271 ;  Perry  v.  Randolph,  6  S. 


72  THE    LAW    OF    PARTNERSHIP.  [CH.  VI. 

this  effect  would  be  to  sanction  an  obvious  and  easy  fraud.     It 

may,  however,  be  said  that  he  is  liable  as  a  partner  only  to  those 

who  have  been  led  with  his  consent  to  believe  him  a  partner, 

and  who  have  trusted  the  tirm  on  his  credit,  {ff) 

*  66  *  But  when  we  go  further,  and  seek  to  determine  the 

exact  facts  and  rules  which  decide  whether  a  person 
is  liable,  either  as  actual  partner  or  as  ostensible  partner,  we 
find  a  considerable  difficulty.  These  questions  we  now  proceed 
to  consider. 

SECTION    II. 

WHEN    A    PERSON    IS   LIABLE    AS    ACTUAL   PARTNER. 

The  cases  on  this  subject  are  not  easily  reconciled,  nor  is  the 
language  used  in  relation  to  it  always  admissible,  or  indeed 
intelligible.  All  that  we  have  said  in  the  preceding  chapter 
has  some  bearing  upon  the  subject  of  this  ;  for,  if  one  certainly 
is  a  partner  in  relation  to  others  who  are  copartners,  he  is  so 
in  relation  to  third  persons  dealing  with  the  firm.  It  is  true, 
as  we  have  already  intimated  and  shall  hereafter  state  more 
fully,  that  partners  may,  by  an  agreement  made  among  them- 
selves, which  is  also  made  known  to  their  customers, 

*  67      importantly  qualify  the  obligations  of  one  *  partner  or 

another  in  reference  to  these  customers.  Still  it  is  also 
true  that  the  tests  already  exhibited,  as  those  by  which  we 
may  determine  who  is,  as  to  the  partnership  itself,  a  member 
of  it,  will  be  useful  when  the  question  comes.  Is  he  a  member 
of  it  as  to  others  ? 

Thus,  we  have  already  seen  that  a  community  of  interest  in  the 
profits  is  essential  to  a  partnership,  and,  generally  at  least,  that 
such  community  will  suffice  to  constitute  a  partnership,  (^fff} 
But  it  is  certain  that  every  interest  in  the  profits  is  not  suf- 
ficient to  make  a  person  a  partner,  or  liable  as  a  partner.  In 
many  recent  cases  it  has  been  held  that  participation  in  the  profits 
is  not  a  decisive  proof  of  partnership,  unless  the  participation 
is  such  as  to  constitute  the  relation  of  principal  and  agent  be- 

&  M.   335.     See  'also  post,  eh.  6,  §  5  ;  (ff)  Wood  v.  Pennell,  15  Me.  52. 

Fisher  v.  Bowles,  20  111.  396  ;  Irwin  ;•.  {X/f)  Duryea  v.  Burt,  28  Cal.  569  ; 

Conklin,  36  Barb.  64 ;  Burns   v.   Row-  [In  re  W.  W.  Francis,  7  N.  B.  R.  359.] 

lands,  40  id.  368;  Moss  v.  Jerome,  10  See  Pratt  v.   Langdon,  12  Allen,  544, 

Bosw.  220 ;  Moffat  v.  Moffat,  id.  468.  and  97  Mass.  97. 


CH.  VI.]         WHO    ARE    PARTNERS    AS   TO    THIRD    PARTIES.  73 

tween  the  person  taking  tlie  profits  and  those  actually  carrying 
on  the  business.  Cffff}  The  very  customers  and  creditors  of  a 
firm  may  be  said  to  have  some  interest  in  the  profits.  They 
depend  upon  them  as  the  fund  for  payment  of  their  debts,  and 
they  are  said  to  have,  as  we  shall  see,  a  kind  of  lien  upon  them 
for  this  purpose.  To  go  nearer  to  the  partnership,  however,  it 
is  more  obvious  that  the  employes  of  the  firm  have  an  indirect 
interest  in  the  profits,  althougli  no  property  in  them  ;  for  to 
these  tliey  look  for  their  salaries  and  wages.  Out  of  this  fund . 
these  are  paid  ;  and  every  payment  of  his  annual  salary  to  a 
clerk  diminishes  by  just  so  much  the  funds  which  would  go  to 
the  payment  of  the  debts.  Now,  it  is  \ery  frequently  said,  that 
the  taking  of  the  profits  takes  from  the  fund  to  wliich  the 
creditors  look  for  payment,  and  that  this  is  the  reason  why  the 
taker  is  held  liable  to  the  creditors.  (^)     But  as  every  payment 

ijff^)  BuUen  v.  Sharp,  Law  Rep.  1  the  foots  showed  participation  in  both 

C.  P.  86;   [In  re    Howard,   25  W.   R.  profits  and  losses.    See  also  posi,  p.  *  74. 

Ct.  of  App.  854  ;  s.  c.  4  L.  &  Eq.  Rep.  Under  the  statute  in  Massachusetts  giv- 

523;  Ross   v.  Parkyns,   L.   R.  20   Eq.  ing  jurisdiction  in  equity  of  suits  upon 

331.   In  Molwo  t'.  Court  of  Wards,  L.  R.  account  not  conveniently  adjustable  at 

4  P.  C.  419.     It  should  appear  that  the  common  law,  a  person,  not  a  partner, 

person  taking  the  profits  took  them  by  who  has  a  portion  of  the   net   profits 

virtue  of  his  rights  as  a  principal  in  a  for  his  compensation,  may  maintain  a 

joint  business,  where  each  party  had  bill  in  equity  as  if  he  were  a  partner. 

authority  to  bind  the  other.     Harvey  Hallet  u.  Comston,  110  Mass.  32.     One 

r.  Childs,  28  Ohio,   319.     The  interest  who  is  entitled  to  a  percentage  of  profits 

must  be  in  the  profits  as  profits,  and  as  compensation,  though  not  a  partner, 

not  merely  as    compensation.     Legett  may  have  an  account.     The  right  to 

V.   Hyde,    58   N.    Y.   272;    Shepard   v.  an   account   is   not   a   conclusive   test 

Pratt,   16  Kan.  209 ;  Burton  v.  Good-  of  partnership.     Bentley  v.  Harris,  10 

speed,  69  111.237.     A  mere  contingent  R.  1. 434,  distinguishing  Hazzard  r.Haz- 

interest  in  property,  without  right   in  zard,  1  Story  U.  S.  C.  Ct.  371.     For 

the  property  of  the  firm,  and  without  cases  of  partnership  resting  on  special 

responsibility  for  losses,  constitutes  no  contracts  and  near  the  line  of  agency 

partnership.      Cora.    v.    Bennett,    118  paid  by  a  sliare  of  the  profits,  see  Rider 

Mass.  443  ;  Haskins  v.  Warren,  115  id.  v.  Wilcox,  109  Mass.  24  ;  Remington  v. 

514;  Campbell  v.  Dent,  54  Mo.  325;  Allen,  109  Mass.  47.    See  also,  upon  the 

Eastman    v.    Clarke,    53    N.   H.    276;  general  subject,  ;oos^  p.  *  71,  note  (/).] 
Bendell  r.   Hettrick,  45  How.  (N.  Y.)  (g)  De  Grey,   C.  J.,  seems  first   to 

Pr.  198;  Crawford  v.   Austin,  34  Md.  have  stated  this  proposition  in  Grace 

49  ;  Morgan  v.   Stearns,  41    Vt.    397  ;  v.  Smith,  2  W.  Bl.  998.     The  language 

Chapline    v.    Conant,    3   W.  Va.    507  ;  he  there  makes  use  of,  and  which  has 

Parker  v.  Fergus,  43  111.  437  ;  Smith  since  been  quoted  with  approbation  in 

V.  Vanderberg,    46   111.    34 ;  Mason   v.  innumerable   cases,   is  :    "  Every  man 

Hackett,  4  Nev.  420 ;  Hargrave  v.  Con-  who   has   a   share  of   the  profits  of  a 

roy,  4    Green    (N.   J.),  281.     In   Man-  trade  ought  also  to  bear  his  share  in 

hattan,  &c.  v.  Sears,  45  N.  Y.  797,  it  is  the  loss.    And,  if  any  one  takes  part  of 

said   that   participation   in   the  profits  the  profits,  he  takes  part  of  that  fund 

makes  one  a  partner  as  to  third  parties,  on  which   the   creditor   of  the   trader 

But  the  point  was  not  in  the  case  as  relies  for  his  payment." 


74  THE   LAW   OF   PAETNERSHIP.  [CH.  VI. 

from  the  funds  has  precisely  this  effect,  and  every  payee  cer- 
tainly does  not  become  liable  for  the  debts  of  the  firm,  it  is 
obvious  that  this  reason  is  not  of  itself,  and  expressed  in  these 
general  terms,  a  sufficient  one. 

Lord  Eldon  said  (A)  :  "  The  cases  have  gone  to  this  nicety, 
upon  a  distinction  so  thin  that  I  cannot  state  it  as  established 
upon  due  consideration,  that,  if  a  trader  agrees  to  pay  another 
person,  for  his  labor  in  the  concern,  a  sum  of  money,  even  in 
proportion  to  the  profits,  equal  to  a  certain  share,  that  will  not 
make  him  a  partner  ;  but  if  he  has  a  specific  interest  in  the 
profits  themselves,  as  profits,  he  is  a  partner."  After- 
*  68  wards,  in  *  the  same  case,  as  if  in  explanation,  and 
certainly  in  confirmation,  of  this,  he  says:  "  It  is  clearly 
settled,  though  I  regret  it,  that  if  a  man  stipulates  that,  as  the 
reward  of  his  labor,  he  shall  have,  not  a  specific  interest  in  the 
business,  but  a  given  sum  of  money,  even  in  proportion  to  a 
given  quantum  of  the  profits,  that  will  not  make  him  a  part- 
ner ;  but  if  he  agrees  for  a  part  of  the  profits  as  such,  giving 
him  a  right  to  an  account,  though  having  no  property  in  the 
capital,  he  is,  as  to  third  persons,  a  partner."  In  another 
case,  (i)  he  says,  more  briefly,  but  evidently  intending  to  ex- 
press the  same  rule :  "  The  ground  is  settled,  that,  if  a  man, 
as  a  reward  for  his  labor,  chooses  to  stipulate  for  an  interest  in 
the  profits  of  a  business,  instead  of  a  certain  sum  proportioned 
to  those  profits,  he  is,  as  to  third  persons,  a  partner."  The 
inference  from  this,  and  perhaps  a  justifiable  inference,  has 
been,  that  if  a  clerk,  for  example,  agrees  to  take  one-twentieth 
part  of  the  profits  of  a  firm,  he  becomes  liable  as  a  partner ;  but, 
if  he  agrees  to  take  a  sum  of  money  equal  to  one-twentieth  part 
of  the  profits,  he  is  not  a  partner :  but  we  cannot  admit  that 
this  is  a  strictly  necessary  inference  from  Lord  Eldon's  state- 
ments, or  a  reasonable  or  a  useful  rule. 

It  cannot  be  denied  that  this  declaration,  so  understood,  has 
had  great  influence  upon  the  courts  and  the  profession.  Collyer 
says,  "  It  must  be  admitted  that  his  lordship's  dicta  upon  this 
subject  have  received  the  sanction  of  the  most  eminent  prac- 
titioners at  the  bar."  (y)     In  this  country  they  have  been  at 

{h)  iEa:  parte  Hamper,  17  Ves.  404.  terms   of  the    agreement    before    the 

(i)  £a:/3arte  Rowlandson,  1  Rose,  91.  court    in    Stocker   v.   Brockelbank,   3 

(j)  Collyer   on    Partnership    (Per-  Mac.  &  G.  250,  5  Eng.  L.  &  Eq.  67. 
king's  ed.),  §  40.     See   the  form  and 


CH.  VI.]         WHO    ARE    PARTNERS    AS    TO    THIRD    PARTIES.  75 

least  as  generally  adopted.  We  have  reason  to  believe  that, 
for  many  years,  in  various  parts  of  this  country,  numerous 
contracts  of  this  kind  have  been  drawn,  carefully  using  the 
language  wliich  Eldon  is  supposed  to  have  made  sq/e,  by  the 
distinction  he  asserted.  Nor  is  it  difficult  to  account  for  this. 
For,  to  say  nothing  of  the  immense  authority  of  so  eminent  a 
judge,  his  words  so  understood  supply  a  clear,  simple,  and 
easily  applicable  rule  for  the  avoidance  of  a  great  danger. 
They  tell  the  lawyer  who  would  draw  a  contract  of  this  kind, 
how,  by  a  mere  formula,  he  can  guard  his  clients  from  a  great 
uncertainty ;  the  inconvenience  of  which  might  other- 
wise suffice  to  prevent  the  proposed  arrangement.  As  *  a  *  69 
convenient  rule,  much  may  be  said  of  it ;  but,  as  an 
accurate  one,  it  must  be  spoken  of  very  differently. 

It  is  indeed  very  remarkable,  that  a  rule,  or  a  distinction,  to 
which  Lord  Eldon  strongly  objects,  not  merely  "  doubting," 
but  positively  affirming  his  dislike,  and  which  he  lays  down, 
as  he  says,  under  the  constraint  of  irresistible  authority,  should 
since  have  been  generally  adopted,  not  so  much  on  his  author- 
ity, as  on  his  assertion  of  preceding  authority,  when  in  point 
of  fact  no  such  authority  can  be  found,  or,  so  far  as  any  acces- 
sible evidence  goes,  can  now  be  believed  to  have  existed.  The 
only  case  in  the  books,  to  which  he  can  be  supposed  to  refer,  (^) 
on  the  one  hand,  would  not  justify  a  specific  rule  of  this  kind, 
and,  on  the  other,  does  not  seem  to  contain  any  thing  calling  for 
animadversion  or  regret. 

We  cannot  but  think  that  Lord  Eldon  has  been  misunder- 
stood, and  perhaps  misreported.  If  the  first  of  the  three 
paragraphs  above  quoted  stood  alone,  it  would  not  conflict 
with  the  current  of  authority  existing  at  that  time,  nor  with 
the  general  and  best-established  principles  of  the  law  of  part- 
nership ;  but  neither  would  it  express  or  justify  the  rule  drawn 
from  it.  If  one  promises  to  pay  another  a  sum  of  money  equal 
to  one-twentieth  of  the  profits,  "  that  will  not,"  says  Lord 
Eldon,  "  make  him  a  partner."  Certainly  it  will  not :  it  will 
raise  a  presumption  that  he  is  not  a  partner,  which  can  be  re- 
butted only  by  showing,  from  other  parts  of  the  contract 
or  by  other  means,  that  he  is  a  partner.  "  But  if  he  has 
a  specific  interest  in  the  profits  themselves,  as  profits,  he  is  a 

(k)  Grace  v.  Smith,  2  Wm.  Bl.  998. 


76  THE    LAW    OF    PARTNERSHIP.  [CH.  VI. 

partner."  Undoubtedly  he  is:  every  principle  of  the  law  of 
partnership  leads  to  this  conclusion.  But,  if  the  trader  agrees 
to  pay  to  him  one-tiventieth  part  of  the  profits,  this  does  not 
necessarily  give  him  a  specific  interest  in  the  profits  themselves, 
as  profits.  And  in  the  supposition  that  it  has  this  effect,  lies, 
we  think,  the  mistake.  So,  in  the  third  of  the  passages  above 
quoted,  it  is  said  :  "  If  a  man  chooses  to  stipulate  for  an  interest 
in  the  profits  of  a  business,  he  is  as  to  third  persons  a  partner." 
Undoubtedly,  again ;  but  a  stipulation  that  he  shall  have  a 
definite  aliquot  part  of  the  profits,  for  his  services,  is  not  a 
stipulation  "  for  an  interest  in  the  profits  of  a  business."     If 

the  word  "  interest "  be  used  here  in  the  broad  sense 
*  70      necessary  to  make  it  true  that  such  a  *  bargain  gives  an 

interest  in  the  profits,  then  such  an  interest  is  not  suf- 
ficient to  make  a  man  a  partner ;  and,  if  it  be  used  in  the 
restricted  and  technical  sense  in  which  one  who  has  an  interest 
in  the  profits  is  accurately  said  to  be  made  thereby  a  partner, 
then  it  is  not  true  that  a  bargain  for  a  definite  part  of  the 
profits  gives  the  receiver  "  an  interest  in  the  profits,  as  such." 
We  doubt  whether  either  of  these  two  passages,  or  the  two 
together,  would  have  given  rise  to  this  construction,  or  to  this 
rule.  The  trouble  lies  with  the  other  passage  which  we  have 
quoted.  Here,  Lord  Eldon  uses  a  different  phrase  from  that 
which  he  employs  in  the  other  two.  He  says,  "  But  if  he 
agrees  for  a  part  of  the  profits,  he  is  a  partner."  He  certainly 
seems  to  use  this  phrase  as  the  exact  equivalent  of  the  other; 
that  is,  he  appears  to  think  that  a  bargain  for  a  definite  part 
of  the  profits  for  services  or  any  other  consideration,  and  a 
bargain  to  become  interested  in  the  profits,  are  one  and  the 
same  thing.  Here,  we  say,  is  the  mistake  ;  nor  should  we 
have  much  doubt  that  it  was  a  mistake  made  for  Lord  Eldon, 
and  not  hy  him,  were  it  not  for  the  regret  he  expresses.  Such 
a  view  leads  to  a  conclusion,  to  a  distinction,  to  a  rule,  which 
might  well  be  regretted,  because  they  have  no  truth  and  no 
foundation.  But  if  he  only  meant  to  say,  what  we  should 
otherwise  incline  to  suppose  that  he  meant  (even  at  the  neces- 
sity of  believing  him  misreported  as  to  a  few  words),  then  we 
do  not  see  any  thing  to  cause  either  his  surprise  or  regret. 
What  we  mean  is  this  :  The  principles  of  the  law  of  partner- 


CH.  VI.]         WHO    ARE    PARTNERS    AS    TO    THIRD    PARTIES.  77 

ship  lead  decidedly  to  the  conclusion,  that  if  a  trader  makes  an 
arran<^ement  in  regard  to  a  commercial  business  or  transaction 
with  another  person,  by  reason  whereof  that  other  person  be- 
comes interested  as  the  first  is  interested  (no  matter  in  what 
proportions)  in  the  resulting  profits,  while  they  are  undivided 
and  remain  as  profits,  these  two  are  certainly  partners.  And 
the  same  principles  lead  us  directly  to  this  other  conclusion, 
that  a  mere  payment,  or  promise  to  pay  out  of  the  profits,  a 
sum  of  money,  as  a  specific  proportion  of  the  profits,  does  not 
necessarily  constitute  the  payee  a  partner,  and  gives  him  no 
interest  in  the  profits,  and  no  right  to  the  profits,  but  only  a 
personal  claim  against  the  promisor  for  such  money,  or  for  such 
a  share  of  profits  after  they  are  ascertained  and  may  be  divided. 
Undoubtedly  there  may  be  connected  with  the  promise 
other  terms,  promises,  or  conditions,  which  *  clothe  the  *  71 
promises  with  the  interest  and  character  of  a  partner ; 
but  the  promise  does  not.  If  two  men  were  bargaining  for  a 
house,  and  the  seller  says,  Your  business  is  so  prosperous,  you 
can  afford  to  pay  me  all  I  ask  ;  and  the  buyer  replies,  You  mis- 
take :  the  profits  of  my  business  are  not  so  large  as  you  think  ; 
and  the  seller  rejoins.  Well,  I  will,  at  all  events,  take  one-fourth 
part  of  your  next  year's  profits  for  the  house ;  and  a  written 
contract  is  executed  on  these  terms,  —  it  would  be  simply  absurd 
to  contend  that  this  sale  of  a  house  made  the  seller  liable  for  all 
the  business  debts  of  the  buyer.  Our  conclusion  is,  that  the 
question  of  interest  in  the  profits,  as  such  (by  which  we  mean 
the  profits  before  they  are  ascertained  and  divided),  is  always 
to  be  inquired  into.  The  words  which  the  parties  use,  and  all 
of  them,  and  all  the  parts  and  provisions  of  their  agreement,  as 
well  as  its  general  character  and  their  relation  to  each  other, 
are  to  be  looked  at ;  and  if  the  whole  evidence  leads  to  the  con- 
clusion that  the  receiver  of  money  took  it  in  good  faith  only  as 
wages  or  specific  compensation  or  payment,  and  did  not  intend 
to  acquire  any  interest  in  or  any  control  over  the  business,  or 
in  the  profits  as  they  accrue  and  before  they  are  ascertained 
and  divided,  but  only  after  they  were  ascertained  to  find  in 
them  the  fund  and  in  their  amount  the  measure  of  his  payment, 
he  is  no  partner,  nor  liable  as  such.  (M)  And  the  true  test  is, 
{kk}  Bidweli  v.  Madison,  10  Minn.  13;  Hargrave  v.  Conroy,  4  Green,  281. 


78 


THE   LAW    OF   PARTNERSHIP. 


[CH.  VI. 


Did  the  supposed  partner  acquire,  by  his  bargain,  any  property 
in  or  any  control  over  the  profits,  while  they  remained  undi- 
vided? If  so,  he  is  liable  to  third  persons;  and  otherwise,  not. 
This  subject  is  certainly  one  of  the  most  interesting,  and  per- 
haps one  of  the  most  difficult,  in  the  whole  law  of  partnership. 
And  we  have  given  to  it,  in  our  notes,  the  space  necessary  for  a 
full  analysis  and  comparison  of  the  leading  cases.  (/) 


(/)  The  rule  laid  down  in  the  text 
for  determining  who  are  partners  as  to 
each  other,  because  actual  partners,  is 
not  perhaps  fully  stated  and  applied  in 
any  one  case.     But  we  consider  it  the 
only  clear   and   intelligible   result   de- 
ducible  from  all  the  authorities.     The 
cases   on  this  difficult  point  are  natu- 
rally divisible  into  three  classes  :  those 
in  which  a  party  puts  into  a  business 
his  labor,  those  in  which  he  puts  in  his 
property,  and  those  in  which  he  puts 
in  both   property  and   labor.     But,  as 
the  same  principle  governs  in  all,  this 
arrangement  is  of   no   particular   ser- 
vice.    The  instances  in  wliich  money 
is  loaned   for  a  share   in    the   profits, 
involve   the    question    of    usury,    and 
will  be  separately  considered  hereafter. 
We  shall  examine  the  leading  author- 
ities   with   reference   to    two    points : 
first,  to  see  whether  they  really  estab- 
lish and  sanction  the  principle  that  a 
taking  of  a  share  in  the  profits  of  a 
trade  does  of  itself  make  one  a  partner 
as  to  third  persons ;  and,  if  it  does  not, 
second,  to  see  whether  the  true  test  of 
partnership,  as  to  third  persons  as  well 
as  inter  se,  is  not  an  ownership  of  the 
profits    before    they   are   divided.     In 
Waugh  V.  Carver,  2  H.  Bl.  235,  the 
question  was,  whether  the  defendants, 
the  two  Carvers  and  Giesler,  were  lia- 
ble as  partners  upon  the  true  construc- 
tion of  certain  articles  of  agreement. 
The  material  portions  of  their  contract 
were   these :    The   two    Carvers,   mer- 
chants  and   ship    agents,   residing    in 
Gosport,    agreed    with    Giesler,  also   a 
merchant   and    ship    agent,    that,    for 
their  mutual  benefit,  he  sliould  estab- 
lisli  himself  at  Cowes,  and  there  carry 
on  a  house  in  the  agency  line.     The 
two  Carvers  were  to  recommend  ships 


to  Giesler,  and  were  to  receive  a  share 
in  his  commissions  on  such  ships,  and 
in  the  discount  of  the  bills  of  the 
tradesmen  employed  on  them.  Giesler 
was  to  act  by  the  advice  of  the  Carvers, 
to  recommend  ships  to  them,  and  to 
receive  a  share  in  their  commissions 
on  them,  and  in  their  discounts  on 
tradesmen's  bills,  and  also  certain  pro- 
portions of  warehouse  rent  and  agency. 
Liberty  was  given  to  the  Carvers  to 
occupy  warehouses  at  Cowes,  without 
Giesler's  interference,  and  the  parties 
were  to  form  no  conflicting  business 
connections.  It  was  tlien  covenanted 
that  one-fifth  part  of  the  agency  or 
commission  on  each  ship  should  be  re- 
tained by  the  party  under  whose  care 
such  ship  should  be,  as  compensation 
for  all  incidental  expenses,  the  remain- 
ing balance  of  the  commissions  to  be 
divided  in  the  above-mentioned  pro- 
portions ;  and  that  such  commissions 
or  agency  should  be  ascertained  by  each 
party's  producing  to  the  other  annual 
authenticated  accounts.  Lastly,  it  was 
stipulated  that  each  party  should  sepa- 
rately run  the  risk  of  and  sustain  all 
such  losses  as  might  happen  on  the  ad- 
vances of  money  by  either  in  respect 
of  any  ships  or  vessels  ;  and  that  neither 
party  should  be  affected  by  any  losses, 
or  be  answerable  for  any  acts,  deeds, 
or  receipts  of  the  other  of  them,  but 
that  each  should  be  answerable  for  his 
own.  The  parties  having  acted  upon 
this  agreement,  we  may  observe  that 
there  was  a  clear  case  of  actual  part- 
nership :  1.  There  was  a  common 
stock  or  joint  capital,  contributed  by 
each  of  the  parties,  and  consisting  of 
the  use  of  the  money  and  otiier  prop- 
erty furnished  by  each  of  the  parties 
to  carry  on   the  business  at   Gosport 


CH.  VI.]  WHO    ARE    PARTNERS    AS    TO    THIRD    PARTIES. 


79 


Before  leaving  the  question  of  the  effect  of  sharing  the  profits, 
it  should  be  stated  that  there  are  many  ways  in  which  persons 


and  Cowes  respectively.  2.  Tliere 
was  a  participation  in  and  ownersliip 
of  the  profits  while  they  remained 
profits.  One-fifth  was  to  be  deducted 
from  the  gross  commissions  as  they 
accrued,  to  defray  current  expenses, 
and  become  at  once  the  separate  prop- 
erty of  the  parties.  The  balance  re- 
mained in  their  hands  as  a  common 
fund,  to  be  divided  among  them,  and 
become  their  individual  property  upon 
a  settlement  of  accounts.  As  to  the 
stipulation  tliat  each  party  should  bear 
his  own  losses,  &c.,  we  have  already 
seen  that  it  is  not  inconsistent  with  a 
partnership  for  one  partner  to  cove- 
nant that  he  shall  not  be  liable  either 
to  any  loss,  or,  as  in  this  case,  to  par- 
ticular items  of  loss ;  for  here  the 
gross  proceeds  alone  of  the  business 
were  not  to  be  divided,  but  those  pro- 
ceeds diminished  by  an  allowance  to 
each  party  for  his  expenses  in  carry- 
ing it  on.  3.  Other  provisions  in  the 
articles  give  the  wliole  agreement  the 
tone  and  character  of  a  contract  of 
partnersliip ;  as  the  provision  giving 
the  Carvers  leave  to  engage  ware- 
houses at  Cowes,  and  those  by  which 
the  parties  mutually  agree  to  account, 
and  not  to  form  other  business  connec- 
tions. All  these  provisions  seem  to  be 
consistent  only  with  an  actual  partner- 
ship ;  and  therefore  the  decision  of  the 
court,  that  the  parties  were  liable  as 
partners,  seems  unobjectionable.  But 
of  the  grounds  upon  which  that  deci- 
sion is  professedly  put,  the  same  can- 
not be  said.  The  court  (by  Eyre, 
C.  J.)  first  declare  the  question  as  to 
whether  the  parties  are  partners  as  to 
each  other  not  to  be  before  them  ;  but 
then  say  that  they  are  not  partners 
intei-  se,  principally  on  the  ground  that 
the}'  were  not  to  share  in  losses,  —  an 
expression  of  opinion,  inthe  view  of  the 
case  taken  by  the  court,  clearly  obiter, 
and,  as  we  have  just  seen,  not  sup- 
ported by  the  reason  given  for  it.  The 
Lord  Chief  Justice  tlien  proceeds  to 
say  that  the  parties  evidently  entitled 


themselves  to  share  indefinitely  in  the 
profits  of  the  business  as  they  should 
arise ;  and  that,  upon  the  authority  of 
Grace  v.  Smith,  he  who  shares  in  the 
profits  indefinitely,  shall,  by  operation 
of  law,  be  made  liable  to  losses,  upon 
the  principle  that,  by  taking  a  part  of 
the  profits,  he  takes  from  the  creditors 
a  part  of  that  fund  which  is  the  proper 
security  to  them  for  the  payment  of 
their  debts ;  and  that,  therefore,  the 
Carvers  and  Giesler,  though  not  part- 
ners inter  se,  had  yet  made  themselves 
such  with  respect  to  third  persons. 
The  case  is  thus  professedly  decided 
upon  the  authority  of  a  rule  said  by 
Lord  Chief  Justice  Eyre  to  be  the 
foundation  of  the  decision  in  Grace  v. 
Smith,  and  to  stand  upon  tlie  fair 
ground  of  reason.  To  estimate,  then, 
the  weight  to  be  given  to  the  principle 
of  tlie  decision  of  the  court  in  Waugh 
V.  Carver,  we  must  see  how  far  that 
principle  is  sanctioned  by  the  case  of 
Grace  v.  Smith,  2  W.  Bl.  998.  There 
Smith  &  Robinson  dissolved  partner- 
ship. But,  Robinson  continuing  the 
business,  Smith  left  behind  in  the  trade 
4,000/.,  for  which  he  was  to  receive 
five  per  cent,  interest,  and  an  annuity 
of  300/.  a  year.  The  question  being 
whether  Smith  &  Robinson  were  gen- 
eral partners,  De  Grey,  C.  J.,  said : 
"  Every  man  who  has  a  share  of  the 
profits  of  a  trade  ought  also  to  bear 
his  share  of  the  loss.  And  if  any  one 
takes  part  of  the  profits,  he  takes  part 
of  that  fund  on  which  the  creditor  of 
the  trader  relies  for  his  payment.  .  .  . 
I  think  the  true  criterion  is  to  inquire 
whether  Smith  agreed  to  share  the 
profits  of  the  trade  with  Robinson,  or 
whether  he  only  relied  on  those  profits 
as  a  fund  of  payment.  .  .  ."  Now 
(whatever  may  be  the  effect  of  Mr. 
Justice  Blackstone's  opinion,  which  we 
shall  consider  when  we  come  to  loans), 
there  is  nothing  in  the  extracts  above 
quoted  which  makes  any  distini.'tion 
between  sharing  definitely  and  sharing 
indejinitely   in   profits.     On    the    other 


80 


THE    LAW    OF   PARTNERSHIP. 


[CH.  VI. 


may  join  in  an  enterprise  or  transaction,  and  share  the  profits, 
without  becoming  partners ;  as  where  an  owner  of  land  fur- 


hand,  the  distinction  is  between  shar- 
ing the  protits  of  a  trade  and  relying 
on  tliem  for  payment,  in  both  of  which 
cases  tlie  indefiniteness  may  be  the 
same.  In  tlie  second  place,  the  ground 
of  this  distinction  cannot  be  that  every 
man  who  participates  in  profits  should 
be  liable  to  losses  because  he  takes 
from  that  fund  on  which  creditors 
rely  ;  since,  whetlier  he  shares  in  prof- 
its, or  relies  on  them  for  payment,  he 
equally  takes  from  that  fund.  Indeed, 
the  remarks  of  this  nature  with  which 
Cliief  Justice  De  Grey  commences  his 
opinion  seem  to  be  merely  general 
ones,  founded  on  supposed  equitable 
considerations,  but  neither  universally 
true,  nor  serving  nor  intended  to  serve 
as  the  grounds  of  the  rule  he  after- 
wards lays  down.  Hence  we  think 
that  neither  the  rule  asserted  in 
Waugh  V.  Carver  as  deducible  from 
Grace  i'.  Smith,  that  he  who  takes  a 
share  of  the  profits  indefinitely  shall  be 
liable  as  partner  for  losses,  nor  the 
reason  given  for  it  upon  the  same  au- 
thority, because  by  so  doing  he  takes 
from  the  fund  on  which  creditors  rely 
for  payment,  is  established  in  that  case. 
The  criterion  laid  down  by  Chief  Jus- 
tice De  Grey  is,  it  is  true,  vague  and 
indefinite.  But  there  is  a  view  of  it 
which  is  not  only  obvious  and  natural, 
but  whicli  also  makes  it  entirely  con- 
sistent with  what  we  consider  true 
principles.  The  distinction  drawn  is 
between  Smith's  sharing  the  profits 
with  Robinson  and  his  merely  relying 
on  them  as  a  fund  of  payment.  Now, 
if  by  sharing  the  profits  with  Robinson 
is  meant  being  interested  in  them  as 
Robinson  was,  and  in  the  same  right, 
then  the  sort  of  interest  which  it  is 
said  Smith  would  have,  if  he  were  a 
partner,  is  that  of  joint  owner  of  the 
profits  with  Robinson.  And  the  sort 
of  interest  the  criterion  of  De  Grey 
gives  Smith,  if  he  were  not  a  partner, 
is  not  expressed  by  the  words  sharing 
in  the  profits  in  any  way.  Eut  in  that 
case  he  is  said  to  simply  rely  on  them 


as  a  fund  out  of  which,  indeed,  he  has 
a  right  to  be  paid,  but  in  which  he 
does  not  share.  But  whatever  may  be 
the  true  meaning  of  Cliief  Justice  De 
Grey's  criterion,  in  any  interpretation 
we  think  it  opposed  to  the  broad  rule 
which  is  derived  from  it  by  the  court 
in  Waugh  v.  Carver. 

Tlie  next  case  we  propose  consider- 
ing is  tliat  of  Hesketh  v.  Blanchard, 
4  East,  144.  There,  Robertson,  the 
defendant's  testator,  having  neither 
money  nor  credit,  requested  the  plain- 
tiff to  order  goods  with  him  to  be 
taken  on  a  voyage,  and  promised,  that, 
if  any  profit  should  arise  from  them, 
the  plaintiff  should  have  one-half  for 
his  trouble.  The  plaintiff  did  as  re- 
quested, and,  having  subsequently  paid 
the  whole  price  of  the  goods,  brought 
the  present  suit  against  Robertson's 
executor  to  recover  the  amount  so 
paid.  It  was  held,  that  the  action 
would  lie.  Lord  Ellenborough  said  : 
"  The  distinction  taken  in  Waugh  v. 
Carver  et  al.  applies  to  this  case.  Quoad 
third  persons,  it  was  a  partnership;  for 
the  plaintiff  was  to  share  half  the 
profits.  But  as  between  themselves  it 
was  only  an  agreement  for  so  much, 
as  a  compensation  for  the  plaintiff's 
trouble,  and  for  lending  Robertson  his 
credit."  Now,  the  only  question  before 
the  court  being  whether  the  parties 
were  partners  as  to  each  other,  the 
decision  that  they  were  not  was  called 
for,  and  seems  consonant  with  the 
facts  of  the  case  and  with  true  princi- 
ples. They  clearly  did  not  intend  to 
form  a  partnership ;  and  the  whole 
proceeds  of  the  adventure  before  divi- 
sion clearly  belonged  to  Robertson. 
But  the  additional  remark  that  quoad 
third  persons  they  were  partners  is 
purely  obiter,  and  may  be  classed  with 
the  dicta  of  Waugh  v.  Carver,  but  can 
have  no  more  weight. 

We  may  now  examine  the  cases  in 
whicli  the  rule  referred  to  in  the  text 
is  laid  down  by  Lord  Eldon.  The  facts 
upon  which   the  question  of  partner- 


CH.  VI.]         WHO    ARE    PARTNERS    AS    TO    THIRD    PERSONS. 


81 


nishes  seeds  and  implements  to  one  who  is  to  work  the  land 
and  divide  the  profits  with  him ;  or  where  one  lets  a  farm  or 


ship  turned  were  the  same  in  Ex  parte 
Rovvlandson,  1  Rose,  91,  and  in  Ex 
parte  Hamper,  17  Ves.  403.  Thomas 
&  Rogers  had  been  partners  in  a  mer- 
cantile adventure  to  Cadiz,  Rogers 
furnishing  goods,  and  Thomas  going 
out  with  and  seUing  them.  Before  the 
goods  were  all  sold,  Rogers  entered 
into  a  new  arrangement  with  Thomas, 
as  follows  :  "  I  do  agree  to  give 
Thomas  one-half  the  profits  he  makes 
on  my  goods,  instead  of  a  commission, 
after  shipping,  freight,  and  every  ex- 
pense paid ;  I  pay  Thomas  his  passage 
out."  This  agreement  was  acted  upon 
by  the  parties,  and  letters  were  in 
evidence  from  Thomas  to  Rogers,  in 
which  Thomas  styled  himself  a  part- 
ner, and  other  expressions  indicating 
the  existence  of  a  partnersliip  between 
Rogers  and  himself.  In  1  Rose,  91, 
Lord  Eldon  said :  "  The  ground  was 
settled  that  if  a  man  as  the  reward  for 
his  labor  chooses  to  stipulate  for  an 
interest  in  the  profits  of  a  business, 
instead  of  a  sum  proportioned  to  those 
profits,  he  is  as  to  third  persons  a  part- 
ner." In  17  Ves.  403,  he  said:  "  If  a 
trader  agrees  to  pay  another  person 
for  his  labor  in  the  concern  a  sum  of 
money  even  in  proportion  to  the 
profits,  equal  to  a  certain  share,  that 
will  not  make  him  a  partner;  but  if 
he  has  a  specific  interest  in  the  profits 
tliemselves,  as  profits,  he  is  a  partner." 
And  again  :  "  It  is  clearly  settled  that 
if  a  man  stipulates  that,  as  the  reward 
of  his  labor,  he  shall  have,  not  a  spe- 
cific interest  in  the  business,  but  a 
given  sum  of  money,  even  in  propor- 
tion to  a  given  quantum  of  the  profits, 
that  will  not  make  him  a  partner  ;  but 
if  he  agrees  for  a  part  of  the  profits,  as 
such,  giving  him  a  right  to  an  account, 
though  having  no  property  in  the  cap- 
ital, he  is  as  to  third  persons  a  partner. 
Upon  the  memorandum,  therefore,  and 
the  letters  in  this  case,  there  is  no  doubt 
that  Thomas  would  be  hable."  These 
three  propositions  of  Lord  Eldon,  ap- 
plied to  the  same  state  of  facts  and  in 


the  same  way,  are  clearly  only  differ- 
ent expressions  of  the  same  rule,  and 
are  to  be  explained  by  reference  to 
one  another,  and  to  be  understood  as 
meaning  the  same  thing. 

The  first  thing  to  be  observed  is 
that  the  criterion  of  Lord  Eldon  gives 
no  support  to  the  rule  asserted  in 
Waugh  V.  Carver,  that  he  who  partici- 
pates in  the  profits  of  a  trade  indefi- 
nitely is  liable  as  a  partner,  because  he 
takes  from  the  fund  on  which  cred- 
itors rely ;  since,  whether  a  man  has 
one-half  of  the  profits  of  a  trade,  or  a 
sum  equal  to  one-half,  in  both  cases 
he  is  alike  affected  by  the  accidents 
of  trade,  and  in  both  cases  takes  from 
the  fund  to  which  creditors  look  for 
payment.  But,  as  in  Grace  v.  Smith, 
the  distinction  taken  is  between  diflfer- 
ent  kinds  of  interests  in  or  claims  upon 
profits.  Thus,  if  a  man  agree  as  the 
reward  of  his  labor  for  a  sum  equal  to 
half  the  profits  of  a  trade,  that  kind  of 
interest  in  profits,  it  is  said,  will  not 
make  him  a  partner.  Yet  his  remu- 
neration depends  upon  the  accidents  of 
trade ;  he  diminishes  the  fund  on 
which  creditors  rely,  and  he  is  entitled 
to  an  account ;  for  though  Lord  Eldon, 
in  one  passage  we  have  quoted,  speaks 
of  the  right  to  an  account  as  belong- 
ing to  that  species  of  interest  which 
will  make  a  man  a  partner,  yet  he  can- 
not be  understood  to  mean  that  it  is 
exclusively  characteristic  of  that  in- 
terest. But  this  sort  of  interest  in 
profits  will  not  make  a  man  a  partner. 
On  the  other  hand,  "  a  specific  interest 
in  the  profits  themselves,  as  profits," 
"  an  agreement  for  a  part  of  the  profits 
as  such,"  is  declared  to  be  that  sort  of 
interest  which  will  make  a  man  a 
partner.  Now,  by  the  terms  "  profits 
themselves,  as  profits,"  and  "  profits  as 
such,"  used  in  relation  to  a  partner- 
ship and  to  partners,  must,  we  think, 
be  meant  profits  before  division.  For, 
when  the  profits  made  by  a  firm  have 
been  divided  among  its  individual 
members,  there  remains  no  fund  which 


6 


82 


THE    LAW    OF   PARTNERSHIP. 


[CH.  VI. 


inn  for  a  portion  of  the  profits  ;  or  where  seamen  sail  a  ship  on 
shares.     All  such  cases  are  governed  by  the  general  principle, 


represents  the  profits  of  the  partner- 
sliip  business.  The  aliquot  portions 
of  the  profits  which  the  several  part- 
ners have  received  represent  the  re- 
turns of  their  several  investments  of 
capital  or  labor.  But  tlie  only  fund 
which  can  represent  the  ])rofits  of  the 
business  of  the  partnership  is  those 
profits  while  they  remain  undivided 
and  part  of  the  stock  in  trade.  And 
this  is  what  we  understand  by  the 
expressions  of  Lord  Eldon,  "profits 
themselves  as  profits,"  and  "  profits  as 
such."  And  the  interest  in  profits  so 
understood,  which  will  make  a  man  a 
partner,  must  be  a  "  specific  interest." 
It  must  be  greater  and  more  immedi- 
ate than  that  of  one  whose  return  for 
his  property  or  labor  depends  wholly 
upon  the  amount  of  profits.  It  must 
be  greater  than  that  of  a  person  who 
is  sirapl}'  entitled  to  an  account.  We 
think  it  can  be  interpreted  to  be  no 
other  than  a  proprietary  interest,  an 
ownership  in  the  undivided  profits. 
And,  if  this  be  the  meaning  of  the 
terra,  then  Lord  Eldon's  criterion  is 
entirely  consistent  with  that  of  Chief 
Justice  De  Grey,  of  which  it  professes 
to  be  only  a  differently  worded  state- 
ment. Moreover,  so  understood,  it  is 
perfectly  intelligible,  and  recognizes 
what  we  believe  to  be  the  true  test  of 
partnership.  It  seems  open  only  to 
the  objection  mentioned  in  the  text ; 
that  it  appears  to  hold  that,  if  a  man 
stipulates  for  a  half  or  a  fourth  of  the 
profits  of  a  business,  he  thereby  neces- 
sarily acquires  that  specific  interest  in 
the  profits,  as  profits,  whicli  we  think 
to  mean  an  ownership  of  the  undivided 
profits.  But  in  this  very  case  of  Ex 
parte  Hamper,  Lord  Eldon  decides  that 
Thomas  is  a  partner,  not  merely  upon 
the  ground  that  by  the  memorandum 
he  was  to  have  half  the  net  profits ; 
but,  as  if  that  circumstance  alone  were 
not  sufficient,  he  says :  "  Upon  the 
memorandum  and  the  letters  in  this 
case,  Thomas  would  undoubtedly  be 
liable."      These   letters   contained,   as 


we  have  seen,  admissions  by  Thomas 
that  he  was  a  partner,  and  were  there- 
fore important  as  showing  in  what 
riglit  Thomas  was  to  have  one-half  the 
profits. 

We  think  these  views  are  sustained 
by  another  case  decided  by  the  same 
judge.  Ex  parte  Langdale,  18  Ves.  300. 
Here,  the  bankrupt  kept  a  canteen. 
The  question  was  whether  the  brewers 
who  supplied  him  with  beer  were  lia- 
ble as  his  partners  in  respect  of  their 
participation  in  profits  under  their 
agreement.  This  agreement,  accord- 
ing to  the  brewers'  account,  was  that 
the  brewers  were  to  pay  half  his  rent, 
and  supply  him  with  beer  at  4/.  5s.  per 
barrel,  the  usual  price  being  3/.  8s. 
The  bankrupt's  account  was  that  the  • 
brewers  were  to  have  out  of  the  profits 
17s.  per  barrel  for  the  half  of  the  rent ; 
the  bankrupt  taking  the  rest.  Now, 
by  either  account,  the  brewers  were 
directly  interested  in  the  profits  of 
the  bankrupt's  business.  But,  if  the 
brewers'  account  were  the  true  one, 
then  there  was  no  undivided  fund  of 
profits  in  which  both  the  bankrupt 
and  the  brewers  were  interested.  On 
the  contrary,  when  profits  accrued, 
they  were  always  already  divided,  and 
they  could  accrue  in  no  other  shape. 
If,  however,  the  bankrupt's  account 
was  the  true  one,  there  was  an  undi- 
vided fund  of  profits  in  which  both 
the  brewers  and  himself  were  inter- 
ested. These  being  the  facts  of  the 
case.  Lord  Eldon  said :  "  Tlie  true 
criterion  is  whether  they  are  to  par- 
ticipate in  profit.  That  has  been  the 
question  ever  since  the  case  of  Grace 
V.  Smith.'"  Now,  if  the  phrase  "par- 
ticipation in  profit "  is  interpreted  in 
a  general  sense,  then  the  brewers  were 
partners,  whichever  was  the  true  ac- 
count of  their  contract.  But  Lord 
Eldon  proceeds  :  "  I  cannot  refuse  to 
let  tliis  case  go  to  a  jury.  The  agree- 
ment to  sell  their  beer  to  him  at  a 
higher  price  than  to  others  would  not 
make  them  partners  ;    but  the  bank- 


CH.  VI.]        WHO    ARE   PARTNERS    AS   TO    THIRD   PERSONS. 


83 


that  they  only  are  partners  who  are  jointly  interested  in  the 
profits,  as  profits,  and  not  by  way  of  payment  for  labor  or 
services  performed.  (/Z) 


rupt's  representation  is  so  different, 
that  it  is  impossible  to  determine, 
without  tlie  decision  of  the  jury  upon 
the  question,  whether  this  was  an 
agreement  for  a  division  of  the  profits, 
or  the  brewers  stood  only  in  the  rela- 
tion of  vendors  of  the  beer  to  this 
retailer  at  41.  5s.  per  barrel,  in  consid- 
eration of  paying  half  his  rent,  selling 
to  others  at  3/.  8s.  If  the  actual  con- 
tract gave  a  claim  upon  the  profits,  or 
the  application  of  them,  that  is  part- 
nership. If  there  was  no  claim  upon 
the  profits,  or  the  application  of  the 
profits,  then  it  is  not  partnership." 
The  whole  case,  taken  in  connection 
with  the  authority  cited,  and  the  cases 
decided  by  the  same  judge  which  we 
have  just  examined,  is  not  in  conflict 
with  the  doctrine  of  the  text.  The 
same  may  be  said  of  the  case  of  Ex 
parte  Watson,  19  Ves.  459.  There 
Lord  Eldon  said :  "  There  is  a  wide 
difference  betwixt  a  dormant  and  a 
nominal  partner.  The  former  is  liable 
in  respect  of  the  profits  ;  but  one  who 
receives  a  salary  not  charged  upon 
profits,  according  to  a  known  but  nice 
distinction,  is  not  by  that  a  partner." 
We  consider  this  as  simply  a  looser 
expression  of  the  rule  laid  down  in 
Ex  parte  Hamper,  and  Ex  parte  Rovv- 
landson,  and  as  one  to  be  explained 
by  reference  to  those  cases,  especially 
since  in  the  case  before  the  court  its 
application  was  not  called  for.  See 
Ex  parte  Hodgkinson,  19  Ves.  291 ;  In 
re  Colbeck,  Buck,  48.  See  also,  in 
this  connection,  Ex  parte  Digby,  1 
Deac.  341,  a  case  in  which  the  only 
thing  justifying  tlie  decision  of  the 
court  seems  to  be  the  declarations  of 
the  party  sought  to  be  charged  as 
partner.  Tench  v.  Roberts,  6  Madd. 
145;  Withington  v.  Herring,  3  Moo.  & 


Payne,  30.     The   case  of  Cheap 

V.  Cramond,  4  B.  &  Aid.  663,  contains 
a  dictum  approving  of  the  doctrine  of 
Waugh  V.  Carver.  But  we  have  al- 
ready treated  of  that  case  in  an  earlier 
note,  when  considering  another  princi- 
ple to  which  it  is  clearly  referable.  In 
Dry  i;.  Boswell,  1  Camp.  329,  the  deci- 
sion of  the  court  seems  to  have  been 
founded  on  the  same  principle.  But 
we  shall  consider  that  case,  when  we 
examine  the  distinction  between  gross 
and  net  profits  at  the  close  of  this  sec- 
tion. So  it  is  generally  held  that  sail- 
ors, who  receive  in  lieu  of  wages  a 
certain  share  of  tlie  profits  of  a  voyage, 
are  not  thereby  made  partners  with 
the  other  participators  in  the  profits. 
Wilkinson  v.  Frazier,  4  Esp.  182  ;  Per- 
rot  V.  Brj'ant,  2  Y.  &  Coll.  61,  explain- 
ing Coppard  v.  Page,  Forrest,  1.  In 
Mair  v.  Glennie,  4  M.  &  S.  240,  it  was 
contended  that  the  captain  of  a  vessel, 
who  was  to  share,  in  lieu  of  wages, 
one-fifth  in  the  profit  or  loss  of  the 
voyage  on  ship  and  cargo,  was  a  part- 
ner with  the  owners.  Lord  Ellen- 
borough  said:  "According  to  that 
mode  of  argument,  every  seaman  in 
a  Greenland  voyage  would  become  a 
partner  in  the  fishing  concern.  There 
is  no  pretence,  therefore,  for  saying 
that  the  captain  was  a  partner  be- 
cause his  wages  were  to  be  regulated 
and  paid  by  reference  to  a  calculation 
on  the  profits  of  the  adventure."  The 
principle  upon  which  the  courts  have 
proceeded  in  these  cases  is  manifest. 
Mariners,  under  such  agreements, 
share  indefinitely  in  profits.  They 
take  from  the  fund  on  which  creditors 
rely.  They  do  not  stipulate  for  a  sum 
equal  to  a  certain  proportion  of  the 
profits.  Yet,  from  the  relative  posi- 
tion of  the  parties,  from  the  custom  of 


(//)  See  an  instructive  case  on  this  land,  ibid.  323,  and  Wright  v.  David- 
subject,  Parker  v.  Fergus,  43  111.  438.  son,  13  Minn.  449.  See  post,  p.  *  144, 
Compare  this  case   with   Snell  v.  De-    note  (k). 


84 


THE  LAW   OP    PARTNERSHIP. 


[CH.   VI. 


*  72  *  As  to  the  intentions  of  the  parties,  Story,  in  his  work 

on  Partnership,  intimates  an  opinion,  that  the  rule  would 


the  trade,  in  tine  from  the  whole  char- 
acter of  the  transaction,  it  clearly  ap- 
pears that  the  sailors  are  not  owners 
of  the  profits,  as  such,  but  merely  inter- 
ested in  them  as  supplying  the  fund, 
or  measuring  the  amount  of  their 
wages.  This  is  well  illustrated  by 
the  case  of  The  Frederic,  5  Rob. 
Adm.  8.  There  the  master  claimed 
specific  shares  of  the  cargo,  as  the  prop- 
erty of  himself,  and  the  officers  and 
crew  of  his  vessel.  Sir  Wm.  Scott 
said :  "  I  have  no  hesitation  in  pro- 
nouncing that  these  persons  cannot 
be  admitted  to  claim.  They  are 
to  be  considered  as  mariners ;  and 
their  proportion  of  the  proceeds  of 
the  voyage,  as  their  wages."  See 
opinion  of  Martin,  B.,  in  Hickman  v. 
Cox,  supra.  So  in  Hartley's  case, 
Rus.  &  R.  139.  The  same  view  may 
be  taken  of  the  instances  in  which  a 
factor  or  broker  has  been  declared  not 
to  be  a  partner.  One  who  is  a  factor 
or  broker  is  well  known  to  be  merely 
a  peculiar  kind  of  agent ;  and  though 
he  be  paid  by  a  proportion  of  the 
profits,  still,  if  he  act  only  as  factor  or 
broker,  his  holding  that  character 
shows  his  interest  in  the  profits  to  be 
simply  that  of  one  who  relies  on  them 
for  payment,  and  not  that  of  one  who 
is  interested  in  them,  like  his  princi- 
pal, as  an  owner.  Thus,  in  Benjamin 
V.  Porteous,  2  H.  Bl.  590,  the  action 
was  for  goods  bargained  and  sold,  to 
recover  the  price  of  a  quantity  of 
indigo.  The  broker,  who  had  sold  the 
goods,  being  called  to  prove  the  con- 
tract, testified  that  by  his  agreement 
with  the  plaintiff  he  was  to  have  for 
his  own  profit  whatever  he  could  get 
for  the  indigo  above  half  a  crown  for 
the  pound,  but  not  an  allowance  of  so 
much  per  cent  by  way  of  commission, 
in  the  usual  manner.  Eyre,  C.  J., 
thought  the  witness  was  not  a  broker 
nor  factor,  and  that  he  was  not  com- 
petent on  the  score  of  interest.  But 
the  other  judges  said  that  they  could 
not  distinguisli  him  from   a  common 


broker,  except  that  he  was  paid  for 
his  trouble  in  a  particular  manner, 
namely,  by  a  share  in  the  profits, 
which  could  make  no  difference. 
They  therefore  held  him  admissible. 
So  in  Dixon  v.  Cooper,  3  Wils.  40, 
where  a  special  action  on  the  case 
was  brought  for  the  non-performance 
of  a  contract  to  receive  and  pay  for 
three  hundred  quarters  of  wheat.  The 
only  witness  ofl'ered  to  prove  the  con- 
tract was  Morley,  the  plaintifi^s  factor, 
who  made  the  contract  with  the  de- 
fendant, and  was  to  receive  one  shil- 
ling on  the  pound  for  selling  the  wheat. 
Objection  being  made  to  his  compe- 
tency, it  was  held,  that  he  was  a  mere 
factor,  a  go-between,  and  was  a  good 
witness  for  either  the  vendor  or  ven- 
dee.    Gibbons  v.  Wilcox,  2  Stark.  43. 

There  are  several  other  recent  Eng- 
hsh  cases,  which  may  be  properly  con- 
sidered in  this  place.  In  Pott  v.  Eyton, 
3  C.  B.  32,  Eyton,  being  concerned  in 
a  colliery,  entered  into  an  agreement 
with  Jones  for  opening  a  store  at  Mos- 
tyn  Quay,  principally  with  the  view  of 
supplying  his  workmen  with  goods. 
Eyton  built  the  shop.  His  name  was 
put  over  the  door,  and  appeared  in  the 
excise  licenses,  and  in  the  invoices  for 
goods  bought  for  the  store.  Jones 
managed  the  shop,  and  paid  over  to 
Eyton  the  money  taken  there  ;  of  which 
Eyton  received  7/.  per  cent  on  all  sales 
to  his  workmen,  and  Jones  all  the 
rest  of  the  profits.  In  1834,  Eyton  & 
Jones  entered  into  a  new  arrangement. 
Jones  was  thenceforth  to  buy  goods  in 
his  own  name,  and  to  receive  all  pay- 
ments. Eyton  was  to  have  5/.  per  cent 
on  the  amount  of  sales  to  his  work- 
men, and  his  name  remained  over  the 
door.  Jones  had  several  other  shops, 
and  when  lie  began  to  buy  goods  in 
his  own  name,  opened  an  account  with 
a  bank  at  Halywell.  In  1839,  this 
bank  failed,  a  large  balance  being  due 
to  it  on  that  account ;  to  recover  which 
the  present  suit  was  brought  against 
Eyton   &  Jones   as   partners.      There 


CH.  VI.]        WHO    ARE   PARTNERS   AS   TO   THIRD   PERSONS. 


85 


have  been  more  *  convenient,  and  more  conformable  to 
true  principles  as  well  as  to  public  policy,  if  it  had  held 


73 


was  no  evidence  that  credit  had  been 
given  to  Eyton,  or  that  the  bankers 
supposed  liim  to  be  a  partner,  or  that 
they  knew  iiis  name  had  ever  appeared 
over  tlie  shopdoor,  or  in  the  licenses, 
&c.  Upon  these  facts,  it  was  left  to 
the  jury  to  say  whether  there  had  been 
a  sharing  of  profit  and  loss  between 
Eyton  &  Jones  after  the  account  was 
opened  with  the  bank,  so  as  to  con- 
stitute an  actual  partnership  between 
them.  The  jury  found  in  the  nega- 
tive. A  rule  nisi  being  obtained  on 
the  ground  that  the  verdict  was  against 
evidence,  Tindal,  C.  J.,  said  :  "  Traders 
become  partners  between  themselves 
by  a  mutual  participation  in  profit  and 
loss  :  but,  as  to  third  persons,  they  are 
partners  if  they  share  the  profits  of  a 
concern ;  for  he  who  receives  a  share 
of  the  profits  receives  a  part  of  that 
fund  on  which  the  creditors  of  the  con- 
cern have  a  right  to  rely  for  payment, 
and  is  therefore  to  be  made  liable  to 
losses,  although  he  may  have  expressly 
stipulated  for  exemption  from  them. 
Grace  v.  Smith  ;  Waugh  v.  Carver. 
But  in  the  former  of  these  cases,  Lord 
Chief  Justice  De  Grey,  after  laying 
down  the  rule  of  law  in  the  terms  which 
I  have  mentioned,  proceeds  :  "  If  any 
one  advances  money  to  a  trader,  it  is 
lent  on  his  general  personal  security. 
It  is  no  specific  lien  upon  the  profits  of 
the  trade ;  and  yet  the  lender  is  gen- 
erally interested  in  those  profits  :  he 
relies  on  them  for  payment."  After- 
wards, he  says  :  "I  think  the  true 
criterion  is  to  inquire  whether  Smith 
agreed  to  share  the  profits  of  the  trade 
with  Robinson,  or  whether  he  only 
relied  on  those  profits  as  a  fund  of  pay- 
ment, —  a  distinction  not  more  nice 
than  usually  occurs  in  questions  of 
trade  and  usury.  The  jury  liave  said 
that  this  is  not  payable  out  of  the  prof- 
its." "  So,  in  tlie  present  case,  the 
jurj'  have  said  tliere  was  no  agreement 
to  share  tlie  profits."  "And  it  appears 
to  us  that  in  the  present  case  the  pay- 
ment  to  Eyton   was  in  the   nature  of 


commission  on  certain  sales  supposed 
to  be  effected  tlirough  his  influence 
over  his  workmen,  and  was  not  suffi- 
cient to  render  him,  as  a  matter  of  legal 
inference,  liable  as  a  partner ;  and,  in 
so  far  as  it  was  a  question  of  fact,  it 
was  disposed  of  by  the  jury."  The 
grounds  of  the  decision  of  the  court,  as 
appearing  in  the  above  extracts,  are 
not  perhaps  entirely  manifest.  If  the 
verdict  of  the  jury,  that  there  was  no 
participation  in  profit,  was  supported 
by  the  evidence,  as  appears  to  be  as- 
sumed in  the  first  of  the  above  quota- 
tions, then  there  was  no  occasion  to 
affirm  the  doctrine  of  Waugh  v.  Carver. 
But  we  think  the  true  reason  why  the 
case  was  so  decided  is  found  in  tlie  last 
quotation,  namel3',  that  it  appeared  from 
the  whole  character  of  the  relations  be- 
tween the  parties  that  Eyton's  interest 
was  simply  of  the  nature  of  a  commis- 
sion on  certain  sales.  Indeed,  we  think 
the  facts  in  the  case  clearly  indicate 
that,  under  the  second  agreement,  Ey- 
ton was  no  longer  an  owner  of  the 
profits ;  as,  for  instance,  the  fact  that 
Jones  was  to  take  the  avails  of  the 
sales  of  the  shop,  whereas,  under  the 
first  agreement,  Eyton  was  to  receive 
them. 

In  Barry  v.  Nesham,  3  C.  B.  641,  Ne- 
sham,  the  proprietor  of  a  newspaper, 
sold  out  the  concern  to  Lowthin  for 
1,500/.  ;  payable,  with  interest,  by  in- 
stalments running  through  a  period  of 
several  years.  Nesham  also  guaran- 
teed to  Lowthin  a  clear  annual  profit 
of  150/.  over  and  above  the  payment 
of  the  annual  instalments  and  the  in- 
terest thereon  ;  in  consideration  where- 
of, Lowthin  agreed  to  pay  to  Nesham 
all  the  profits  over  150/.  per  annum, 
until  such  surplus  profits  should  amount 
to  500/. ;  and,  if  they  should  amount 
to  so  much  during  the  seven  years, 
then  Lowthin  agreed  to  pay,  in  ad- 
dition to  the  purchase-money,  inter- 
est, and  the  500/.,  the  existing  liabilities 
of  the  newspaper  not  exceeding  250/. 
It  was  also  agreed  that  Nesham  should 


86 


THE    LAW    OF    PARTNERSHIP. 


[CH.  VI. 


74      that  no  partnership  should  be  deemed  *  to  exist  at  all, 
even  as  to  third  persons,  unless  such  were  the  intention 


receive  sucli  surplus  profits  only  till 
the  same  amounted  to  500/. ;  tliat 
Lowthin  might  pay  off  the  purchase- 
money,  and  assume  all  the  liabilities, 
and  become  entitled  to  all  the  profits 
of  the  newspaper  at  any  time  ;  and  that 
Nesham  might,  upon  giving  six  months' 
notice,  withdraw  the  above-mentioned 
guaranty.  The  question  was,  whether 
Nesham  was  liable  as  partner  for  goods 
supplied  to  the  newspaper  at  Lowthin's 
order.  The  court  reiterate  the  general 
doctrine  of  Waugh  v.  Carver.  But 
we  do  not  think  they  really  apply  it. 
The  counsel  for  the  defendant  con- 
tended that  the  court  must  look  at  the 
wiiole  purview  of  the  agreement,  in 
order  to  ascertain  the  intention  of  the 
parties.  Wilde,  C.  J.,  said  :  "  Adopt- 
ing the  principle  of  that  case,  and 
looking  at  the  intention  of  the  parties  to 
their  agreement,  I  am  unable  to  come 
to  any  other  conclusion  than  that  it 
created  an  interest  in  the  profits  of  the 
concern  in  Nesham,  which  constituted 
him  a  partner  rjuoad  third  persons. 
The  view  presented  by  my  brother 
Maule,  in  the  course  of  the  argument, 
seems  to  me  to  be  the  correct  one  " 
Maule,  J.,  said  in  the  course  of  the 
argument :  "  The  proper  way  of  taking 
the  account  between  the  parties  under 
the  agreement,  as  it  strikes  me,  should 
be,  to  treat  Nesham  as  a  person  entitled 
to  the  whole  profits  of  the  newspaper, 
subject  to  the  payments  guaranteed 
to  Lowthin;"  and  in  his  judgment 
"  I  quite  agree,  that  we  are  to  look  at 
the  substance,  and  not  at  the  mere 
form,  of  the  transaction.  The  question 
is,  whether  it  gave  Nesham  an  interest 
in  the  profits  of  the  newspaper."  And 
he  determines  what  the  interest  of 
Nesham  is  in  the  following  manner : 
"  Before  the  date  of  the  agreement, 
the  whole  profits  belonged  to  him. 
What  does  he,  in  substance,  part  with  ? 
Lowthin  is  to  manage  the  concern,  and 
to  receive  150/.  a  year,  at  all  events,  for 
seven  years.  That  is  all  that  Lowthin 
is  certain  of  receiving.     Deduct   that 


sum  from  the  whole  interest  in  the 
newspaper,  and  Nesham  is  interested 
in  the  excess,  except  in  the  improbable 
event  of  the  profits  realizing  more  than 
suflficient  to  pay  the  annual  instal- 
ments of  the  1,500/.,  the  150/.  a  year  to 
Lowthin,  and  tlie  further  sum  of  500/. 
in  the  seven  years.  Upon  that  simple 
statement,  it  might  very  well  be  ques- 
tioned whether  Lowthin  was  a  partner, 
or  whether  he  was  not  a  sort  of  salaried 
agent,  remotely  interested  in  surplus 
profits.  It  is  however,  unnecessary  to 
discuss  that ;  for  no  one  disputes  that 
he  is  a  partner.  I  think  Nesham  is 
a  much  more  unquestionable  partner 
than  Lowthin."  Now,  it  is  evident  that 
the  interest  in  the  profits  which  Maule, 
J.,  here  gives  to  Nesham  is  none  other 
than  that  of  owner.  He  considers  him 
as  never  having  wholly  parted  with 
his  proprietary  interest.  See  further 
Heyhoe  v.  Burge,  9  C.  B.  431.  The 
head-note  is  as  follows  :  A.  &  B.,  by  a 
memorandum  in  writing,  agreed,  "  for 
services  performed,"  to  allow  C.  a  fourth 
share  of  the  clear  profits  arising  from 
a  contract  for  the  construction  of  a 
line  of  railway ;  and  there  was  evi- 
dence to  show  that  C.  had  acted  upon 
the  agreement  (though  not  formally 
a  party  to  it),  and  that  he  had  to  some 
extent  interfered  in  the  work.  Held, 
sufficient  to  show  that  C.  was  a  partner 
in  the  transaction,  quoad  third  persons. 
See  also  the  recent  and  very  interest- 
ing case  of  Plickman  v.  Cox,  3  C.  B. 
N.  s.  523,  and  36  Eng.  L.  &  Eq.  400. 
[Grace  f.  Smith,  and  Waugh  v.  Carver 
may  be  said  not  to  be  now  law  in  Eng- 
land. Cox  V.  Hickman,  8  H.  of  L.  Cas. 
268  ;  Buller  v.  Sharp,  L.  R.  1  C.  P.  86 ; 
Stat.  28  ;  29  Vict.  ch.  86  ;  post,  p.  *  93, 
note  (0;  ante,  p.  *  67,  note.  See  fur- 
ther, as  to  criteria  of  partnership.  Am. 
Law  Reg.  n.s.  10,  p.  209 ;  Molwo  v.  Court 
of  Wards,  L.  R.  4  P.  C.429.  See  also 
Lord  V.  Proctor,  7  Phila.  (Penn.)  630; 
Kaiser  v.  Wilhelm,  post,  p.  *  524,  n.  (k)J] 
The  American  authorities  on  tliis 
subject  are  in  no  inconsiderable  cou- 


CH.  VI.]  WHO    ARE    PARTNERS    AS    TO    THIRD    PARTIES. 


87 


of  the  parties,  or  unless  they  had  so  held  themselves  out 
*to  the  public.     He  admits,  however,  that  the  common 


75 


flict.  Mr.  Justice  Story  believes  that 
the  true  principle,  and  the  one  deduci- 
l)le  from  all  the  authorities,  is,  that  a 
participation  in  profits  raises  a  pre- 
sumption of  partnership,  which,  how- 
ever, is  not  conclusive,  but  may  be 
overcome  by  other  circumstances. 
Story  on  Part.  §  38,  et  seq.  Chancellor 
Kent  affirms  the  general  doctrine  of 
Waugh  V.  Carver,  and  also  adopts  the 
principle  that  the  interest  in  profits 
which  will  constitute  a  man  a  partner 
must  be  such  as  to  entitle  him  to  an 
account.  3  Kent  Com.  (8th  ed.)  pp.  22, 
23,  26,  32.  And  the  same  distinction 
is  approved  by  Chancellor  Walworth 
in  Champion  v.  Bostwick,  18  Wend.  184, 
185  [reaffirmed  by  the  Court  of  Ap- 
peal in  Manhattan  Brass  Co.  v.  Sears, 
45  N.  Y.  797;  Leggett  v.  Hyde,  58 
N.  Y.  272,  which  last  especially  ex- 
pressly affirms  the  doctrine  of  Grace 
V.  Smith,  and  Waugli  v.  Carver].  Still 
the  tendency  of  the  cases,  especially 
of  the  later  and  better-considered  ones, 
we  believe  to  be  on  the  whole  in  favor 
of  the  doctrine  of  the  text.  We  shall 
examine  particularly  only  those  which 
are  important,  either  from  the  elabo- 
rate consideration  they  have  received, 
or  because  they  maj^  be  regarded  as 
representing  a  class.  There  are  quite 
a  number  of  early  cases  in  which  the 
courts  have  applied  without  a  question 
the  rule  asserted  in  Waugh  ik  Carver, 
and  supposed  to  be  confirmed  by  Lord 
Eldon.  Thus,  in  Purviance  i\  Mc- 
Clintee,  6  S.  &  R.  259,  Purviance  was 
sued  as  a  partner  with  S.  Dryden,  Jr. 
His  defence  was  that  he  was  not  a 
partner,  but  merely  a  clerk,  receiving 
as  compensation  for  his  services  one- 
half  the  profits  of  a  store  kept  at  Lan- 
caster. Tilghman,  C.  J.,  delivered  the 
opinion  of  the  court,  and  after  citing 
Grace  v.  Smith,  Waugh  v.  Carver,  and 
Hesketh  v.  Blanchard,  said:  "In  the 
present  state  of  the  world,  we  cannot 
afford  to  part  with  any  of  the  safe- 
guards against  fraud.  Every  man 
who   trusts  tlie  partnership,  increases 


the  fund  to  which  creditors  look  for 
payment,  upon  the  faith  of  its  being 
applied  in  the  first  instance  to  pay  the 
partnership  debts  ;  and,  therefore,  no 
man  shall  be  suffered  to  diminish  it, 
under  the  pretence  of  taking  any  part 
of  the  profits  as  a  compensation  for 
his  services,  without  being  himself  re- 
sponsible in  case  of  loss.  This  is  all 
fair  in  principle  and  good  in  practice. 
I  argue,  therefore,  that  if  S.  Dryden, 
Jr.,  was  to  take  half  the  profits,  he 
was,  by  operation  of  law,  the  partner 
of  Purviance"  So  the  case  of  Walden 
V.  Sherburne,  15  Johns.  422  (which  is 
not  very  unlike  Waugh  v.  Carver  in 
its  facts),  is  sometimes  cited  as  sup- 
porting the  same  principle.  And  to 
tliat  effect  is  a  remark  of  tlie  court. 
But  the  decision  is  that  the  parties 
were  general  partners,  and  no  distinc- 
tion is  drawn  between  partnership  inter 
se  and  partnership  as  to  third  persons. 
And  the  facts  certainly  seem  to  make 
out  a  clear  case  of  actual  partnership. 
See  also  Miller  v.  Bartlet,  15  id.  137 ; 
Brown  v.  Cook,  8  N.  H.  64 ;  Miller  v. 
Hughes,  1  A.  K.  Marsh.  181 ;  Taylor 
V.  Ferme,  3  Harr.  &  Jolms.  505;  Scott 
V.  Colmesnil,  7  J.  J.  Marsh.  416 ; 
M'Donald  v.  Millaudon,  5  Miller,  La. 
403.  There  are  also  later  cases,  which 
must  be  regarded  as  decided  upon  the 
same  grounds,  or,  at  least,  as  giving  a 
controlling,  and,  we  think,  undue  in- 
fluence to  the  fact  of  participation  in 
indefinite  profits.  Thus,  in  Catskill 
Bank  v.  Gray,  14  Barb.  471,  the  facts 
were  these  :  The  Ulster  Iron  Company 
leased  to  Gray,  for  the  term  of  five 
years,  their  manufacturing  premises  at 
S.  As  rent  of  the  premises,  G.  agreed  to 
pay  the  company  one-fourth  of  the  net 
profits  arising  therefrom  ;  all  expenses 
being  deducted,  except  commissions  on 
sales,  G.'s  personal  services,  and  the 
general  superintendence  of  the  busi- 
ness. G.  was  to  furnish  all  the  finances 
necessary  to  carry  on  the  manufacture, 
and  to  be  allowed  interest  on  his  ad- 
vances, and  was  at  liberty  to  make  re- 


THE    LAW    OF    PARTNERSHIP. 


[CH.  VI. 


76 


law  has  settled  it  otherwise.    And  then  he  remarks  upon 
the  difference  which  *  he  supposes  to  exist  on  this  point, 


pairs  at  a  cost  of  not  over  $5,000,  for 
wliich  the  company  were  to  allow  him 
interest  until  the  accruing  rent  should 
be  equal  to  the  expenditure.  One-half 
the  profits  agreed  upon  as  rent  was  to 
be  paid  annually ;  the  balance  at  the 
end  of  the  five  years,  with  interest ; 
such  interest  to  be  yearly  added  to  the 
principal.  Any  loss  that  accrued  was 
to  be  charged  to  the  profit  and  loss 
account ;  but  the  company  were  not  to 
repay  any  amount  already  received  by 
them  as  rent,  nor  to  be  liable  for  any 
deficiency,  at  the  end  of  the  demised 
term.  G.  was  to  allow  interest  on  all 
moneys  in  his  hands  arising  from  the 
manufacture.  A  certain  kind  of  iron 
was  allowed  to  be  used,  to  be  charged 
at  its  fair  market  price,  the  price  and 
all  other  questions  arising  under  the 
agreement  to  be  settled  by  one  J.  T., 
of  New  York.  Burt,  the  superintend- 
ent of  the  works,  and  who  drew  the 
bills  on  G.  &  Co.,  upon  which  the 
present  action  was  brought,  testified 
that  the  accounts  of  the  concern  were 
kept  at  the  works  with  G.  as  lessee, 
that  he  acted  as  agent  of  such  lessee, 
and  received  no  directions  from  the 
Ulster  Iron  Company.  This  last  evi- 
dence does  not  appear  to  have  been 
regarded ;  but,  upon  a  construction  of 
the  above  agreement,  the  court  held, 
that  the  Ulster  Iron  Company  thereby 
stipulated  for  a  specific  interest  in  the 
profits,  as  profits,  and  were  therefore 
liable  as  partners  to  third  persons. 
The  court  took  the  whole  agreement 
into  consideration,  but  apparently  only 
for  the  purpose  of  ascertaining  whether 
the  company  were  to  be  paid,  indfji- 
nitely,  out  of  the  profits.  The  language 
is  :  "  What  was  to  be  received  by  the 
company  was  only  payable  out  of  the 
profits  actually  made  in  the  manu- 
facture of  iron.  They  had  then  a  di- 
rect interest  in  such  profits.  As  was 
said  in  Dob  v.  Halsey  (16  Johns.  40), 
'  he  who  takes  a  part  of  the  profits 
indefinitely,  shall,  by  operation  of  law, 
be  made  liable  for  losses  ;  upon  the 


principle,  that  by  taking  a  part  of  the 
profits,  he  takes  from  the  creditors  a 
part  of  that  fund  which  is  the  security 
for  the  payment  of  their  debts.'  We 
think  the  error  here  lies,  not  in  declar- 
ing that 'a  specific  interest  in  profits, 
as  profits,'  makes  a  man  a  partner  as 
to  third  persons,  but  in  assuming  that 
a  stipulation  for  a  certain  share  of  the 
profits  necessarily  gives  such  specific 
interest;  that  is,  an  ownership  in  the 
profits.  There  are  certainly  portions 
of  the  agreement  which  are  not  incon- 
sistent with  a  contract  of  partnership  ; 
as  the  provisions  respecting  the  kind 
of  iron  to  be  used,  and  the  sharing  of 
profits.  On  the  other  hand,  the  whole 
character  of  the  transaction  seems 
more  consonant  with  the  idea  that  it 
was  a  mere  contract  of  lease,  and  that 
the  company  were  interested  in  profits, 
not  as  owners,  but  merely  as  relying 
on  them  for  payment."  See  further 
Cushman  v.  Bailey,  1  Hill,  526 ;  Wood 
V.  Valette,  7  Ohio  St.  172;  Church- 
man V.  Smith,  6  Whart.  146;  Holt  v. 
Kernodle,  1  Ired.  199 ;  Everett  v.  Coe, 
5  Denio,  180;  Buckner  v.  Lee,  8  Ga. 
285.  The  decisions  in  Hodgman  v. 
Smith,  13  Barb.  302,  and  Perry  v. 
Butt,  14  Ga.  699,  notwithstanding  the 
dicta  of  the  courts,  do  not  seem  at 
variance  with  true  principles,  all  the 
circumstances  considered. 

But,  in  contradistinction  to  these 
cases,  we  may  now  examine  those 
which,  we  think,  must  be  regarded 
as  proceeding  upon,  if  not  definitely 
establishing,  a  different  and  sounder 
principle.  Thus,  in  the  first  place,  it 
has  been  uniformly  held,  as  in  the  Eng- 
lish law,  that  mariners,  who  receive 
for  their  wages  a  share  in  the  profits 
of  a  voyage,  are  not  thereby  made 
partners,  either  as  to  rights  or  as  to 
liabilities.  Rice  v.  Austin,  17  Mass. 
197  ;  Grozier  v.  Atwood,  4  Pick.  234 ; 
Coffin  V.  Jenkins,  3  Story,  108;  The 
Crusader,  Ware,  437;  Reed  v.  Hussey, 
1  Blatch.  &  Howl.  Adm.  525  ;  Duryee 
V.  Elkins,  1  Abbott  Adm.    529.     And 


CH.  VI.]  WHO    ARE    PARTNERS    AS    TO    THIRD    PARTIES. 


89 


between  the  English  and  American  law,  on  the  one  hand, 
and  Roman  law  and  the  modern  *  foreign  law,  on  the 


77 


the  principle  whicli  has  governed  the 
courts,  in  these  agreements  with  sailors, 
is,  tliat,  all  the  circumstances  being 
considered,  it  is  apparent  that  the  par- 
ties never  intended  to  give,  nor  did 
give,  to  the  mariners  the  interest  of 
owners  in  the  undivided  profits.  In 
Baxter  v.  Rodman,  3  Pick.  435,  the 
master  and  crew  of  a  whaling-ship  re- 
ceived, in  lieu  of  wages,  a  proportion 
of  the  net  proceeds  of  the  oil  obtained 
in  the  adventure.  The  court  said : 
"  That  every  seaman  should  be  tenant 
in  common  with  all  the  other  seamen, 
the  master,  and  the  owners  of  the  ves- 
sel, in  all  the  oil  which  may  be  taken 
on  a  whaling  voyage,  so  that  no  action 
could  be  brought  respecting  it  without 
joining  all,  and  none  could  be  sued 
without  the  whole,  giving  every  sea- 
man a  right  to  discontinue  the  action, 
or  to  release  the  claim,  or  to  receive 
payment  for  the  whole,  would  be  a 
state  of  things  not  suspected  by  the 
wise  and  enterprising  men  who  have 
carried  on  the  whale  fishery.  But  we 
think  it  is  not  the  law.  The  owners 
of  the  vessel  and  proprietors  of  the 
voyage  are  the  owners  of  the  product 
of  the  voyage.  The  true  meaning  of 
the  shipping  contract  is,  that  the  men 
shall  be  paid  out  of  the  proceeds  in  a 
stipulated  proportion.  It  is  an  agree- 
ment as  to  the  mode  of  compensation, 
and  gives  them  no  property  in  the  oil, 
but  only  regulates  the  amount  of  com- 
pensation." So,  in  Bishop  v.  Shep- 
herd, 23  Pick.  494,  where  the  court 
say :  "  It  has  often  been  held  that  upon 
these  whaling  voyages,  carried  on  under 
a  shipping-paper  and  form  of  contract 
like  that  exhibited  in  the  present  case, 
although  the  officers  and  seamen  re- 
spectively are  to  receive  a  share  of  the 
proceeds  of  the  oil  and  other  acquisi- 
tions of  the  ship,  as  their  only  compen- 
sation, yet  they  are  not  partners  or 
part-owners  of  tJie  oil  with  the  owners 
of  the  ship;  but,  on  the  contrary,  the 
oil,  before  division,  is  the  property  of 
the  owners.     The  oil,  in  the  first  in- 


stance, being  the  property  of  the  own- 
ers, it  remains  theirs  until  some  settle- 
ment or  adjustment."  For  similar 
reasons,  we  think  the  courts  have  uni- 
formly held,  that  a  ship-owner  who  lets 
his  vessel  to  another,  in  consideration 
of  receiving  a  certain  share  of  the 
gross  or  net  proceeds  of  the  adventure, 
is  not  liable  to  third  persons  as  a  part- 
ner with  the  hirer.  Reynolds  v.  Top- 
pan,  15  Mass.  370 ;  Taggard  v.  Loring, 
16  id.  336 ;  Thompson  v.  Snow,  4 
Greenl.  264;  Cutler  v.  Winsor,  6  Pick. 
335.  See  Holmes  v.  Old  Colony  R.  R. 
Co.,  5  Gray,  58,  60. 

In  Cox  V.  Delano,  3  Dev.  89,  the 
question  was  whether  Delano  &  Whel- 
den  were  liable  as  partners  under  the 
following  agreement :  "  The  said  De- 
lano agrees  to  let  a  schooner,"  &c. 
"  to  the  said  Whelden,  upon  condition 
as  follows  :  said  Whelden  to  pay  all 
charges  of  victualling  and  manning, 
together  with  all  and  other  charges 
which  may  arise  on  said  schooner,  as 
long  as  he  shall  have  possession  of  her, 
excepting  such  as  are  hereafter  enu- 
merated, which  are  to  be  paid  by  the  said 
Delano  ;  namely,  one-half  the  expenses 
of  port  charges,  one  half  the  expense  of 
lights  used  on  board,  and  the  wages  of 
one  seaman.  .  .  .  The  said  Whelden 
is  hereby  empowered  to  invest  the  pro- 
ceeds of  freight  in  such  merchandise  as 
he  may  think  for  mutual  interest.  All 
profit,  over  and  above  the  expenses 
above  mentioned,  to  be  equally  di- 
vided." It  was  held,  that  Delano  & 
Whelden  were  general  partners.  The 
opinion  of  the  court  is  well  worthy  of 
attention  :  "  He  who  shares  in  the  prof- 
its, which  are  nothing  but  the  net 
earnings,  should  also  share  in  the  losses, 
if  there  be  any.  The  inor<d  riijht  of 
making  gains  is  based  upon  this  princi- 
ple. The  rule  is  easily  laid  down  ;  the 
difRculty  is  in  its  application.  Where 
a  part  of  the  profits  themselves  is  the  prop- 
erty of  the  party,  he  is  then  a  partner. 
Where  their  amount  merely  ascertains 
the  amount  of  a  debt  or  duty,  but  they 


90 


THE    LAW    OF   PARTNERSHIP. 


[CH. 


VI. 


other.  He  holds  that  these  latter  systems  of  law  create  no 
78      partnership  between  the  parties  as  to  third  parties,  *  with- 


themselves  do  not  belong  to  the  party, 
there  it  is  not  a  partnership.  Were 
there  no  special  contract,  but  the  case 
rested  on  the  facts,  part  of  the  earnings 
would  be  the  property  of  the  defend- 
ant. .  .  .  But  there  is  in  this  contract 
a  clause  which,  I  think,  puts  the  matter 
to  rest ;  to  wit :  '  The  said  Wlieldcn  is 
hereby  empowered  to  invest  the  pro- 
ceeds of  freight  in  such  merchandise 
as  he  may  think  proper  for  mutual 
interest.'  If  a  part  of  the  freight  was 
not  the  property  of  Delano,  why  was 
his  consent  necessary  to  invest  it  in 
merchandise  ?  or  why  should  he  direct 
about  it,  if  the  whole  was  a  mere  con- 
tract of  hiring,  and  the  earnings  referred 
to  merely  to  fix  the  price  to  be  paid  ?  " 
Entirely  consistent  with  these  last 
cases,  and  decided  substantially,  we 
believe,  upon  the  same  principle,  are 
the  leading  and  well-considered  cases 
of  Loomis  V.  Marshall,  12  Conn.  69, 
and  of  Denny  v.  Cabot,  6  Mete.  82. 
The  facts  in  the  two  cases  are  very 
similar  ;  and  we  may  therefore  examine 
them  together.  In  Loomis  v.  Marshall, 
Frencli  &  Hubbell,  lessees  of  a  factory, 
agreed  with  Marshall  &  Co.  that  the 
latter  should  furnish  wool  sufficient  to 
supply  the  factory,  F.  &  H.  to  manu- 
facture the  same  into  cloth  of  any  color 
except  blue.  If,  however,  M.  &  Co. 
tliouglit  best  to  have  any  of  the  wool 
made  into  satinet,  then  they  were  to 
pay  fifty-five  per  cent  of  the  cost  of 
warps  for  the  same,  F.  &  H.  paying 
only  forty-five  per  cent.  The  expenses 
of  insuring  the  wool  and  cloth  were  to 
be  borne  by  the  parties  in  the  ratio  of 
their  respective  interests  in  the  avails 
of  the  cloth  ;  and,  in  case  of  the  destruc- 
tion of  any  wool  or  cloth,  the  amount 
received  therefor  was  to  be  divided,  as 
near  as  possible,  according  as  either 
party  should  sustain  loss.  All  the 
expense  of  making  the  wool  into  cloth 
and  fitting  it  for  market,  except  that  of 
boxing,  was  to  be  borne  by  F.  &  H. 
The  cloths  when  finished  were  to  be 
at  the  disposal  of  M.  &  Co. ;  and  the 


net  proceeds  of  all  said  cloth,  after 
deducting  the  incidental  and  necessary 
expenses  of  travelling  and  other  prop- 
er charges  of  sale,  were  to  be  divided 
thus  :  M.  &  Co.  to  keep  fifty-five  per 
cent  of  the  avails,  and  to  pay  over  to 
F.  &  II.  forty-five  per  cent.  In  like 
manner,  in  Denny  v.  Cabot,  Hiram 
Cooper  was  the  lessee  of  a  mill,  which, 
it  was  agreed  C,  A.,  and  Co.  should 
supply  with  wool,  to  be  manufactured 
into  cloth,  as  required  by  C,  A.,  &  Co. 
Cooper  was  to  deliver  the  finished  cloth 
to  C,  A.,  &  Co.  in  Boston,  to  receive 
a  certain  sum  per  yard  for  manufactur- 
ing, and.  if  he  fulfilled  the  above  agree- 
ment, to  have  in  addition  one-third  of 
the  net  profits,  computed  by  deducting 
from  gross  sales  a  commission  and  guar- 
anty of  six  per  cent,  and  also  all 
premiums,  insurance,  and  other  usual 
expenses.  These  being  the  facts  of 
the  two  cases,  it  was  decided  in  both 
that  the  parties  supplying  the  wool 
were  not  liable  as  partners  with  those 
who  manufactured  it  into  cloth,  and 
that  the  contracts  between  tliem  were 
contracts  of  hiring,  and  not  of  partner- 
ship. The  grounds  of  both  decisions 
are  also  the  same.  In  the  first  place, 
in  both  cases,  it  was  asserted  by  the 
respective  judges,  that,  in  order  to  de- 
termine whether  the  facts  before  them 
constituted  a  partnership  as  to  third 
persons,  they  must  regard  the  intentions 
of  the  parties,  and  take  into  consid- 
eration the  entire  transaction  between 
them.  2d.  In  both  cases  it  was  con- 
sidered that  the  proceeds  of  the  busi- 
ness belonged  wholly  to  one  of  the 
parties  ;  namely,  to  those  who  supplied 
the  wool.  This  is  to  be  gathered  from 
the  whole  tenor  of  the  opinion  of  the 
court  in  Loomis  v.  Marshall ;  and  in 
Denny  v.  Cabot,  Wilde,  J.,  expressly 
says :  "  The  satinets  were  tiierefore 
unquestionably  the  property  of  Cabot, 
Appleton,  &  Co."  y\nd  again:  "The 
property  and  the  profits  of  the  transac- 
tion belonged  to  Cabot,  Appleton,  & 
Co."     3d.  All  the  circumstances  being 


CII,  VI.]  WHO    ARE   PARTNERS    AS    TO    THIRD   PARTIES. 


91 


out  their  consent,  or  against  the  stipulations  of  their  own  con- 
tract ;  and  he  also  expresses  the  opinion,  that  "  the  common 


considered  in  both  cases,  it  was  held, 
that  tlie  parties  manufacturing  the 
goods  had  not  a  specific  interest  in  prof- 
its, as  profits.  Thus,  Huntington,  J., 
in  Loomis  ?'.  Marshall,  says  :  "  In  many 
of  the  cases  to  which  we  iiave  referred, 
the  language  of  the  arguments  was  not 
more  explicit  than  in  the  one  now 
under  consideration  ; .  but,  looking  at 
the  entire  transaction,  such  was  consid- 
ered the  obvious  meaning  of  the  parties. 
French  &  Ilubbell  had  no  other  interest 
in  the  profits  than  such  as  arose  from  the 
agreement  to  pay  for  their  labor,  &c.,  in 
a  specific  proportion  of  the  amount  of 
the  sales  of  the  manufactured  article." 
It  is  to  be  observed,  that  in  both  these 
cases  the  funds  to  be  divided  were  the 
gross  proceeds  of  the  sales,  reduced,  not 
by  the  expenses  of  the  business,  but 
simply  by  the  expenses  of  the  sales. 
In  Loomis  v.  Marshall  it  was  strongly 
pressed  upon  the  court,  that  as  the  net 
sales,  and  not  the  net  profits,  were  to  be 
divided,  there  could  be  no  community 
of  interest  in  the  profits.  But  the  court 
thought  it  unnecessary  to  decide  that 
point.  In  Denny  r.  Cabot,  the  opinion  of 
the  court  would  seem  to  be  that  the  dis- 
tinction between  gross  and  net  profits 
was  not  a  sound  one,  though  in  that 
particular  case  it  was  considered  that 
tlie  agreement  was  substantially  to  di- 
vide the  gross  earnings.  See  page  *  88 
and  note. 

The  principles  of  Loomis  v.  Mar- 
shall and  of  Denny  v.  Cabot  are  sup- 
ported by  many  other  American  cases, 
both  prior  and  subsequent.  In  Massa- 
chusetts, the  decisions  seem  to  be 
quite  uniform.  Reynolds  v.  Toppan, 
15  Mass.  370 ;  Rice  v.  Austin,  17  id. 
197  ;  Turner  v.  Bissell,  14  Pick.  192 ; 
Blanehard  v.  Coolidge,  22  id.  151; 
Bradley  v.  White,  10  Mete.  303  ;  Judson 
V.  Adams,  8  Cush.  556.  In  a  very 
recent  case  in  that  State,  Dewey,  J., 
delivered  the  opinion  of  the  court,  as 
follows  :  "  It  is  contended,  on  the  part 
of  the  plaintiffs,  that  the  stipulations 
existing  between  the  Old  Colony  Rail- 


road Corporation  and  Parker  &  Tribou, 
the  lessees  of  the  hotel  called  the  Sam- 
oset  House,  in  relation  to  the  leasing 
of  said  house,  were  such  as  to  render 
the  Old  Colony  Railroad   Corporation 
a  partner  in  the  concern,  and  liable,  as 
such,  to  creditors  who  may  have  fur- 
nished  provisions   and    other   articles 
for  the  hotel,  at  the  request  of  Parker 
&  Tribou.     Such  copartnership  is  sup- 
posed  to    arise    from   the    agreement 
between  these  parties,  providing  that 
the  Old  Colony  Kailroad   Corporation 
shall  receive  for  the  use  of  the  prem- 
ises leased,  in   addition  to  the  sum  of 
five  hundred  dollars  for  the  use  of  the 
furniture,  'one-half  of  the  net  proceeds 
arising  from  keeping  the   house  as  a 
hotel.'    Whatever  doubts  may  formerly 
have  existed  as   to   the   effect   of  an 
arrangement   like   that   made    in    the 
present   case,   entitling    the    lessee   to 
receive,  as  a  compensation  for  the  use 
of   his  property  or  capital  stock,  one 
moiety   of   the    net   proceeds    arising 
from    the     business    transacted,    that 
question    seems  now  fully  settled,  at 
least  in  this  Commonwealth.     It  is  no 
longer  true  that  receiving  one-half  of 
the  profits,  or  one-half  of  the  net  prof- 
its, arising  from  articles  manufactured 
and  sold,  or  resulting  from  business  in 
which  one  furnishes  the  stock  in  trade 
and  another  performs  the  labor,  nec- 
essarily creates  a  partnership.      It  is 
always  competent  to  look  at  the  par- 
ticular circumstances  of  the  case,  and 
ascertain  thereby  whether  it  may  not 
be  merely  a  compensation  to  a  party 
for  his  labors  and  services,  or  for  fur- 
nishing the   raw   materials,  or   a  mill 
privilege,  or  a  factory,  from  which  the 
other  is   to    earn    profits.      Story   on 
Part.  §  36.      This   question  was  very 
fully  considered  in  the  case  of  Denny 
;;.   Cabot,  6  Mete.  82,  where  it  is  said 
by   Judge    Wilde,   in    delivering    the 
opinion  of  the  court :  '  Where  a  party 
is  to  receive  a  compensation   for  his 
labor,  in   proportion  to  the   profits  of 
the  business,  without  having  any  spe- 


92 


THE    LAW    OP    PARTNERSHIP. 


[CH.  VI. 


*  79      law  seems  *  to  have  pressed  its  principles  on  this  subject 
to  an  extent  not  required  by,  even  if  it  is  consistent  with, 
natural  justice."  (w) 


cific  lien  on  such  profits,  to  the  exclu- 
sion of  other  creditors,  there  seems  to 
be  no  reason  for  holding  him  liable  as 
a  partner,  even  to  third  persons.'  6 
Mete.  92.  That  case  was  followed  by 
Bradley  v.  White,  10  Mete.  303,  where 
the  question  arose  upon  an  agreement 
that  A.  sliould  furnish  the  goods  for  a 
store,  and  pay  all  expenses,  and  B. 
should  transact  the  business  of  the 
store,  and  receive  half  the  profits  for 
so  doing;  and  it  was  held,  tliat  this 
did  not  constitute  B.  a  partner,  and 
that  he  was  not  liable  to  a  creditor 
who  had  furnished  goods  for  such 
store.  It  may  be  fiirtlier  remarked, 
that  in  relation  to  contracts  for  the 
chartering  of  vessels,  where  it  was 
stipulated  that  the  owner  of  the  vessel 
should  receive  a  certain  percentage  on 
the  profits  of  the  voyage,  it  was  early 
held,  that  such  an  interest  in  the  prof- 
its did  not  constitute  a  partnership. 
Reynolds  v.  Tappan,  15  Mass.  373 ; 
Cutler  V.  Winsor,  G  Pick.  335.  In 
looking  at  the  particular  contract  ex- 
isting between  these  parties,  it  is  quite 
obvious  that  no  partnership  was  con- 
templated by  them.  It  was  a  part  of 
the  stipulation,  clearly  expressed,  that 
the  labor  and  expenditures  in  carrying 
on  the  hotel  were  matters  solely  in 
the  hands  of  Parker  and  Tribou,  and 
all  bills  were  to  be  paid  by  them.  The 
articles  bought  by  them  were  their 
own  property,  as  were  all  moneys  re- 
ceived from  the  guests  of  the  house ; 
and  the  Old  Colony  Railroad  Corpora- 
tion had  no  right  or  authority  over 
either.  It  seems  to  us  to  have  been, 
on  the  part  of  tlie  Old  Colony  Rail- 
road Corporation,  a  mere  leasing  of 
the  house  and  furniture,  but  making 
the  rent  of  the  former  to  depend 
wholly  upon  tlie  success  of  the  estab- 
lishment. If  no  profits  were  realized, 
they  would  receive  no  rent ;  but,  be- 
yond this,  they  were  not  to  be  affected 
by  the  losses  that  might  occur  in  the 


keeping  of  the  hotel.  The  agreement 
on  the  part  of  Parker  and  Tribou  to 
keep  exact  accounts  of  all  receipts  and 
expenditures,  which  should  be  open 
to  the  inspection  of  the  corporation, 
was  a  proper  arrangement  to  carry 
out  the  fulfilment  of  the  stipulation  to 
pay  one-half  of  the  net  proceeds  aris- 
ing from  keeping  the  house,  for  rent  of 
the  same,  and  does  not  necessarily 
import  any  partnership  in  the  proceeds 
thus  received  by  Parker  and  Tribou. 
Applying  to  the  present  case  tlie  legal 
principles  so  fully  settled  in  the  cases 
above  referred  to,  the  court  are  of 
opinion  that  this  action  cannot  be 
maintained  against  the  Old  Colony 
Railroad  Corporation."  Holmes  v. 
0.  C.  R.  Co.,  5  Gray,  58.  See  also 
Bucknam  v.  Barnum,  15  Conn.  67 ; 
Clement  v.  Hadlock,  13  N.  H.  185; 
Tobias  v.  Bliss,  21  Vt.  544;  Heckert 
V.  Tregely,  6  Watts  &  S.  139,  where 
the  facts  are  quite  analogous  to  those 
of  Loomis  V.  Marshall ;  Bowyer  v. 
Anderson,  2  Leigh,  550 ;  Brown  v. 
Higginbotham,  5  id.  583.  The  case 
of  Barckle  v.  Eckhart,  1  Denio,  837, 
confirmed  on  appeal,  3  Conist.  132, 
deserves  particular  notice  in  this  con- 
nection. There,  G.  &  Co.,  partners  in 
general  trade,  being  in  need  of  some 
one  to  attend  to  tlie  particular  business 
of  purchasing  and  forwarding  western 
produce,  employed  E.,  the  defendant, 
for  tiiat  purpose.  As  a  remuneration 
for  his  services,  E.  received  one-fourth 
of  the  profits  coming  to  G.  &  Co.  from 
tlie  western  produce  business,  but  had 
no  farther  interest  in  the  affairs  of  G. 
&  Co.,  and  had  always  acted,  not  as 
their  partner,  but  their  servant.  It 
was  held,  that  E.  was  not  a  partner  as 
to  third  persons,  with  G.  &  Co. ;  since, 
from  the  whole  nature  of  their  rela- 
tions, it  appeared  that  E.'s  interest  in 
the  profits  was  merely  tliat  of  an 
agent  relying  on  them  for  compensa- 
tion.    A  similar  decision  was  made  in 


(m)  Story  on  Part.  §§  36,  37. 


CH.  YI.]         WHO    ARE    PARTNERS    AS    TO    THIRD    PARTIES. 


93 


We    *  are,   however,  constrained    to    doubt  whether    *  80 
the  common   law   is  open  to  this  objection,  and  also 
whether  it  differs  on  this  subject  *  so  much  as  is  inti-      *  81 
mated  above,  from  the  Roman  law    and  the  modern 
foreign  law. 

*  This  question,  as  to  the  intention  of  the  parties,  may      *  82 
be  considered  as  presenting  itself  under  three  forms. 
First,  if  we  suppose  *  that  the  parties  make  a  contract      *  83 
which  provides  for  some  joint  action  or  joint  property, 
but  does  not  produce  that  community  of  *  property,  or      *  84 
business  and  profit,  which  the  law  regards  as  constitut- 
ing partnership,  and  in  the  same  contract  declare  that 
they  are  *  not  to  be  partners,  —  then,  by  every  system      *  85 
of  law  they  are  not  partners.     Their  intentions  as  ex- 
pressed, and  as  they  are  to  be  *  inferred  from  the  terms      *  86 
of  their  bargain,  are  the  same  ;  and  they  prevail. 


Vanderburgh  v.  Hull,  20  Wend.  70, 
where  the  question  was  whether  a  per- 
son with  a  salary  of  $300  guaranteed 
to  him,  and  a  right  to  one-third  of 
the  profits,  if  there  were  any,  though 
he  was  not  to  be  liable  for  losses,  was 
a  partner  as  to  third  persons  with  tiie 
plaintiff ;  and  it  was  held  that  he  was 
not  a  partner,  and  was  competent  as 
a  witness  for  him.  See  farther  Fitch 
V.  Hall,  25  Barb.  13 ;  Dawham  v. 
Eogers,  1  Barr,  255 ;  Johnson  v.  Miller, 
16  Ohio,  431;  Keed  v.  Murphy,  2 
Greene  (la.),  574;  Hodges  v.  Dawes, 
6  Ala.  215;  Scott  v.  Campbell,  30  Ala. 
728;  Shropshire  v.  Shepherd,  3  id. 
733;  Bartlett  y.  Jones,  2  Strobh.  471; 
Brockway  v.  Burnap,  16  Barb.  310. 
From  this  review  of  the  leading  cases, 
we  conclude  that  the  rule  of  Waugh 
V.  Carver,  that  an  indefinite  participa- 
tion in  profits  makes  a  man  a  partner 
as  to  third  persons,  because  by  sucli 
participation  the  fund  on  which  cred- 
itors rely  is  diminislied,  is  not  estab- 
lished by  the  mass  of  either  English  or 
American  authorities.  On  the  other 
hand,  we  think,  that,  notwithstanding 
dicta  of  immense  woigiit  apparently 
to  the  contrary,  the  cases  show  that 
there  are  but  two  grounds  upon  which 
a  man  can  be  liable  as  partner  to 
third  persons  ;  and  that,  if  a  man  has 


not  been  held  out  as  partner,  he  can 
be  chargeable  as  such,  only  when  he 
holds  that  relation  to  profits  which 
we  believe  to  be  the  ultimate  test  of 
partnership,  both  inter  se,  and  as  to 
third  persons ;  that  is,  unless  he  has 
some  ownership  in  or  of  the  profits  as 
they  accrue  and  are  not  yet  ascertained 
or  divided  into  portions.  [A  contract 
that  one  party  shall  furnish  money 
and  the  other  perform  the  labor  for 
the  accomplishment  of  a  particular 
enterprise,  sharing  equally  in  the  prof- 
its, is  a  partnership  as  to  third  par- 
ties. Pettee  v.  Appleton,  114  Mass. 
114 ;  Rowland  v.  Long,  45  Md.  439.] 
See,  for  the  latest  cases  on  this  impor- 
tant question,  Gibson  v.  Stone,  43 
Barb.  285  ;  Smith  ads.  Perry,  5  Dutch. 
74  ;  Voorhees  v.  Jones,  id.  270  ;  Wheat- 
croft  V.  Hickman,  9  C  B.  n.  s.  (99 
Eng.  Com.  L.  R.)  47  ;  s.c.  8  H.  of  L. 
Cas.  268;  Berthold  v.  Goldsmith,  24 
How.  (U.S.)  536;  Stevens  y.  Faucet, 
24  111.  483 ;  Bobbins  v.  Laswell,  27  111. 
365;  Fawcett  v.  Osborn,  32  id.  411; 
Macy  V.  Combs,  15  Ind.  469 ;  Rey- 
nolds V.  Hicks,  19  id.  113;  Braley  v. 
Goddard,  49  Me.  108;  Atherton  v. 
Tilton,  44  N.  H.  452  ;  Whitney  v.  Lud- 
ington,  17  Wis.  140.  [See  ante,  pp.  *  75, 
note,  and  *67,  note.] 


94  THE    LAW    OP    PARTNERSHIP.  [CH,  VI. 

In  the  second  place,  let  us  suppose  the  parties  expressly 
make  and  carry  out  in  act  an  agreement  to  enter  into  such 
community  of  property,  or  business  and  profit,  as  constitutes  a 
partnership,  and  say  nothing  about  partnership.  The  law  now 
says,  You  intended  to  enter  into  partnership,  you  have  carried 
out  your  purpose,  and  you  are  partners  ;  and  it  is  a  matter  of 
no  moment  that  you  have  not  given  to  yourselves  this  name. 
Here,  also,  the  intentions  prevail. 

In  the  third  case,  we  suppose  that  parties  to  an  agreement 
like  the  last  have  added  to  that  agreement  the  declaration 
that  they  do  not  intend  to  be,  and  are  not  made  by  their  bar- 
gain, partners,  (w)  In  our  opinion,  the  law  would  say, 
*  87  Your  intentions  are  *  the  same  as  they  were  before,  and 
shall  prevail  as  before.  While  agreeing  to  become  part- 
ners in  fact,  you  deny  the  name ;  and  whether  you  do  this 
ignorantly  and  innocently,  or  in  fraud,  matters  not:  your  as- 
sertion cannot  prevail  over  the  fact,  and  your  actual  intentions 
govern,  instead  of  your  declared  intentions. 

We  apprehend  that  the  law  looks  first,  and  we  had  almost 
said  only,  to  the  intentions  of  the  parties.     But  these  it  gathers 

(n)  This  may  perhaps  be  illustrated  infer  se.  Say  the  court:  "If  the 
by  the  following  case :  A.  &  B.  dis-  agreement  had  been  merely  that  the 
solved  partnership.  But,  A.  continu-  plaintitf  (A.)  should  compensate  the 
ing  the  business,  it  was  agreed  that  defendant  for  his  services  as  clerk,  by 
he  should  take  all  the  remaining  stock  giving  him  one-third  of  the  profits,  the 
in  trade,  and  the  notes  and  accounts  relation  of  partners,  as  between  them- 
due  to  the  firm,  and  should  pay  the  selves,  would  not  have  resulted  ;  nor 
outstanding  debts  of  the  concern.  B.,  would  such  partnership  have  been  in- 
the  retiring  partner,  in  consideration  of  ferred,  from  the  fact  that  the  defend- 
his  intei-est  in  the  stock  of  goods  and  debts,  ant's  compensation,  as  clerk,  was  to  be 
was,  from  the  date  of  the  dissolution,  determined  by  ascertaining  how  much 
to  have  one-third  interest  in  all  the  one-third  of  the  profits  would  be,  after 
profits  arising  from  the  sale  of  said  the  deduction  of  losses.  The  evidence 
goods,  was  to  share  one-third  of  tiie  does  not  tend  to  show  such  a  state  of 
losses,  and,  further,  was  to  act  as  A.'s  fact^.  The  agreement  that  the  de- 
clerk     in     the     sales     of    the    goods,  fendant  should  have  one-third  of  the 


Clearly,     the     circumstances    of     the  profits  was  not  in  consideration  of  his 

dissolution  of  the  partnership,  and  of  services  as  clerk,  but  of  his  interest  in 

B.'s  agreeing  to  act  thenceforward  as  the  debts  and  stock  of  goods.  .  .  .  The 

A.'s  clerk,  indicated  that,  after   their  defendant's  agreement  was,  not  simply 

dissolution,  the  parties  did  not  intend  that    the   losses    should   be    deducted 

to   be   partners.      But  the  court  Iteld,  before   his   share   of    the   profits    was 

that,  under   the   contract   made  upon  ascertained,  but   that  he  would  share 

the   dissolution,  A.   and   B.  were  part-  one-third  of  the  losses."  .  .  .  Scott  v. 

ners  not  only  as    to  third  parties,  hut  Campbell,  30  Ala.  728. 


CH.   VI,]  WHO    ARE    PARTNERS    AS    TO    THIRD    PARTIES.  95 

from  the  whole  contract,  and  all  the  words  and  all  the  acts  of 
the  parties,  (o)  It  is  not  necessary  that  the  intention  of  being 
partners  should  be  declared  in  words ;  for  the  law  supplies  the 
want  of  these  words.  And  if  one  intention  is  plainly  implied 
in  the  bargain  itself,  and  another  is  asserted  in  words,  the 
actual  intention  prevails  over  the  verbal  one. 

We  might  suppose  a  case,  or  indeed  refer  to  one,  in  which 
parties  agreed  to  become  partners  in  a  business,  and  then  pro- 
ceeded to  frame  such  terms  and  provisions  as  left  them  without 
any  community  of  interest  in  the  property,  business,  or  profits  ; 
and  certainly  they  would  not  be  in  law,  any  more  than  in  fact, 
partners,  (jo)  Although,  even  in  this  case,  if  they  made  known 
their  agreement  to  be  partners,  they  might  then  be  bound,  as 
such,  to  third  parties,  on  the  ground  that  they  held  themselves 
out  as  partners,  which  is  sufficient  of  itself. 

In  other  words,  while  it  is  undoubted  law,  that  one  held  out  as 
a  partner,  with  his  own  consent,  is  liable  as  such  whether 
he  be  a  *  partner  in  fact  or  not,  it  is  not  true  that  one  *  88 
who  is  a  partner  in  fact  is  not  liable  unless  he  is  also 
held  out  as  such  ;  or  that  he  is  not  liable  because  he  declares, 
either  in  his  contract  or  elsewhere,  to  one  person  or  to  any 
person,  that  he  is  no  partner. 

We  are  unable  to  see  any  other  alternative,  but  to  adopt 
these  views,  or  else  to  say  that  persons  may  enter  into  actual 

(o)  See  Loomis  v.  Marshall,  12  ners,  Gray  &  Oliver,"  were  to  pay  an 
Conn.  69,  and  Denny  v.  Cabot,  6  Mete,  equal  portion  of  the  expense  of  the 
82,  which  cases  illustrate  the  regard  horse  during  that  time.  By  tlie  court, 
which  the  courts  pay  to  the  intentions  Dickinson,  J. :  "  The  plaintiff  in  error 
of  the  parties,  as  gathered  from  a  view  insists  that  there  was  no  debt  due  by 
of  their  entire  contract,  and  of  all  the  Oliver  to  Gray,  but  to  them  jointly,  as 
circumstances  bearing  upon  it.  See  partners.  We  apprehend  there  is  noth- 
also,  to  the  same  point,  opinions  of  ing  in  the  contract  constituting  them 
Bramwell  and  Martin,  Bli.  in  Hick-  partners.  There  is  certainly  no  corn- 
man  V.  Cox,  3  C.  B.  N.  8.  523.  Vib-  munity  of  profit  and  loss  arising  out 
bard  v.  Roderick,  51  Barb.  616.  of   their   agreement.      It   amounts,  in 

(p)  In  OUver  v.  Gray,  4  Ark.  425,  our  opinion,  to  a  mere  joint  interest  in 
Oliver  sued  Gray  on  a  note.  Gray  the  horse  alone,  and  an  agreement  on 
filed,  by  way  of  set-ofi',  an  account  for  the  part  of  Oliver  to  pay  Gray  one- 
keeping  a  horse.  To  prove  his  ac-  half  of  the  actual  expenses  incurred  in 
count.  Gray  produced  an  agreement  keeping  him.  They  styled  themselves 
under  seal,  by  which  it  was  stated  that  partners  in  the  contract,  yet  the  nature 
Oliver  had  sold  Gray  half  of  a  certain  and  terms  of  the  agreement  clearly 
horse,  and  that  Gray  was  to  keep  him  show  they  are  merely  part-owners." 
for  eighteen  months,  "  and   the   part- 


96  THE    LAW    OF    PARTNERSHIP.  [CH.  VI. 

partnership,  and  enjoy  all  its  facilities,  credit,  and  advantage, 
but  escape  all  its  liabilities  because  they  see  fit  to  deny  them. 
And  we  think  no  system  of  law,  ancient  or  modern,  would 
come  to  this  conclusion.  We  do  not  propose  to  exhibit  the 
Roman  law  on  this  subject  at  any  length ;  but  we  think  it  fully 
sustains  what  we  have  said  above.  Indeed,  by  that  law  almost 
all  the  questions  of  partnership  passed  under  the  Pretorian 
jurisdiction  (which  was  an  equitable  one  in  fact,  in  the  modern 
use  of  the  term)  in  somewhat  the  same  way  and  for  the  same 
reasons  as  they  have  come  under  the  equity  jurisdiction  in 
England  and  here. 

In  this  connection  we  would  advert  to  a  distinction  which 
ran  through  a  number  of  cases,  and  seemed  for  a  while  to  meet 
with  much  favor.  It  was  this :  One  who  receives  a  certain 
portion  of  the  gross  receipts  is  not  a  partner ;  but,  if  he  receives 
the  same  portion  of  the  net  j^rojits,  this  constitutes  him  a  part- 
ner, and  makes  him  liable  as  such.  We  do  not  think  this  dis- 
tinction very  reasonable  or  very  useful.  It  may,  in  some  cases, 
help  to  determine  whether  the  parties  had  made  a  bargain  by 
virtue  of  which  the  receiver  of  this  portion  acquired  a  property 
in  the  undivided  profits,  and  so  far  it  may  be  of  use,  but  no 
further.  The  rule,  however,  has  been  so  often  and  so  strongly 
insisted  upon,  that  we  examine  very  fully,  in  our  note,  the  au- 
thorities on  which  it  seems  to  rest,  (j) 


{q)  Of  this  distinction  between  gross  The  case  commonly  cited  in  support 
and  net  profits,  it  is  to  be  observed  that  of  the  distinction  is  Dry  v.  Boswell,  1 
it  cannot  be  founded  upon,  nor  does  Camp.  329.  There  the  action  was 
it  support,  the  principle  asserted  in  assumpsit  for  work  and  labor,  and 
Waugh  V.  Carver,  that  he  who  shares  materials  in  and  about  the  repairs  of 
in  profits  indefinitely  is  liable  as  part-  a  lighter.  The  only  question  was, 
ner  to  creditors,  because  he  takes  from  whether  the  defendant  was  liable  for 
that  fund  which  is  the  proper  security  the  repairs,  which  were  admitted  to 
to  them  for  the  payment  of  their  debts,  have  been  made.  The  witnesses  first 
K  the  diminution  of  the  fund  on  which  stated,  that  the  lighter  was  the  sole 
creditors  rely  were  the  true  ground  of  property  of  a  person  of  the  name  of 
a  man's  liability  as  partner,  the  re-  Russell ;  that  she  was  let  out  by  him 
ceiver  of  gross  profits  should,  it  would  to  the  defendant,  who  worked  her; 
seem,  be  charged  as  partner,  rather  than  and  that  the  two  shared  her  profits 
the  receiver  of  net  profits  ;  for  the  latter  equally  between  them.  Lord  Ellen- 
takes  from  that  fund  only  if  profits  are  borough  said,  in  that  case  the  defendant 
netted,  while  the  former  does  so  whether  was  to  be  considered  a  partner,  and  was 
the  business  is  profitable  or  not,  and  jointly  liable  fur  the  repairs  done  to 
may  therefore  even  lessen  the  capital,  the  lighter.     There  was  here  a  partici- 


CH.  VI.]         WHO    ARE   PARTNERS    AS   TO   THIRD   PARTIES. 


97 


*  It  has  been  asserted,  not  only  by  text-writers,  but 
by  eminent  *  judges,  that  a  person  is  liable  as  a  partner, 


*89 
*90 


pation  of  profit  and  loss  which  consti- 
tuted a  partnership. 

But  the  agreement  with  Russell  sub- 
sequently appeared  to  be  that  the  de- 
fendant, in  consideration  of  working 
the  lighter,  should  receive  half  her  (jross 
earnings,  and  that  Russell,  as  owner, 
should  receive  the  other  half. 

Lord  EUenborough  observed,  that 
this  was  only  a  mode  of  paying  the 
defendant  wages  for  his  labor,  and  was 
different  from  a  participation  of  profit 
and  loss ;  so  that,  under  these  circum- 
stances, no  partnership  could  be  con- 
sidered as  existing  between  him  and 
the  owner  of  the  lighter.  See  Pott  v. 
Eyton,  3  C.  B.  32. 

In  this  country,  the  distinction  drawn 
in  Dry  i'.  Boswell  has  been   approved 
in  a  number  of  cases.     See  Ambler  v. 
Bradley,  6  Vt.  119 ;  Bowman  v.  Bailey, 
10  id.  170  ;  Mason  v.  Potter,  26  id.  722 ; 
Turner  v.  Bissell,  14  Pick.  192  ;  Heira- 
street  v.  Howland,  SDenio,  68  ;  Everett 
V.  Coe,  id.  180.     The  facts  of  Patter- 
son V.  Bianchard,  1  Seld.  186,  are  thus 
stated   in   the   opinion   of  the   court : 
"  In  the  case  under  consideration,  each 
party  was  to  stock  a  particular  portion 
of  the  stage  route  from    Saratoga   to 
Sandy  Hill,  Glen's   Falls,  and  White- 
hall, and  each  was  to  receive  fare  for 
the  passengers  in  proportion  to  the  dis- 
tance they  should  be  by  them  respec- 
tively conveyed.     Neither  party  had, 
by  the  terms  of  the  contract,  any  in- 
terest in  or  control  over  the  stock  or 
road  of  the  other ;   nor  were  any  ex- 
penses upon  any  part  of  the  route  to 
be   borne  jointly.      The    question   of 
their  liability  to  third  persons  is  not 
here  involved.  .  .  .  By  the  demurrer 
it  is  admitted  to  be  a  simjile  case  of 
shares  in  the  fares  in  proportion  to  the 
distance  the  passengers  and  their  bag- 
gage  were   conveyed   by   each,   from 
which  no   deduction  was  to  be  made 
for  joint  expenses  or  losses  of  any  de- 
scription ;  the  funds  to  be  divided  were 
their  gross  earnings,  and  not  profits,  as 
profits.     To  constitute  persons  partners 


as  between  themselves,  there  must  be 
an  interest  in  the  profits,  as  profits. 
Each  party  must,  by  the  agreement, 
participate  in  some  way  in  the  losses 
as  well  as  the  profits ;  an  agreement  to 
divide  the  gross  earnings,  as  in  this 
case,  does  not  constitute  a  partnership." 
Beecham  v.  Uodd,  3  Harrison,  485 ; 
Moore  v.  Smith,  19  Ala.  774.  See 
Wood  V.  Valette,  7  Ohio  St.  172. 

But  the  principle  of  the  case  of  Dry 
V.  Boswell,  if  it  is  understood  to  be  that 
the  sharer  in  gross   receipts   is,  as   a 
conclusion  of  law,  not  a  partner,  is  not 
only  erroneous  in  principle,  but  is  also, 
we  think,  opposed  by  weighty  author- 
ity.    In  Cheap  &  Others,  Assignees,  v. 
Cramond,  4  B.  &  Aid.  663,  Abbott,  C. 
J.,  said  :  "  Tlie  facts  are  these.     The 
defendant,    having    occasion   to    send 
goods  to  Rio  Janeiro,  for  sale  there, 
applied   to  the   bankrupts   for   recom- 
mendation to   a  house  at  that   place. 
They  recommended  Ruxton,  and  the 
goods  were  consigned  to  him.     Ruxton 
was  to  remit  the  proceeds,  in  money  or 
goods,  to  the  bankrupts  ;  who  were  to 
pay  over  the  money  to  the  defendant, 
or  sell  the  goods,  and  account  to  him 
for  the  proceeds.     The  correspondence 
was  carried  on  between  the  bankrupts 
and   Ruxton,  the  defendant  not   com- 
municating directly  with  Ruxton.   The 
latter  sold  the  goods,  and  having   ad- 
vised the  bankrupts  thereof,  they  ad- 
vanced a  sum  of  money  to  the  defendant, 
in  anticipation  of  the  remittance  ex- 
pected  from    Ruxton  ;  and  the   latter 
having  failed,  and  made  no  remittance, 
this  action  was  brought  to  recover  the 
money  so  advanced.     And,  if  there  had 
been   nothing   more   in   the   case,  the 
plaintiffs   had  an   undoubted   right  to 
recover.     But  it  came  out  at  the  trial, 
that  the   bankrupts  and  Ruxton  were 
in  the  habit  of   dividing  equally  the 
commissions  received  by  each  other  on 
the  sales  of  all  goods  recommended,  or 
'infiuenced,'  according  to  the  expres- 
sion of  the  witnesses,  by  the  one  house 
to  the  other ;  and,  according  to  this  habit 
7 


98 


THE    LAW    OF    PARTNERSHIP, 


[CH.  VI. 


*  91      to  third  parties,  when  *  he  has  such  an  interest  in  profits 

*  92      as  will  give  him  a  right  to  an  *  account,  (r)  Undoubtedly, 


and  course  of  dealing,  the  bankrupts 
were  entitled  to  half  the  commission 
received  by  Ruxton  on  the  sale  of  the 
defendant's  goods,  and  he  would  be 
entitled  to  one-half  of  the  commission, 
if  any  cliarged  by  them,  on  their  receipt 
of  tiie  proceeds  in  London,  had  the 
proceeds  been  duly  remitted.  And,  upon 
this  evidence,  it  was  contended,  on  the 
part  of  the  defendant,  that  the  bank- 
rupts were  to  be  considered  as  joint 
factors,  or  partners  quoad  hoc,  with 
Ruxton,  and  consequently  that  his  re- 
ceipt was  in  effect  a  receipt  by  them ; 
and  so  the  advance  of  money  by  them 
to  the  defendant  was,  in  eflect,  merely 
a  payment  of  money  for  which  they 
were  previously  accountable  to  him. 
And  in  support  of  this  proposition,  the 
case  of  Waugli  v.  Carver,  2  H.  Bl.  235, 
was  cited  and  relied  on.  And  we  are 
all  of  opinion  that  the  present  case 
cannot  be  distinguished  in  principle 
from  tliat,  and  that  our  decision  must 
be  governed  by  it.  It  is  true,  that  in 
that  case  a  definite  part  of  the  commis- 
sion was,  by  agreement  of  the  parties, 
to  be  deducted  as  compensation  for  the 
charges  and  expenses  before  a  division 
took  place ;  and  also  that  each  party 
was  to  share  in  some  specified  meas- 
ure witli  the  other,  in  other  parts  of 
the  profits  of  their  respective  business, 
such  as  warehouse  rents  and  discount 
upon  tradesmen's  bills.  And  it  was 
contended,  in  this  case,  on  the  part  of 
the  plaintiffs,  that  the  bankrupts  and 
Ruxton  were  to  be  considered  as  divid- 
ing the  gross  proceeds  only,  and  not  the 
net  proceeds  or  profits  of  each  other's 
agency  or  factorage ;  and  that  a  divi- 
sion of  gross  proceeds  does  not  consti- 
tute a partnersiiip.  We  think,  however, 
that  the  previous  deduction  of  a  definite 
part  of  the  commission  before  the  divi- 


sion in  the  case  cited,  is  an  unimportant 
part.  It  cannot  have  the  effect  in  all 
cases  of  leaving  the  remainder  as  clear 
profit,  because  the  expense  and  charge 
cannot  be  in  all  cases  imiformly  the 
same,  but  must  vary  with  the  particu- 
lar circumstances  of  each  transaction; 
so  that  in  effect  a  part  only  of  the  gross 
commission,  or  proceeds,  of  the  agency, 
and  not  the  whole,  was  to  be  divided 
in  that  case  ;  and  taking  the  definite 
deducted  part  at  a  fifth,  or  any  other 
aliquot  part,  the  absent  house,  instead 
of  receiving  one-half,  as  in  the  case  at 
bar,  would  by  the  agreement  receive 
two-fifths,  or  some  other  definite  part 
of  the  whole  gross  sum,  and  not  an 
indefinite  part  thereof,  depending  upon 
the  actual  and  clear  profit  of  the  trans- 
action. And  although,  in  the  case  of 
Waugh  V.  Carver,  the  agreement  was 
not  confined  to  a  division  of  the  commis- 
sion, but  extended  also  to  the  moneys 
received  in  certain  other  parts  of  the 
transactions  of  the  two  houses,  yet  the 
principle  of  the  division  is  not  affected 
by  that  circumstance ;  the  principle 
being,  that,  where  two  houses  agree 
that  each  shall  share  with  the  other  the 
money  received  in  a  certain  part  of  the 
business,  they  are,  as  to  such  part,  part- 
ners with  regard  to  those  who  deal  with 
them  therein,  though  they  may  not  be 
partners  inter  se."  See  also  remarks  of 
Martin,  B.,  upon  the  distinction  be- 
tween gross  and  net  profits,  in  Hickman 
V.  Cox,  3  C.  B.  N.  s.  562. 

In  Loomis  v.  Marshall,  12  Conn.  67, 
the  parties  sought  to  be  charged  as 
partners  were  to  divide  between  them 
the  proceeds  of  the  sales  of  the  goods, 
diminished  only  by  the  cost  of  selling. 
The  difference  between  net  profits  and 
net  sales  was  pressed  upon  the  court. 
But  it  was  not  thought  necessary  to 


(r  )  3  KentCom.p.  25,  note  (6) ;  Cary  worth   in   Champion    v.   Bostwick,    18 

on  Part.  11,  note  (i)  ;   CoUyer  on  Part.  Wend.    184.      See   also    Heimstreet  v. 

§  44,  and  note  ;  Lord  Eldon  in  Ex  parte  Rowland,  5  Denio,  68 ;  Denny  v.  Cabot, 

Hamper,  17  Ves.  412  ;  Chancellor  Wal-  6  Mete.  92. 


CH.   VI.]         WHO    ARE    PARTNERS    AS    TO    THIRD    PARTIES. 


99 


every  partner  has  a  right  to  an  account  of  the  profits ;  but  the 
converse  is  not  true,  that  every  one  who  has  such  a  right  is 


express  any  opinion  upon  the  point. 
In  Denny  v.  Cabot,  6  Mete.  82,  the  fund 
to  be  divided  was  substantially  the 
same:  "For  (we  quote  the  language 
of  the  court)  although,  in  terms,  the 
agreement  was  to  pay  Cooper  one-third 
of  the  net  earnings,  yet  that  is  explained 
by  the  words  immediately  foUowing, 
by  which  it  appears  that  Cooper  was 
entitled  to  one-third  of  the  gross  prof- 
its after  deducting  certain  specified 
charges  ;  and  tliat  in  no  event  was  he  to 
be  liable  for  any  losses."  The  court  then 
cite  Loomis  i'.  Marshall,  supra ;  Rey- 
nolds V.  Tophani,  15  Mass.  370 ;  Van- 
derburgh V.  Hall,  20  Wend.  70 ;  Tur- 
ner V.  Bissell,  14  Pick.  192  ;  and  proceed 
thus  :  "  These  cases  appear  to  us  fully 
to  support  the  defence  in  the  present 
case.  Some  of  them  may  perhaps 
appear  to  clash  with  the  distinction 
(laid  down  by  Lord  EUenborough  in 
Dry  V.  Boswell,  1  Camp.  329,  and  recog- 
nized in  other  cases)  between  sharing 
the  gross  earnings  and  sharing  the  net 
earnings  of  a  business  or  adventure. 
But,  however  this  may  be,  we  think 
there  is  no  sound  distinction  between 
an  agreement  to  pay  to  a  party  a  cer- 
tain share  of  the  gross  profits,  and  an 
agreement  to  pay  a  certain  share  of  the 
net  profits,  as  explained  in  tlie  present 
contract ;  the  clear  meaning  of  the 
terms  of  which  is,  that  Cabot,  Apple- 
ton,  &  Co.  were  to  pay  Cooper  one- 
third  part  of  the  profits,  after  making 
certain  specified  deductions  therefrom, 
and  Cooper  clearly  was  not  to  be  liable 
for  any  losses.  If  he  had  stipulated 
for  a  share  in  the  profits  (whether  gross 
or  net  projits),  so  as  to  entitle  him  to  an 
account,  and  to  give  him  a  specific  lien, 
or  a  preference  in  payment  over  other 
creditors,  and  giving  him  the  full  bene- 
fit of  the  profits  of  the  business,  with- 
out any  corresponding  risk  in  case  of 
loss, — justice  to  the  other  creditors 
would  seem  to  require  tliat  he  should 
be  holden  to  be  liable  to  third  persons, 
as  a  partner. 

We    think,    then,    the    distinction 


drawn  in  Dry  v.  Boswell,  between  the 
gross  and  the  net  profits  of  a  business, 
derives  no  very  strong  support  from 
the  authorities.  Still  less  has  it  any 
foundation  in  the  true  principles  ap- 
plicable to  the  subject.  As  we  have 
already  seen  (see  ante,  p.  *41,  and 
note),  it  is  entirely  consistent  with  the 
existence  of  an  actual  partnership,  that 
one  or  more  of  its  members  should  not 
be  subject  to  any  losses ;  since  such 
exemption  from  loss  may  be  merely 
the  consideration  in  view  of  wliich  one 
partner  contributes  to  the  firm  more 
capital  than  the  other  partners,  or 
accepts  for  an  equal  contribution  a 
smaller  return.  Hence  the  reason  for 
the  rule,  that  the  participator  in  the 
gross  receipts  of  a  business  is  not  a 
partner,  cannot  be  that  he  is  thereby 
exempt  from  losses,  and  that  such  ex- 
emption from  losses  is  necessarily  op- 
posed to  the  existence  of  an  actual 
partnership.  Xor  can  the  ground  of 
this  distinction  be,  that  the  gross  pro- 
ceeds of  a  trade  and  the  net  proceeds 
are  two  different  funds,  an  interest  in 
the  former  of  which  never  makes  a 
man  a  partner,  while  an  interest  in  the 
latter  always  does.  Whether  a  man 
is  a  partner  or  not  depends  upon  the 
nature  of  his  interest  in  the  profits. 
The  profits  of  a  trade  are  included 
within  the  gross  proceeds ;  and,  if  a 
man  is  interested  as  owner  in  the 
latter  of  these  funds,  lie  must  be  so  also 
in  tlie  former ;  for  there  is  nothing  in 
the  mere  deduction  of  the  expenses 
of  a  business  from  its  proceeds  which 
affects  in  any  way  the  kind  of  interest 
of  those  concerned  therein.  Hence 
the  question  still  must  be,  not  whether 
a  man  shares  in  gross  or  in  net  re- 
ceipts, but  what  is  the  nature  of  his 
interest  in  either  of  these  funds  ?  If 
his  interest  is  that  of  owner,  then  he 
is  a  partner;  otherwise,  not. 

The  doctrine  whicii  Story  deduces 
from  the  authorities,  and  to  wliich  he 
gives  his  approval,  is,  that  a  particii)a- 
tion  in  the  net  proceeds  of  a  business 


100 


THE   LAW    OP    PARTNERSHIP. 


[CH.  VI. 


a  partner.  There  are  many  ways  in  wliieh  a  man  may  repre- 
sent another,  and  in  tliat  right  be  entitled  to  an  account  without 
being  liable  as  a  partner.  And  it  has  been  well  said  by  a 
recent  writer,  "  In  all  cases  where  a  person  is  to  be  paid  for 
his  services  by  a  sum  proportional  to  the  profits,  he  must  be 
entitled  to  an  account  of  profits.  If  not,  how  is  he  to  ascertain 
that  he  has  what  he  has  stipulated  for  ?  "  (s)  It  must  be,  how- 
ever, considered  as  now  settled  that  a  person  paid  for  services 
rendered  to  a  firm  by  a  share  of  the  profits,  if  this  be  given 
him  only  as  compensation  for  service,  and  he  has  no  interest  in 
the  principal  and  no  other  interest  in  the  profits,  is  not  liable 
as  a  partner,  (ss) 

The  many  cases  cited  in  the  notes  to  this  chapter  exhibit  in 
strong  light  the  difficulty,  if  not  impossibility,  of  drawing  from 
the  decisions  any  definite  principle  or  rule  applicable,  with 
certainty,  to  the  question,  "  Who  are  partners  as  to  third  per- 
sons ? "  This  uncertainty  has  recently  led,  in  England,  to  a 
very  important  statute,  28th  &  29th  Vict.,  ch.  86,  which 
*  93      we    give   in    our   note,  (f)     *  We   will   add   our   hope 


is  presumptive  proof  that  the  partici- 
pator is  a  partner,  while  a  participa- 
tion in  gross  proceeds  is  presumptive 
proof  that  he  is  not  one.  Story  on 
Part.  §§  34-39.  But  the  true  doctrine, 
as  suggested  in  the  text,  would  seem 
to  be,  that  the  sharing  in  the  gross  or 
in  the  net  receipts  of  a  business  is  a 
fact  from  which,  in  connection  with 
the  other  facts  of  the  case,  the  jury 
may  infer  that  the  parties  have  or 
have  not  that  interest  in  profits  requi- 
site to  make  them  partners.  And  all 
the  facts  may  show  that  the  partici- 
pator in  net  proceeds  is  not  a  partner, 
or  that  the  participator  in  gross  pro- 
ceeds is  one. 

(s)  Bissett  on  Partnership,  p.  14. 

{ss)  Besides  the  cases  already  cited, 
which  bear  upon  this  question,  see 
Conklin  v.  Barton,  43  Barb.  435, 
where  it  is  directly  decided. 

(t)  By  this  act,  after  reciting  that 
it  is  expedient  to  amend  the  law  relat- 
ing to  partnership :  It  is  therefore 
enacted  as  follows  :  1.  The  advance  of 
money  by  way  of  loan  to  a  person  en- 


gaged or  about  to  engage  in  any  trade 
or  undertaking,  upon  a  contract  in  writ- 
ing with  such  person  that  the  lender 
shall  receive  a  rate  of  interest  varying 
with  the  profits,  or  shall  receive  a 
share  of  the  profits  arising  from  carry- 
ing on  such  trade  or  undertaking 
shall  not,  of  itself,  constitute  the  lender 
a  partner  with  the  person  or  the  per- 
sons carrying  on  such  trade  or  under- 
taking, or  render  him  responsible  as 
such.  2.  No  contract  for  the  remu- 
neration of  a  servant  or  agent  of  any 
person  engaged  in  any  trade  or  under- 
taking, by  a  share  of  the  profits  of 
such  trade  or  undertaking,  shall,  of 
itself,  render  such  servant  or  agent 
responsible  as  a  partner  therein,  nor 
give  him  the  rights  of  a  partner. 
3.  No  person,  being  the  widow  or 
child  of  the  deceased  partner  of  a 
trader,  and  receiving  by  way  of  an- 
nuity a  portion  of  the  profits  made  by 
such  trader  in  his  business,  shall,  by 
reason  only  of  such  receipt,  be  deemed 
to  be  a  partner  of  or  to  be  subject  to 
any  liabilities  incurred  by  such  trader. 


CH.  VI.]         WHO    ARE   PARTNERS    AS    TO    THIRD    PARTIES.  101 

and  our  belief,  that  the  courts  of  this  country  will  regard 
this  statute  rather  as  declaratory  of  the  law-merchant  in  re- 
spect to  partnerships,  than  as  changing  that  law  ;  and  will 
apply  to  cases  which  come  before  them  the  principles  on  which 
the  statute  is  founded.  It  will  be  noticed,  that  the  last  section 
applies  the  word  "  person,"  in  the  construction  of  this  statute, 
to  a  partnership  as  well  as  to  a  corporation  ;  a  provision  which 
accords  with  views  which  we  have  repeatedly  expressed  in  this 
work. 

SECTION    III. 

now    FAR    STIPULATIONS    BETWEEN    THE    PARTNERS   AFFECT    THIRD 

PARTIES. 

We  shall  hereafter  consider  fully  the  subject  of  articles  of 
partnership.  In  this  connection,  we  say  only  that  it  is  unques- 
tionably a  rule  of  English  and  American  law,  which  has  few  if 
any  exceptions,  that  if  parties  enter  into  a  contract  of  actual 
partnership,  and  also  into  stipulations  as  a  part  of  this  contract, 
or  independent  of  it,  which  either  in  whole  or  in  part  deny  or 
qualify  the  liabilities  of  one  or  more  of  the  partners,  such  stip- 
ulations would  have  no  effect  whatever  upon  third  parties  who 
acted  with  the  partnership  in  good  faith,  believing  and  justified 
in  the  belief  that  it  was  a  partnership,  and  in  ignorance  of 
these  special  stipulations,  (m)     It  is  a  more  difficult  and  com- 

4.  No  person  receiving,  by  way  of  an-  of  the  profits  or  interest  payable  in 
niiity  or  otherwise,  a  portion  of  the  respect  of  such  loan,  nor  shall  any 
profits  of  any  business,  in  considera-  such  vendor  of  a  good-will  as  afore- 
tion  of  the  sale  by  him  of  the  good-  said  be  entitled  to  recover  any  such 
will  of  such  business,  shall,  by  reason  profits  as  aforesaid  until  the  claims  of 
only  of  such  receipt,  be  deemed  to  be  a  the  other  creditors  of  the  said  trader 
partner  of  or  be  subject  to  tiie  liabili-  for  valuable  consideration  in  money 
ties  of  tlie  person  carrying  on  such  or  money's  worth  have  been  satisfied, 
business.  5.  In  the  event  of  any  such  6.  In  the  construction  of  tins  Act  the 
trader  as  aforesaid  being  adjudged  a  word  "  person  "  shall  include  a  part- 
bankrupt,  or  taking  the  benefit  of  any  nership  firm,  a  joint-stock  company, 
act  for  tlie  relief  of  insolvent  debtors,  and  a  corporation.  [It  is  said  in  Hohn 
or  entering  into  an  arrangement  to  v.  Hammond,  L.  R.  7  Ex.  218,  tliat 
pay  his  creditors  less  than  20s.  in  the  the  effect  of  this  statute  is,  tliat  sliar- 
pound,  or  dying  in  insolvent  circum-  ing  in  the  profits,  by  a  lender,  is  no 
stances,  —  the  lender  of  any  such  loan  evidence  of  a  partnership.  See  also 
as  aforesaid  sliall  not  be  entitled  to  re-  Leggett  v.  Hyde,  58  N.  Y.  272.] 
cover  any  portion  of  his  principal,  or  (u)  Seepos-^,  ch.  7,  §  7. 


102  THE    LAW    OF    PARTNERSHIP.  [CH.  VI. 

plicated  question,  what  effect  such  stipulations  have  when 
made  known  to  third  parties.  This  we  will  proceed  to 
consider. 

The  two  principles  which  apply  to  this  question,  and  which 
we  must  reconcile  as  far  as  this  can  be  done,  are  these :  First, 
if  one  is  a  partner  in  fact,  and  has  all  the  advantages  and 
credit  belonging  to  his  partnership,  he  is  to  be  held  to  his  lia- 
bilities, however  he  may  disclaim  them  at  any  time,  or  seek  to 
escape  from  them.  The  other  principle  is  this :  Every  man 
has  a  riglit  to  put  what  qualifications  or  limitations  he  pleases 
to  his  bargain  with  another,  and  that  other  is  bound  by 
*  94  these  if  he  accepts  them  ;  and,  *  generally,  will  be  taken 
to  accept  them,  if  they  are  distinctly  made  known  to  him 
while  making  his  bargain.  These  principles  meet  in  a  some- 
what fluctuating  point,  which  now  inclines  nearer  to  the  one 
and  then  approaches  the  other  of  them. 

In  general,  we  should  say,  that  a  provision  in  partnership 
articles,  that  the  partners  would  not  come  under  these  liabili- 
ties, nor  confer  upon  each  other  those  rights  and  powers  which 
belong  to  the  law  of  partnership,  would  so  far  annul  the  con- 
tract that  it  would  not  be  a  contract  of  partnership  as  to  those 
who  were  informed  of  them.  Suppose,  for  example,  that  some 
three  merchants  should  advertise  that  they  entered  into  a 
copartnership  from  the  first  of  January  next  for  five  years,  to 
transact  commission  business,  under  the  name  and  style  of  A., 
B.,  &  Co.,  but  that  neither  of  the  partners  would  be  liable  on 
any  contract  he  did  not  himself  make,  nor  for  any  goods  not  sent 
to  him  personally,  and  receipted  for  by  him,  nor  on  any  note 
or  obligation  not  signed  by  him.  It  might  be  said  that  this 
was  an  advertisement  in  fact  that  they  were  not  partners ;  and 
anybody  who  knew  it  and  still  made  a  contract  with  one,  using 
the  name  of  the  firm,  could  not  hold  the  rest,  because  he  made 
no  contract  with  them.  Still,  such  facts  would  raise  the  ques- 
tion, whether  there  was  not  here  an  evasion  of  the  law  ;  and,  if 
the  three  were  joined  in  the  business  and  in  tlie  ownership  of 
the  property  and  of  the  profits,  whether  all  should  not  be  held 
liable  in  the  usual  way  ;  certainly,  to  a  customer  to  whom  the 
peculiar  restrictions  were  not  distinctly  known,  and  perhaps 
even  to  one  who  knew  the  advertisement,  on  the  ground  that 


CH.   VI.]         WHO    ARE   PARTNERS    AS   TO    THIRD    PARTIES.  103 

their  acts  contradicted  their  words,  and  that  while  they  said 
substantially  they  were  not  partners,  they  were  so  in  fact.  So 
if  the  advertisement  were  that  two  of  the  partners  would  be 
liable  as  usual,  but  that  the  third,  designated  by  name,  was  not, 
by  agreement  with  the  rest,  to  participate  in  the  losses  or  be 
liable  for  the  debts,  such  a  stipulation,  even  if  advertised,  would 
suffice  to  discharge  this  partner,  if  in  fact  he  participated  in  the 
profits  as  a  partner.  One  reason  for  this  doubt  would  be,  that, 
if  the  stipulation  when  so  made  known  took  effect,  the  statutory  . 
introduction  of  limited  partnerships  would  not  have  been  neces- 
sary ;  and  they  would  now  exist  in  England,  as  well  as  here,  at 
the  pleasure  of  the  parties,  and  the  somewhat  cumbrous  ma- 
chinery of  our  statutes  of  limited  partnership  would  never  be 
resorted  to,  because  wholly  unnecessary. 

*  Stipulations  of  this  kind  are  rare,  and  such  adver-  *  95 
tisements  never  appear.  We  have  supposed  them,  how- 
ever, as  they  may  help  us  to  come  to  a  right  conclusion  upon 
a  class  of  questions  frequently  presented  in  fact.  For  stipula- 
tions frequently  occur  in  articles  which  limit  in  various  respects 
and  degrees  the  power  of  each  partner  to  represent  or  bind 
the  rest,  or  of  some  one  or  more  to  bind  the  others.  If  these 
stipulations  are  wholly  unknown  to  third  persons,  they  are 
wholly  inoperative  as  to  them.  But  the  present  question  is, 
what  effect  they  have  when  made  known,  either  publicly  or 
personally,  to  some  third  party  who  deals  with  the  partner- 
ship. 

Tlie  general  principle  which  lies  at  the  foundation  of  the 
partner's  liability  is,  that  every  partner  has  full  and  absolute 
authority  to  bind  all  the  partners  by  his  acts  or  contracts,  in 
relation  to  the  business  of  the  firm,  in  the  same  manner  and 
to  the  same  extent  as  if  he  held  full  powers  of  attorney  from 
all  the  members.  No  principle  is  better  established  than  this : 
it  rests  not  only  on  universal  usage  and  universal  authority, 
but  on  obvious  reason  and  necessity ;  because,  if  the  rule  were 
otherwise,  a  very  large  proportion  of  the  advantages  and  facili- 
ties for  which  partnerships  are  formed  would  be  lost.  It  must, 
however,  be  remembered  that  a  partner  binds  the  firm,  neces- 
sarily only  when  he  uses  the  name  of  the  firm.  Hence  it  has 
been  held  that  the  execution  of  a  mortgage  of  personal  property 


104 


THE   LAW    OF    PARTNERSHIP. 


[CH.  VI. 


of  a  partnership,  by  one  partner  in  his  individual  name,  passes 
no  title,  (uu) 

This  authority  of  each  partner  is  only  an  implied  one.  It  is 
a  fair  inference  from  the  fact  of  partnership :  it  is  an  inference 
from  the  reason  of  the  thing,  as  well  as  from  the  rules  of  law. 
But  it  is  an  inference  which  cannot  be  made  when  the  partners 
disclaim  it,  honestly,  in  a  reasonable  way,  and  by  act  as  well 
as  word.  Hence,  if  the  act  of  a  partner  be  forbidden  by  his 
copartners,  and  notice  is  given  to  the  person  with  whom  he 
deals,  he  no  longer  acts  as  their  agent,  and  his  act  is  only  his 
own.  (imii)  The  great  difficulty  is  in  drawing  the  line  between 
a  rule  which  would  give  to  any  partner,  at  his  own  pleasure, 
all  the  advantages  and  none  of  the  liabilities  of  a  partner,  and, 
on  the  other  hand,  permitting  reasonable  and  honest  limitations 
or  qualifications  of  liability  which  ought  to  operate  on  all  who 
have  contracted  with  full  knowledge  of  them,  and  have  therefore 
assented  to  them,  (v)     It  should  be  added,  that  the  question 


(mi)  Clark  v.  Houghton,  12  Gray, 
38 ;  and  see  Butterfield  v.  Hensley,  id. 
226 ;  and  Cummings  v.  Parish,  30  Miss. 
412. 

(uuu)  Yeager  v.  Wallace,  57  Penn. 
St.  865. 

(v)  Thus,  in  Alderson  v.  Pope,  1 
Camp.  404,  note  (a),  Lord  Ellenbor- 
ough  held,  that  when  there  was  a  stipu- 
lation between  A.,  B.,  &  C,  who  ap- 
peared to  the  world  as  copartners,  that 
C.  should  not  participate  in  the  profit 
and  loss,  and  should  not  be  liable  as 
partner,  C  was  not  liable  as  partner  to 
those  who  had  notice  of  this  stipulation, 
and  that  notice  to  one  member  of  a 
firm  was  notice  to  the  whole  partner- 
ship. Compare  with  this  case  Brown 
V.  Leonard,  2  Ciiitty,  120.  In  Batty 
V.  M'Cundie,  3  C.  &  P.  202,  the  defend- 
ants had  become  shareholders  in  a  news- 
paper, the  prospectus  of  which  Col. 
Jones,  one  of  the  plaintiffs,  who  were 
partners,  had  been  concerned  in  pre- 
paring, and  which  stated  that  the  sub- 
scribers were  not  to  be  partners,  and 
were  not  to  be  liable  for  more  than 
their  subscriptions;  the  present  suit 
being  brought  for  the  price  of  sta- 
tionery furnished  for  the  newspaper. 


Parke,  J.  (in  summing  up),  said  :  "  The 
question  is,  whether  Col.  Jones,  having 
a  knowledge  of  all  the  circumstances, 
can  maintain  the  action  ;  for  it  is  clear 
that  his  knowledge  is  the  knowledge 
of  all  the  plaintiffs.  There  is  no  doubt 
that  the  defendants  were  proprietors  ; 
but  that  will  not  make  them  partners. 
The  question  is,  whether  Col.  Jones  did 
not  know  that  these  persons,  though 
called  proprietors,  were  not  to  be 
deemed  partners,  and  whetlier  he  did 
not  give  them  an  assurance  that  they 
would  not  be  liable  for  more  than  their 
subscriptions  ?  The  prospectus  states 
that  the  subscribers  are  not  to  be  part- 
ners; and  it  is  proved  that  he  knew 
of  that  prospectus,  and  acted  as  treas- 
urer under  it.  How  can  he,  after 
this,  say  that  the  defendants  are  liable  ? 
The  question  for  our  consideration  is, 
whether  Col.  Jones  does  not  accede  to 
the  proposition,  that  the  defendants 
are  not  liable,  and  undertake  that  he 
will  not  look  to  them  as  responsible  1 
If  you  believe  the  evidence  in  the 
sense  that  I  have  taken  of  it,  I  tell 
you,  that,  in  point  of  law,  the  plaintiffs 
are  not  entitled  to  recover."  In  re 
Worcester  Corn  Exchange  Co.,  3  De 


CH.  VI.]        WHO    ARE   PARTNERS    AS   TO   THIRD   PARTIES. 


105 


whether,  in  any  *  particular  ease,  an  alleged  partner  has 
disproved  the  evidence  or  *  rebutted  the  legal  presum|> 


*96 

*97 


G.,  M.  &  G.  180, 19  Eng.  L.  &  Eq.  627  ; 
Bailey  v.  Clark,  6  Pick.  372.  See  also 
Boardman  v.  Gore,  15  Mass.  339;  Bax- 
ter V.  Clark,  4  Ired.  127  ;  Denny  v. 
Cabot,  6  Mete.  98  ;  Jordan  v.  Wilkins,  3 
Wash.  C.  C.  115;  Dow  v.  Say  ward,  12 
N.  H.  271 ;  Cargill  v.  Corby,  15  Mo. 
425;  Langan  v.  Hewett,  13  S.  &  M. 
122;  Brent  v.  Davis,  9  Md.  217.  In 
Leavitt  v.  Peck,  3  Conn.  124,  Ilosmer, 
C.  J.,  says  :  "  It  is  a  well-established 
principle,  that  the  contract  of  a  partner 
is  obligatory  for  his  copartner,  by  vir- 
tue of  an  implied  authority,  which  may 
be  rebutted  by  a  refusal  to  be  bound  by 
his  acts.  B}'  legal  consequence,  the  part- 
ners whose  authority  is  thus  declined 
cannot  bind  the  copartnership  in  favor 
of  those  who  have  knowledge  of  the 
fact.  .  .  .  The  principle  under  consid- 
eration is  not  founded  at  all  on  any 
supposed  waiver  of  the  creditor,  but 
solely  and  exclusively  on  the  declara- 
tion of  the  person  declining  to  be  bound. 
The  implied  authority  of  his  partner  he 
has  annihilated  ;  and  the  contract  in 
the  name  of  the  firm  is  of  no  validity 
beyond  the  personal  obligation  it  im- 
poses on  the  individual  making  it."  So 
if,  upon  the  dissolution  of  a  copartner- 
ship, the  outgoing  partner  assigns  to 
the  continuing  partner  all  his  interest 
in  the  outstanding  partnership  debts 
and  accounts,  the  subsequent  release  of 
a  debt  by  the  outgoing  partner  to  a 
debtor  having  notice  of  the  agreement 
is  void.  Gram  v.  Cadwill,  5  Cowen, 
489.  See  Ex  parte  Harris,  1  Madd. 
588. 

Partners  sometimes  give  notice  to 
particular  persons,  or  to  the  public 
generally,  that  they  are  not  responsible 
for  the  acts  of  one  or  more  of  the  other 
partners.  Such  repudiation  of  the 
ordinary  liabilities  of  a  partner,  espe- 
cialh^  if  it  be  with  reference  to  a  single 
transaction,  is  not,  perhaps,  necessarily 
inconsistent  with  the  continuance  of 
the  partnership.  But  it  more  com- 
monly happens  when  one  or  more  of 
the  partners   wishes   to    dissolve    the 


partnersliip  and  retire,  while  the  rest 
choose  to  continue  in  the  business. 
Such  warnings  by  partners  of  limita- 
tions they  mean  to  put  to  their  own 
liability,  and  to  the  authority  of  the 
other  partners,  have  the  same  effect, 
so  far  as  third  persons  are  concerned, 
as  the  communication  of  stipulations 
between  partners  restricting  their  lia- 
bility, and  upon  similar  principles. 
For,  a  partnership  being  once  proved 
to  exist,  and  the  implied  power  of  each 
partner  to  act  for  the  others  in  every 
thing  within  the  scope  of  the  partner- 
ship business  being  once  given,  the 
fair  presumption  upon  which  third  par- 
ties are  justified  in  acting  is,  that  the 
partnership  and  the  consequent  implied 
authority  of  each  partner  still  con- 
tinue. But  this  presumption  is  of 
course  wholly  rebutted  by  notice  to 
the  contrary,  and  can  then  no  longer 
be  a  reason  for  holding  the  party  giv- 
ing the  notice  to  liability  as  a  partner. 
In  Galway  v.  Matthew  &  Smithson,  10 
East,  264,  the  defendants,  partners  in 
trade,  were  sued  upon  a  promissory 
note.  Matthew  let  judgment  go  by 
default ;  but  Smithson  defended  the 
action  on  the  ground  that  the  plaintiff, 
before  he  took  the  note  in  question, 
had  notice  of  an  advertisement,  then 
recently  published  in  a  newspaper  by 
Smithson,  wherein  he  warned  all  per- 
sons not  to  give  credit  to  the  defendant 
Matthew  on  his  (Smithson's)  account, 
and  that  he  would  no  longer  be  liable 
for  drafts  drawn  by  the  other  partners 
on  the  partnership  account.  The  de- 
fendants having  a  verdict  on  this 
ground  (Galway  v.  Matthew,  1  Camp. 
403),  upon  motion  to  set  aside  the  non- 
suit, Lord  Ellenborough,  C.  J.,  said  : 
"  The  general  authority  of  one  partner 
to  draw  bills  or  promissory  notes  to 
charge  another,  is  only  an  implied 
authority ;  and  that  implication  was 
rebutted  in  this  instance  by  the  notice 
given  by  Smithson,  wlio  is  now  sought 
to  be  charged,  which  reached  the  plain- 
tiff, warning  him   that  Matthew  had 


106 


THE    LAW    OF    PARTNERSHIP. 


[CH. 


VI. 


tion  of  authority  on  the  part  of  his  partner,  to  bind,  seems  to 
be  a  question  of  fact,  (w) 


no  such  authority.  It  is  not  essential 
to  a  partnersliip  that  one  partner 
should  have  power  to  draw  bills  and 
notes  in  the  partnership  firm  to  charge 
the  others  :  they  may  stipulate  be- 
tween themselves  that  it  shall  not  be 
done  ;  and  if  a  third  person,  having 
notice  of  this,  will  take  such  a  security 
from  one  of  the  partners,  he  sliall  not 
sue  the  others  upon  it,  in  breach  of 
such  stipulation,  nor  in  defiance  of  a 
notice,  previously  given  to  him  by  one 
of  them,  that  he  will  not  be  liable  for 
any  bill  or  note  signed  by  the  others." 
Layfield's  Case,  1  Salk.  292;  Minnit 
V.  Whinnery,  2  Bro.  P.  C.  323 ;  16 
Vin.  Abr.  244 ;  Ex  parte  Harris,  1 
Madd  583  ;  Vice  v.  Fleming,  1  Y.  &  J. 
227;  Rooth  v.  Quinn,  7  Price,  193; 
Feigley  v.  Sponeberger,  5  Watts  &  S. 
564 ;  Johnston  v.  Button,  27  Ala.  245. 
It  has,  however,  been  questioned, 
whether,  if  a  firm  consist  of  more 
than  two  members,  the  expressed  and 
known  dissent  of  one  partner  to  a 
contract  about  to  be  entered  into  in 
good  faith  by  a  majority  of  the  part- 
ners in  the  name  of  the  firm  will  oper- 
ate to  free  the  dissenting  partner  from 
liability  thereon.  Story  on  Part.  §  12-3, 
and  notes ;  3  Kent  Com.  45.  This 
question  will  be  considered  when  we 
come  to  treat  of  the  power  of  a  ma- 
jority of  the  partners  to  bind  the  part- 
nership, post,  ch.  7,  §  5.  In  one  case, 
indeed,  it  was  said  :  "  By  the  act  of 
entering  into  a  copartnership,  each  of 
its  members  becomes  clothed  with  full 
power  to  make  any  and  every  contract 
within  the  scojie  and  limits  of  the  co- 
partnership business.  All  such  con- 
tracts   will    therefore    be    absolutely 


binding  upon  the  several  members. 
This  power  is  incident  to  the  copart- 
nership relation,  and  must  exist,  in 
defiance  of  expostulations  and  objec- 
tions, while  the  relation  endures." 
Wilkins  v.  Pearce,  5  Denio,  541,  544. 
But,  though  the  judgment  in  this  case 
was  affirmed  in  the  Court  of  Appeals, 
the  dictum  just  quoted  does  not  appear 
to  have  been  approved.  On  the  other 
hand,  the  acts  of  the  protesting  part- 
ner subsequent  to  his  expression  of 
dissent  were  held  to  amount  to  a 
waiver  of  it,  and  to  a  ratification  of 
the  transactions  to  which  he  had  origi- 
nally objected,  s.  c.  2  Comst.  469, 
472.  See  opinion  of  Colden,  Senator, 
in  Smith  v.  Lasher,  5  Cow.  689,  710. 
In  Willis  V.  Dyson,  1  Stark.  164,  Lord 
Ellenborough  held,  "  that  after  notice 
by  one  partner  not  to  supply  any  more 
goods  on  the  partnership  account,  it 
would  be  necessary  for  the  party  send- 
ing goods  after  such  notice  to  prove 
some  act  of  adoption  by  the  partner 
who  gave  the  notice,  or  that  he  had 
derived  some  benefit  from  the  goods." 
This  qualification  of  the  rule,  that  a 
partner  may  limit  his  liability  by  giv- 
ing notice  to  that  effect,  though  reiter- 
ated upon  the  authority  of  this  case 
by  some  of  the  writers  on  partnership 
(see  3  Kent  Com.  8th  ed.  49;  Gow  on 
Part.  52),  seems  open  to  considerable 
question,  as  matter  of  principle.  Nor 
does  it  appear  to  have  the  support  of 
any  other  judicial  decision.  On  the 
contrary,  in  Galway  v.  Smithson,  su- 
pra, Matthew,  for  whose  acts  Smith- 
son,  his  partner,  had  given  the  plaintiff 
notice  he  would  not  be  responsible,  had, 
after  the  notice,   borrowed   money  of 


(w)  Leavitt  v.  Peck,  3  Conn.  124  ; 
Willis  V.  Dyson,  1  Stark.  164 ;  Vice  v. 
Fleming,  1  Y.  &  J.  227.  See  authori- 
ties cited  above.  And  if  a  partner,  in 
the  presence  of  a  party  dealing  with 
another  partner  who  acts  in  the  name 
of  the  firm,  refuses  to  be  bound  by  the 


transaction,  yet  his  subsequent  acts 
and  declarations  may  amount  to  a 
waiver  of  his  dissent,  and  to  a  ratifi- 
cation of  the  transaction  from  which 
he  thus  at  first  dissented.  Pearce  v, 
Wilkins,  2  Comst.  469. 


CH.   VI.]         WHO    ARE   PARTNERS    AS   TO    THIRD    PARTIES.  107 

*  On  the  whole,  we  say  that  the  law-merchant,  as  it  is  *  98 
incorporated  into  the  common  law  of  England  and  of 
this  country,  does  not  permit  one  to  secure  to  himself  all  the 
advantages  and  gains  of  partnership,  and  guard  himself  against 
all  its  liabilities  and  losses ;  and  that  his  attempt  to  do  so 
would  be  defeated  by  casting  upon  him  those  liabilities.  But 
stipulations  are  often  entered  into  which  must  be  understood 
as  giving  up,  on  the  part  of  all  the  partners,  or  of  a  part,  some 
of  the  powers  and  advantages  of  partnership,  and  providing 
against  a  proportionate  measure  of  liability ;  and  any  stipula- 
tions of  this  character  would  undoubtedly  take  effect  as  far  as 
they  were  known. 

Thus,  it  is  quite  common,  in  continental  Europe,  for  mercan- 
tile firms,  in  their  circulars  or  other  advertisements,  to  desig- 
nate one  or  more  of  the  partners  as  alone  having  authority  to 
put  the  name  of  the  firm  to  negotiable  paper.  If  a  firm  should 
so  advertise  in  this  country,  it  would  undoubtedly  prevent  any 
person  who  knew  of  it  from  holding  the  firm  on  the  signature 
of  any  other  member.  But  it  should  not  affect  one  who  did  not 
know  it ;  because  he  might  fairly  imply  the  authority  of 
each  partner  from  the  partnership.  *  Formerly,  the  *  99 
phrases  special  and  limited  partnerships,  which  now 
have  a  statute  meaning,  were  applied  quite  loosely  to  those 
which  were  less  general  than  usual ;  {x)  and  it   was  always 

the  plaintiff,  and  had  applied  it  mostly  party  thus  notified  still  persists  in  his 
to  the  payment  of  partnership  debts,  purpose,  and  completes  the  contract, 
Nevertlieless,  Smithson  was  held  not  he  must  be  presumed  to  have  made 
liable  on  a  note  given  in  tlie  partner-  it  solely  on  the  credit  of  the  non- 
ship  name  for  the  sum  so  borrowed,  dissenting  partners.  But  we  shall  see, 
So  in  Leavitt  v.  Peck,  3  Conn.  124.  in  the  next  section,  that  where  credit 
In  Monroe  v.  Conner,  15  Me.  178,  is  given  to  one  or  more  of  the  individ- 
Shepley,  J.,  after  an  examination  of  ual  partners,  the  other  partners  are  not 
the  point,  comes  to  the  conclusion,  that  liable  on  such  contracts,  even  though 
"  it  is  more  in  accordance  with  the  they  inure  to  the  benefit  of  the  part- 
general   principles    of   law,   and    with  nership. 

good   faith   and  fair   dealing,  to   hold         {x)    See   Lansing   v.    Ten   Eyck,    2 

that  a  partner  is  not  bound  by  a  con-  Johns.  304  ;  Mumford  v.  Nicoll,  20  id. 

tract  after  he  has  given  notice,  to  the  624,  629  ;  Bentley  v.  White,  3  B.  Mon. 

party  proposing   to  make   it,  that   he  263 ;  Reynolds  v.  Cleaveland,  4  Cow. 

would   not  be   bound    by  it."     When  282;  Ensign  v.  Wands,  1  Johns.  Cas. 

notice  is  given  to  a  party  proposing  to  171.     In  these  last  two  cases,  the  word 

make  a  certain  contract,  that  one  mem-  "  limited  "  is   used  only  in  the  head- 

ber  of  a  firm  will  not  be  bound  by  the  note.     Ensign  v.  Wands,  1  .Johns.  Cas. 

action  of  tlie    other  members,    if  the  171  ;    De    Berkom   v.    Smith,    1    Esp. 


108  THE   LAW   OF   PARTNERSHIP.  [CH.  VI. 

held  that,  where  these  limitations  were  known  to  a  customer, 
he  was  affected  by  them ;  and  further,  that  this  specialty  or 
limitation  may  be  inferred  from  facts.  Limitations  upon  the 
authority  of  one  partner  to  represent  his  copartners  may  also 
be  imposed  by  the  nature  and  usages  of  particular  trades.  The 
fact  that  a  partnership  is  engaged  in  a  particular  trade  being 
known,  is  sufficient  notice  to  third  persons  of  the  limitations 
which  the  nature  and  customs  of  that  trade  place  upon  the 
power  of  each  partner ;  and  third  parties  dealing  with  a  partner 
in  matters  outside  the  scope  of  its  usual  business,  to  charge  his 
firm  therein,  must  show  him  to  have  possessed  special  authority 
so  to  act.  Thus,  it  has  been  held^  that  persons  who  are  en- 
gaged in  working  a  mine  or  a  farm,  in  partnership,  give  no 
implied  authority  to  one  another  to  borrow  money  or  to  draw 
bills  of  exchange  on  joint  account  and  credit,  even  in  promotion 
of  the  joint  business.  Hence,  if  money  be  borrowed,  or  a  bill 
be  drawn,  by  one  of  several  persons  jointly  interested  in  a  farm 
or  a  mine,  the  lender  or  holder  cannot  hold  the  other  partners 
upon  it,  without  showing  that  they  had  in  some  way  authorized 
the  acting  partner  so  to  bind  them.  (?/) 


29;  Post  V.  Kimberly,  9  Johns.  489.  v.  Ginrick,  57  111.531;]  Greenslade  v. 
[When,  by  the  terms  of  a  partnership,  Dower,  7  id.  635  ;  Ricketts  v.  Bennett, 
the  liability  of  each  partner  is  limited,  4  C.  B.  686.  See  Shieknesse  v.  Bromi- 
and  this  limitation  is  known  to  a  tiiird  low,  2  Cromp.  &  J.  425 ;  Hawtayne  v. 
person  who  contracts  with  a  partner  Bourne,  7  M.  &  W.  595;  Tredwen  v. 
in  a  matter  for  which  he  alone  is  re-  Bourne,  6  id.  461 ;  Howken  i'.  Bourned, 
sponsible,  the  other  partners  are  not  Sid.  703;  Burmesteri?.  Norris,  6  Exch. 
liable.  Thus,  A.  and  B.  are  partners,  796 ;  8  Eng.  L.  &  Eq.  487.  But  where 
A.  agreeing  to  furnish  capital,  and  B.  it  was  sliown  that  it  was  the  custom 
labor ;  and  C.  knowing  these  facts  con-  of  planters  generally  to  borrow  money 
tracts  with  B.  to  perform  in  part  the  when  necessary  for  tlie  purposes  of 
labor  which  B.  was  to  furnish.  C.  their  business,  it  was  held,  that  one  of 
must  look  to  B.  for  his  compensation,  a  firm  engaged  in  the  business  of  plant- 
Pollock  V.  Williams,  42  Miss.  88  ;  New-  ing  might  bind  his  copartners  by  bor- 
man  v.  Baker,  9  Johns.  207 ;  Zettee  v.  rowing  money  for  their  business,  and 
Soper,  Sup.  Ct.  Kan.,  4  Cen.  L.  J.  288.  giving  a  note  therefor.  Lea  v.  Gnice, 
The  rights  of  third  persons  against  a  13  S.  &  M.  656.  And  in  McGregor  v. 
partnership  will  be  limited  by  the  spe-  Cleaveland,  5  Wend.  475,  a  promissory 
cial  provisions  of  the  articles  of  copart-  note  given  for  the  firm  by  one  of  two 
nership  known  to  such  third  persons,  partners  in  the  business  of  farming  and 
Smith  V.  Vanderburg,  46  111.  34.]  coopering  was  held  good,  and  binding 
(y)  Dickinson  v.  Valpy,  10  B.  &  C.  upon  both.  "An  attorney,  gud  at- 
128;  [Judge  v.  Braswell,  Ct.  of  App.  torney,  is  not  a  scrivener:  it  is  part  of 
Ky.  3  L.  &  Eq.  Reptr.  602  ;  Kimbro  his  business  to  prepare  conveyances 
V.  Bullitt,  22  How.  (U.  S.)  256;  Ulery  and  negotiate  mortgages,  and  see  that 


CH.  VI.]         WHO    ARE   PARTNERS   AS   TO   THIRD    PARTIES. 


109 


*  A  limitation  or  exception   may  grow  out   of  the    *  100 
nature  of  the  particular  transaction.     Thus,  if  a  partner 


tlie  deeds  are  executed  and  the  trans- 
action completed.  A  scrivener  is  a 
person  who  receives  money  to  lay  out 
upon  security,  and  to  hold  the  money 
in  his  hands  until  an  opportunity  offers 
for  laying  it  out."  Hence,  where  two 
are  in  partnership  merely  as  attorneys, 
one  member  of  the  firm  is  not  rendered 
liable  as  partner  by  his  copartner's  re- 
ceiving money  indefinitely  for  the  pur- 
pose of  being  laid  out  on  mortgage 
security.  Harman  v.  Johnson,  2  Ellis 
&  B.  188,  18  Eng.  L.  &  Eq.  400,  2 
Ellis  &  B.  01.  See  Sims  v.  Brutton,  1 
id.  440  ;  Wilkinson  v.  Candlish,  19  Law 
J.  Kep.  Exch.  100.  So,  if  persons  are 
in  partnership  as  attorneys,  there  is  no 
implied  authority  in  one  of  them  to 
bind  the  rest  by  pledging  the  name  of 
the  firm  for  a  loan  of  money,  Brecken- 
ridge  v.  Shrieve,  4  Dana,  o75;  Hedley 
V.  Bainbridge,  3  Q.  B.  316;  or  by  put- 
ting the  name  of  the  firm  in  any  shape 
to  negotiable  paper,  Levy  v.  Pyne,  1 
C.  &  Marslim.  453.  See  Smithy.  Cole- 
man, 7  Jur.  1053 ;  Wells  v.  Turner,  10 
Ind.  133.  [Garland  i\  Jacomb,  L.  K. 
8  Ex.  218.  In  Wisconsin,  after  a  care- 
ful review  of  the  authorities,  it  was  held 
that  one  member  of  a  non-trading  part- 
nership —  law  firm,  for  instance  —  can- 
not bind  his  copartner  by  a  bill  or  note, 
drawn,  accepted,  or  indorsed  by  him, 
even  for  a  debt  of  the  firm,  unless  spe- 
cially authorized  by  his  copartner,  or 
it  be  necessary  to  carry  on  the  partner- 
ship, or  it  be  shown  to  be  usual  in 
similar  partnerships  ;  and  the  burden 
of  proof  of  authorit}-,  necessity,  and 
usage  is  upon  the  party  claiming  under 
the  note.  Smith  v.  Sloan,  37  Wis.  285; 
Hunt  V.  Chapin,  0  Lansing  (N.  Y.),  139  ; 
McCord  i:  Field,  27  U.  C.  C.  P.  3j)l ; 
Prince  v.  Crawford,  50  Miss.  344.]  In 
like  manner,  a  partner  in  tlie  practice 
of  physic  is  not  bound  by  a  note  drawn 
by  his  cojiartner  in  the  name  of  the 
firm,  for  the  purpose  of  raising  money, 
Crosthwait  v.  Ross,  1  Humph.  23 ;  nor 
by  any  other  of  his  copartner's  con- 
tracts  which   are  not  connected  with 


their  business  as  physicians,  Thomp- 
son V.  Howard,  2  Cart.  (Ind.)  245.  So 
if  four  are  interested  as  partners  in  two 
shares  of  the  stock  of  a  company  formed 
for  digging  tunnels,  the  peculiar  and 
limited  character  of  the  partnership 
business  precludes  any  legal  implica- 
tion that  one  of  the  partners  can  bind 
the  others  by  issuing  commercial  paper 
in  the  partnership  name.  Gray  v. 
Ward,  18  111.  32.  See  Cocke  v.  Branch 
Bank,  3  Ala.  175,  respecting  the  limi- 
tations to  the  authority  of  one  of  a  firm 
of  tavern-keepers.  In  re  Worcester 
Corn  Exchange  Company,  3  De  G.,  M. 
&  G.  180,  19  Eng.  L.  &  Eq.  032 ;  and 
Cheeny  v.  Clark,  3  Vt.  431,  as  to  the 
liability  of  members  of  a  building  asso- 
ciation. See  also  Williams  v.  Thomas, 
0  Esp.  18  ;  Bentley  v.  White,  3  B.  Mon. 
203 ;  Vance  v.  Campbell,  8  Humph. 
524 ;  Lanier  v.  McCabe,  2  Fla.  32 ; 
Miller  v.  Hines,  15  Ga.  197  ;  Benson  v. 
M'Bee,  2  McMullan,  91  ;  Goodman  v. 
White,  25  Miss.  103 ;  Cargill  v.  Corby, 
15  Miss.  425 ;  Lansing  v.  Gaine,  2 
Johns.  300.  In  Andrews  v.  Lehott,  10 
Barr,  47,  Andrews  &  Harris  had  agreed 
to  form  a  statutory  limited  partnership, 
Harris  being  the  special  partner.  With 
that  view,  they  had  placed  upon  record, 
and  otherwise  published  to  the  woi'ld, 
in  accordance  with  the  provisions  of 
the  statute,  the  terms  of  their  connec- 
tion. A  subsequent  breach  of  the  stat- 
ute made  Harris  a  general  partner,  in 
an  action  against  both  the  partners 
upon  contracts  made  in  the  name  of 
the  copartnership.  Harris  alleged  in 
defence  that  the  plaintifl,  at  the  time 
the  contracts  were  made,  knew  he  was 
a  special  partner,  and  gave  credit  to  the 
firm  and  the  general  partners,  and  did 
not  rely  on  liim.  But  it  was  held,  that 
this  knowledge  by  the  creditor  of  the 
special  partnership  could  not  discharge 
the  special  partner  from  the  general 
liability  fixed  on  him  by  statute.  The 
court  said:  "If  the  plaintifi's  knew 
they  held  themselves  out  as  a  limited 
partnership,   they   also   knew    that,  if 


110 


THE   LAW   OP   PARTNERSHIP. 


[CH.  VI. 


of  a  firm  which  deals  only  in  merchandise  gives  the  note  of  the 
firm  for  a  horse,  it  would  be  a  fair  presumption  that  the  party- 
receiving  it —  if  he  knew  the  general  business  of  the  firm  — 

should  have  supposed  that  the  partner  had  no  authority 
*  101    to  give  such  a  note.  (2)    The  rule  itself,  which  gives  *to 

a  partner  his  authority,  limits  it,  in  perhaps  all  the  au- 
thorities which  assert  the  rule,  to  contracts  or  acts  within  or 
belonging  to  the  business  of  the  firm.  The  reason  of  this  is 
perfectly  obvious ;  and  it  would  follow  that  as  partners  may  cer- 
tainly limit  their  business  as  they  please,  by  so  doing  they  place 
an  analogous  limitation  to  the  authority  of  the  partners,  in 
reference  to  any  one  knowing  the  limitation  of  their  business. 
The  general  reason  why  all  the  partners  are  bound  by 
the  acts  of  one,  is,  that  great  and  inevitable  frauds  would 
spring  from  the  want  of  this  rule.  Thus,  it  would  always  be 
easy  for  a  firm  doing  the  largest  business  to  have  one  partner 


the  defendants  failed  to  comply  with 
the  requisition  of  the  act,  they  became 
general  partners,  and  were  liable  as 
such.  The  presumption  is,  that  the 
contract  was  made  in  reference  to  the 
legal  rights  of  the  parties  ;  and  this  pre- 
sumption can  alone  be  rebutted  by  clear 
proof  of  an  express  contract,  waiv- 
ing all  the  plaintiffs'  rights  under  the 
statute." 

(z)  Holmes  v.  Burton,  9  Vt.  252; 
Livingston  v.  Roosevelt,  4  id.  25L  In 
this  last  case,  A.  &  B.  formed  a  copart- 
nership, under  the  style  of  A.  &  Co.,  in 
the  business  of  sugar-refining,  and  so 
advertised  the  public.  B.  afterwards, 
without  the  knowledge  of  A.,  bought  a 
quantity  of  brandy,  for  which  he  gave 
his  note,  payable  to  the  firm,  and  in- 
dorsed by  him  with  the  name  of  the 
firm.  nie  plaintiff,  the  indorsee  of 
said  note,  took  both  the  newspapers  in 
which  the  character  of  the  business  of 
A.  &  Co.  was  advertised.  The  question 
in  the  case  being  whether  the  copart- 
nership was  liable  on  the  above  note, 
Kent,  C.  J.,  said :  "  All  partnerships 
are  more  or  less  limited.  There  is  no 
one  that  embraces,  at  the  same  time, 
every  branch  of  business  ;  and  when  a 
person  deals  with  one  of  the  partners 


in  a  matter  not  within  the  scope  of  the 
partnership,  the  intendment  of  law  will 
be,  that  he  deals  with  him  on  his  private 
account,  notwithstanding  the  partner 
may  give  the  partnership  name,  unless 
there  be  some  circumstances  in  the  case 
to  destroy  that  presumption.  '  If,'  says 
Lord  Eldon  (8  Vesey,  p.  544), '  under  the 
circumstances,  the  person  taking  the 
paper  can  be  considered  as  being  ad- 
vertised, that  it  was  not  intended  to  be 
a  partnership  proceeding,  the  partner- 
ship is  not  bound.'  Public  notice  of 
the  object  of  a  copartnership,  the  de- 
clared and  habitual  business  carried 
on,  the  store,  the  counting-house,  the 
sign,  &c.,  are  the  usual  and  regular 
indicia  by  which  the  nature  and  extent 
of  a  partnership  are  to  be  ascertained. 
When  the  business  of  a  partnership  is 
thus  defined  and  publicly  declared,  and 
the  company  do  not  depart  from  that 
particular  business,  nor  appear  to  the 
world  in  any  other  light  than  the  one 
thus  exhibited,  one  of  the  partners  can- 
not make  a  valid  partnership  engage- 
ment on  any  other  tiian  a  partnership 
account.  There  must  be  some  author- 
ity, beyond  the  mere  circumstance  of 
partnership,  to  make  such  a  contract 
binding." 


CII.   VI.]         WHO    ARE    PARTNERS    AS    TO    THIRD    PARTIES.  Ill 

(entitled  to  a  very  small  share)  without  means,  and  therefore 
without  risk,  who  should  sign  all  their  paper  and  execute  all 
their  contracts ;  the  other  partners  taking  all  the  profits  and 
casting  all  the  losses  on  him.  But  it  would  as  certainly  be  a 
fraud,  if  a  customer,  who  knew  that  a  partner  with  whom  he 
dealt  had  no  authority  to  act  for  his  partners  in  a  certain  way 
or  on  certain  terms,  should  nevertheless  make  that  very  bar- 
gain with  him,  relying  on  the  responsibility  of  the  other  part- 
ners, (a)  A  firm  may  undoubtedly  permit  one  of  the  partners 
to  act  in  his  own  name,  but  for  the  interest  and  benefit  of  the 
firm,  and  then  any  loss  in  such  transaction  is  a  loss  of 
the  firm.  As  where  one  partner  deposited  the  funds  of  the 
firm  in  a  bank  in  his  own  name,  with  the  consent  and  for  the 
convenience  of  the  firm,  and  the  funds  were  charged  to  him 
in  the  books  of  the  firm,  but  only  to  indicate  in  whose  hands 
they  were,  and  the  bank  became  insolvent,  —  it  was  held  to  be 
the  loss  of  the  firm,  and  not  of  the  partner,  (aa) 

*  While  there  are  many  cases  in  which  this  general  *  102 
question  is  raised,  there  are  few  in  which  it  is  fully  con- 
sidered. In  nearly  all,  it  is  dismissed  with  the  simple  remark, 
that  any  stipulations  which  partners  choose  to  agree  upon 
between  themselves  are  operative  and  obligatory  upon  any 
third  parties  to  whom  they  are  made  known.  But,  for  the 
reasons  we  have  already  given,  we  think  this  statement  of 
the  rule  too  broad.  It  needs  to  be  qualified  by  the  other  rule, 
that  the  limitations  and  qualifications  shall  produce  or  leave 

(a)  To  a  similar  effect  is  the  language  upon  the  purchase  of  groceries  or  fur- 

of  Kent,  C.  J.,  in  Livingston  v.  lioose-  niture  for  his  family,  —  it  could  not  be 

velt,  4  Johns.  278,  279.     He  says  that  supposed  by  any  one  that  the  company 

where  the  particular  business  of  a  firm  would   be   holden.      These    would  be 

is  made  known  in  a  usual  and  reason-  plain  cases  of  a  fraud,  practised  upon 

able  way  to  the  public,  "  the  creditor  is  the  firm,  of  which  the  creditor  would 

advertised  that  he  is  not  dealing  on  a  be  chargeable  with  notice.     When  the 

partnership   account ;  and  for  him    to  public  have  the  usual  means  of  knowl- 

take  a  partnership  engagement,  with-  edge  given  them,  and  no  means  have 

out  the  consent  of  the  firm,  is,  in  judg-  been   suffered   by    the   partnership   to 

ment  of  law,  a  fraud  upon  the  firm,  mislead  them,  every  man  is  to  be  pre- 

S appose,  in  the  case  of  a  general  com-  sumed  to  know  the  extent  of  the  part- 

mercial  partnership,  a  debt  was  to  be  nership  with  whose  member  he  deals." 

contracted   by   one   partner   upon   the  Dow  v.  Sayward,  12  N.  H.  275.     See 

purchase  of  new  lands  ;  or  suppose,  in  Bignold  v.  Waterhouse,  1  Moore  &  S. 

the  case  of  a  partnership  between  two  259  ;    Maltby  v.  N.  W.  &  li.  Co.,  10  Md. 

attorneys,  in  law  business,  a  partnership  422. 

note  was  to  be  given  by  one  of  them  [aa)  Campbell  v.  Stewart,  34  III.  151. 


112  THE   LAW   OF   PARTNERSHIP.  [CH.  VI. 

something  of  equality  between  the  general  advantages  wliich 
are  to  be  gained  by  the  partnership  on  the  one  hand,  and  the 
power  and  authority  of  the  partner  or  partners  on  the  other ; 
or  in  other  eases,  similar  to  those  we  have  already  used,  the 
law  will  not  permit  parties  to  enter  into  an  actual  and  unlim- 
ited partnersliip,  so  far  as  regards  all  the  advantageous  results 
to  be  derived  from  a  partnership,  and  then  by  an  agreement 
among  themselves,  communicated  to  others,  to  protect  them- 
selves from  any  important  portion  of  the  liabilities  which 
necessarily  belong  to  partnership  by  the  law,  the  usage  of 
merchants,  and  reason  and  justice. 

We  have  already  seen  that  any  stipulations  between  partners 
bind  them,  and  there  is  nothing  to  prevent  them  from  agreeing 
that  one  shall  share  all  the  profits,  but  that  the  others  shall 
bear  all  the  losses.  This,  however,  will  not  prevent  a  creditor 
of  the  firm  from  suing  all,  nor  from  levying  an  execution  on 
the  property  of  the  partner  thus  exempted,  unless  the  creditor 
had  knowledge  of  the  agreement,  and  made  his  bargain  with 
the  firm  so  far  in  acceptance  of  and  accordance  with  that  agree- 
ment, that  he  must  be  taken  not  to  have  given  any  credit  to 
the  exempted  partner.  If  that  partner  is  made  to  pay  any 
share  of  loss,  by  the  general  law  of  partnership,  he  can  turn 
round  upon  his  partners,  under  their  agreement,  and  recover 

it  from  them. 
*  103  *  It  is  well  established  that  if  a  partner,  in  direct 

violation  of  his  stipulations  as  partner,  or  in  fraud  of 
the  partnership,  enters  into  any  contract  on  their  part  with  a 
third  person,  the  partners  are  not  discharged  by  his  breach  of 
contract,  or  by  his  fraud,  unless  the  third  person  was  partici- 
pant or  conusant  of  it.  (6) 

(h)  See  post,  ch.  7,  "  Of  the  Rights  A  partner  cannot,  for  a  private  con- 

and  Duties  of  Partners  between  Tliem-  sideration,  discharge   a  debtor  of  tlie 

selves."    And  see    Salland  v.  McRae,  firm,   by   an    agreement    to    pay  the 

16  La  Ann.  193 ;  Stockwell  v.  Dilhng-  debtor's   note  to   tlie   firm.     Lewis  v, 

ham,  50  Me.   442.     Mechanics'   Bank  Westner,  29  Mich.    14.     If  a  partner 

V.  Foster,  44  Barb.  87  ;  Gale  v.  Miller,  pays  his  private  debts  by  receipting  a 

id.   420 ;    Tilford   v.    Ramsey,  37    Mo.  bill  due  from  his  creditor  to  the  firm, 

563  ;    Hay  ward   v.   French,    12   Gray,  the  firm,  or  its  assignee,  may  neverthe- 

453;  Sterling  ?;.  Jandon,  48  Barb.  459;  less  recover  the  amount  of  their  bill. 

[Blodgett  y.  Weed,  119  Miss.  215.    See  Thomas    v.    Penrich,    Sup.    Ct.    Gin. 

also   Guild  v.  Welch,  119   Mass.  257.  Ohio,  3  L.  &  Eq.  Reptr.  399.     If  the 


CH.  VI.]         WHO    ARE    PARTNERS    AS    TO    THIRD    PARTIES. 


113 


We  add,  that  the  person  so  dealing  with  a  fraudulent  part- 
ner, in  actual  ignorance  of  the  fraud,  but  in  an  ignorance  which 
implies  gross  negligence  on  his  part,  should  not  be  permitted 
to  hold  the  firm.  This  would  be  an  inference  from  the  prin- 
ciples of  agency.  This  rule  has  been  applied  to  the  holder  of 
negotiable  paper,  and  should  be  applied  to  every  one  dealing 
with  such  partner,  (c) 


SECTION    IV. 

WHEN   CREDIT    IS    GIVEN    TO    ONE   PARTNER   ONLY. 

He  who  gives  credit  to  one  partner  alone,  cannot  call  on  the 
rest.     This  is  true,  however  the  credit  be  given.     As,  if 
the  *  creditor  sold  him  goods;  (cZ)  or  sold  to  another    *  104 


appropriation  by  one  partner  of  part- 
nership property  to  pay  his  private 
debt,  be  made  and  received  in  good 
faith  and  under  such  circumstances 
that  the  other  partners  and  tlie  cred- 
itors are  not  defrauded,  the  money  so 
appropriated  cannot  be  recovered  back. 
Corwin  v.  Suydara,  24  Ohio  St.  210.] 

(c)  Loyd  V.  Freshfield,  2  C.  &  P. 
325 ;  New  York  Fire  Insurance  Co.  v. 
Bennett,  5  Conn.  574.  In  this  last 
case,  Hosmer,  C.  J.,  says :  "  It  is  now 
insisted,  that  the  payee  of  a  promis- 
sory note,  although  he  has  knowledge 
that  the  maker  or  indorser  in  the  name 
of  the  firm  is  making  payment  by  this 
act  of  his  own  debt,  or  is  becoming  the 
surety  of  another  person,  without  the 
concurrence  of  his  partners,  and  that 
neither  the  partnership  covenant  nor 
the  interest  of  the  partnership  sanc- 
tions the  act,  yet  that  he  has  a  riglit 
to  subject  the  partnership.  The  prin- 
ciple, in  direct  hostility  with  justice 
and  convenience,  is  endeavored  to  be 
sustained  by  the  unwarranted  supposi- 
tion, that  the  payee,  not  having  knowl- 
edge that  special  authority  was  not 
given  the  partner,  may  fold  his  arms, 
and  reap  a  benefit  from  his  supine- 
ness.  Common  sense  and  common 
integrity  require  that  he  should  make 
inquiry,  in  such  cases,  and  actually 
know  that  authority  was  given.  He 
is  bound,  on  legal  and  fair  principles, 
to  sustain  the  affirmative.     He  knows 


that  the  partnership  is  for  mercantile 
operations.  He  knows  that  the  part- 
ner, signing  or  indorsing  a  note  in  the 
name  of  the  firm,  from  the  partnersiiip 
contract,  had  no  implied  authority. 
He  knows  that  the  act  can  alone  be 
authorized  by  the  delegation  of  ex- 
press power.  And  he  knows  tliat  on 
the  most  common  and  best-established 
principles,  in  promotion  of  justice  and 
prevention  of  fraud,  the  person  claim- 
ing the  obligation  of  contract  against 
a  partnership  is  bound  to  prove  it." 
See  Warren  v.  French,  6  Allen,  317 ; 
Kimball  v.  Walker,  30  III.  482 ;  Dun- 
can i\  Lewis,  1  Duvall  (Ky.),  183; 
Sims  u.  Smith.  12  Rich.  Law  (S.  C), 
685.  [Whether  the  plaintiff  suing  on 
such  a  note  had  such  notice  as  ought 
to  put  him  on  inquiry,  is  a  question 
for  the  jury.  Waite  v.  Thayer,  118 
Mass.  473.  The  burden  of  proof  that 
a  note  given  in  the  firm  name  by  one 
of  the  partners  is  not  on  partnership 
account,  is  on  the  partnership.  Cur- 
rier V.  Cameron,  31  Mich.  373.] 

(d)  As  where  goods  for  the  use  of 
a  stage-coach  are  supplied  to  one  of 
several  partners  in  a  stage-coach  line 
by  one  knowing  that  the  agreement 
between  them  is  that  each  shall  run 
and  stock  a  particular  portion  of  the 
road  at  his  own  expense.  Iliard  v. 
Bigg,  Mann.  N.  P.  Index,  Partners, 
A.  (a),  5;  Barton  v.  Hanson,  2  Camp. 
97 ;  2  Taunt.  49.     So  where  L.  &  C, 


8 


114 


THE    LAW    OF    PARTNERSHIP, 


[CH.  VI. 


goods  on  his  guaranty  ;  or  received  him  as  surety  in  any  way,  or 
loaned  him  money,  (e)  If  there  is  no  evidence  to  show  to  whom 
credit  was  given,  the   fact  that  money  borrowed  by  a  partner 

comes  to  the  use  of  a  firm  raises  a  presumption  that  the 
*  105    hjan  was  made  by  him  *  as  partner,  and,  if  not  rebutted, 

will    malce   the    firm    liable    for   the    repayment.  (/) 


by  articles,  entered  into  partnership  for 
the  manufacture  of  hemp ;  L.  to  find 
the  stock,  and  C.  to  furnish  the  ma- 
chinery and  operatives.  The  plain- 
tiff's slave  was  employed,  by  C.  alone, 
in  the  business  of  the  firm,  and  the 
present  action  was  assumpsit  against 
the  partners  for  the  value  of  his  ser- 
vices. The  plaintiff,  as  the  only  evi- 
dence of  the  liability  of  the  firm, 
exhibited  the  articles  of  copartnership, 
providing  for  the  arrangement  above 
stated.  Held,  that,  in  the  absence  of 
evidence  to  the  contrary,  the  plaintiff 
must  be  presumed  cognizant  of  the 
duty  of  C.  to  furnish  hands,  and  to 
have  contracted  solely  upon  the  credit 
of  C. ;  to  whom  alone,  therefore,  he 
could  look  for  payment.  Lafon  v. 
Cliinn,  6  B.  Mon.  305.  See  Pinckney 
t;.  Keyler,  4  E.  D.  Smith,  469.  In 
Young  V.  Hunter,  4  Taunt.  583,  Gibbs, 
J.,  said :  "  I  am  by  no  means  of  opin- 
ion that  there  may  not  be  a  case  where 
two  houses  shall  be  interested  in  goods 
from  the  beginning  of  the  purchase, 
yet  not  be  both  liable  to  the  vendor  : 
as  if  the  parties  agree  amongst  them- 
selves that  one  house  shall  purchase 
the  goods  and  let  the  other  into  an 
interest  in  them,  that  other  being 
unknown  to  the  vendor ;  in  such  a 
case  the  vendor  could  not  recover 
against  him,  although  such  other  per- 
son would  have  the  benefit  of  the 
goods.  See  further  Saville  v.  Rob- 
ertson, 4  T.  R.  725 ;  Gibson  v.  Lupton, 
9  Bing.  297  ;  Ex  parte  Harris,  1  Madd. 
583  ;  Holcroft  i-.  Hoggins,  2  M.,  G.  & 
Sc.  488;  Sylvester  v.  Smith,  9  Mass. 
121 ;  Holmes  v.  Burton,  9  Vt.  252 ; 
Ketchum  v.  Durkee,  1  Hoff.  Ch.  528 ; 
Watt  V.  Kirby,  15  III.  200 ;  Meyer  v. 
Larkin,  3  Cal.  403.  In  Johnston  v. 
Warden,  3   Watts,  101,  the  court  in- 


structed the  jury  :  "  That  if  A.  con- 
tract with  B.  to  deliver  articles  at  a 
specified  period,  and  if  in  the  inter- 
mediate time  B.  &  C.  enter  into  a 
partnership,  as  upon  such  a  contract, 
it  is  to  be  i)resun)ed  that  payment  is  to 
accompany  delivery  ;  if  credit  is  given 
at  the  time  of  delivery,  it  must  be  pre- 
sumed to  be  done  upon  the  credit  of 
the  partners,  and  this  whether  the  ex- 
istence of  the  partnership  was  known 
to  the  plaintiff  who  gave  the  credit  or 
not.  If  the  existence  of  the  partner- 
ship was  known  at  the  time,  no  doubt 
could  be  raised  ;  but  if  a  credit  be 
given  where  there  is  a  secret  partner, 
as  the  credit  is  supposed  to  be  given  as 
well  to  him  as  to  those  associated  with 
him,  upon  the  ground  that  he  is  en- 
titled to  the  profits,  so  he  in  equity 
should  be  responsible  for  the  loss  in 
the  present  case." 

(e)  Ex  parte  Hunter,  1  Atk.  223; 
Parkin  v.  Carruthers,  3  Esp.  248,  per 
Le  Blanc,  J. ;  Loyd  v.  Ereshfield,  2  C. 
&  P.  325 ;  Bevan  v.  Lewis,  1  Sims,  376 ; 
Murray  v.  Somerville,  2  Camp.  99 ;  Le 
Roy  V.  Johnson,  2  Peters,  186;  Mifflin 
V.  Smith,  17  S.  &  R.  169;  Willis  v.  Hill, 

2  Dev.  &  Bat.  231 ;  Foley  v.  Robards, 

3  Ired.  177  ;  Bird  v.  Lanius,  4  Wis.  615  ; 
Clay  V.  Cottrell,  18  Pe'^nn.  408  ;  Wiggins 
V.  Hammond,  1  Mo.  121 ;  Siegel  v. 
Chidsey,  28  id.  279;  Miller  v.  Morrice, 
6  Hill,  114;  Holmes  v.  Burton,  9  Vt. 
252;  Evans  v.  Biddleman,  3  Cal.  435; 
Logan  V.  Bond,  13  Ga.  192;  Foster  v. 
Hall,  4  Humph.  346 ;  Jaques  v.  Mar- 
quand,  6  Cow.  497  ;  VVhitaker  v.  Brown, 
16  Wend.  505. 

(/)  Jaques  v.  Marquand,  6  Cow.  497 
Rothwell  V.  Humphreys,   1  Esp.  406 
Church    V.   Sparrow,    5    Wend.    223 
Whitaker  v.  Brown,  16  id.  505.     If  for 
money  borrowed  a  partner  gives   his 


CH.  VI.]         WHO    ARE    PARTNERS    AS    TO    THIRD    PARTIES. 


115 


If  the  creditor  sold  goods  or  loaned  money  to  every  one  of  the 
partners  severally,  on  their  several  credit,  he  could  not  recover 
of  them  jointly,  nor  hold  them  mutually  responsible,  although 
the  money  or  the  goods  were  immediately  used  by  the  bor- 
rowers or  buyers  to  make  up  the  stock  of  the  firm,  or  provide 
for  its  debts  or  business.  (</) 

It  must,  however,  be  remembered,  that  this  credit,  to  exon- 
erate the  other  partners,  must  be  given  knowingly  and  volun- 
tarily. For,  if  one  sold  goods  actually  to  a  firm,  but  through 
the  agency  of  a  partner  whom  he  did  not  know  to  be  a  partner, 
and  accordingly  charged  the  same  to  that  partner  alone,  the 
firm  would  still  be  bound.  We  think  this  rule  applies  equally 
to  all  simple  contracts,  whether  oral  or  written.  (A) 


own  bill,  or  note,  or  other  simple  con- 
tract security,  and  suit  is  brought 
dire.ctly  u/wit  such  individual  security, 
"  it  cannot  be  allowed  to  supply  by  in- 
tendment the  names  of  others,  in  order 
to  charge  them"  (per  Lord  Ellen- 
borough,  C.  J.,  in  Emly  v.  Lye,  15 
East,  7) ;  Skiffkin  v.  Walker,  2  Camp. 
308;  £x  parte  Brown,  1  Atk.  225, 
cited;  Ex  parte  Bolitho,  Buck,  103; 
though  upon  the  common  money  counts 
the  partnership  may  be  charged,  if  the 
obligation  of  the  borrowing  partner 
was  meant  to  be  taken,  not  in  lieu 
of,  but  simply  in  connection  with,  the 
partnership  liability.  Ibid. ;  Denton  v. 
Rodie,  3  Camp.  493;  Tuckers. Peaslee, 
36  N.  H.  107.  If,  however,  the  obliga- 
tion of  one  partner  be  thus  taken,  not 
as  a  collateral,  but  as  the  sole  security 
for  the  money  loaned,  the  credit  must 
be  deemed  to  have  been  given  solely 
to  that  partner,  and  the  lender  cannot 
recover  for  money  had  and  received  hy 
the  partnership,  notwithstanding  the 
loan  went  to  its  use.  As  where  the 
transaction  between  a  banker  and  one 
partner  is  in  fact  a  discount  by  the 
former  of  the  latter's  paper ;  notwith- 
standing the  application  of  the  funds  so 
raised  to  the  uses  of  the  firm,  and  the 
understanding  by  the  banker  that  they 
would  be  *so  applied,  the  discounter 
does  not  become  a  creditor  of  the  part- 
nership, but  simply  of  the  contracting 
partner  ;  for  "  the  purchase  or  discount 


of  a  note  is  a  contract  wholly  un- 
connected with  the  objects,  uses,  or 
application  of  the  money  paid."  Per 
Baldwin,  J.,  in  Winship  v.  Bank  of  the 
United  States,  5  Peters,  567 ;  Emly  v. 
Lye,  15  East,  7 ;  Uenton  v.  Ilodie,  3 
Camp.  493  ;  Graeff  v.  Hitchman,  5 
Watts,  454 ;  Bond  v.  Aitkin,  6  Watts 
&  S.  165;  Foster  v.  Hall,  4  Humph. 
346 ;  Union  Bank  v.  Eaton.  5  id.  499 ; 
Green  v.  Tanner,  8  Mete.  411 ;  Ostrom 
V.  Jacobs,  9  Mete.  454  ;  Thorn  v.  Smith, 
21  Wend.  365;  Beebe  v.  Rogers,  3  G. 
Greene,  319;  Mead  v.  Tomlinson,  1 
Day,  148.  See  also  Donnally  v.  Ryan, 
41  Penn.  306;  Folk  v.  Wilson,  21  Md. 
538. 

(g)  Saville  v.  Robertson,  4  T.  R.  725. 
See  Hoare  v.  Dawes,  Dougl.  371  ; 
Coope  V.  Eyre,  1  H.  Bl.  37  ;  Smith  v. 
Craven,  1  Cromp.  &  J.  500 ;  Bevan  v. 
Louis,  1  Sims.  376  ;  Wall's  Adm. 
V.  Fife,  37  Penn.  394.  [So  where  two 
parties  agree  to  buy  separately  cer- 
tain amounts  of  a  specified  kind  of 
property,  and  then  to  form  a  partner- 
ship, each  contributing  his  purchase  to 
the  firm,  neither  partner  is  liable  for 
the  purchase  of  the  other,  as  for  a  part- 
nership debt.  McGar  v.  Drake,  Sup. 
Ct.  Tenn.,  5  Reptr.  387.] 

{h)  It  was  laid,  in  one  case,  in  the 
Common  Pleas  in  England,  that  there 
was  a  difference  between  a  written  and 
an  oral  contract,  so  far  as  regards  the 
liability  of  a  dormant  partner   to  be 


116 


THE    LAW    OF    PARTNERSHIP. 


[CH.   VI. 


*  106        *  The   firm  would  not  be  lield,  if  the  creditor  of  the 

firm  liad  accepted  the  individual  security  of  the  partner 

instead  of  the  debt  of  the  firm  ;  provided  the  new  individual 


sued  thereon,  and  that,  in  an  action 
upon  the  former,  it  was  not  allowable 
to  add  as  parties  otlier  persons  than 
those  whose  names  were  signed  to  the 
agreement.  Beckiiam  v.  Knight,  4 
Bing.  N.  C.  243.  The  facts  of  tiie  case 
are  suflBciently  set  forth  in  tlie  opinions 
of  the  judges.  Tindall,  C.  J.:  "The 
action  is  brought  on  an  express  con- 
tract between  Knight  &  Surgey  of  the 
one  part,  and  the  plaintiff  of  the  other 
part.  It  appears  by  the  plea  that  three 
persons  were  carrying  on  business 
under  the  firm  of  Knight  &  Surgey, 
and  that  the  defendant  Drake  was  a 
dormant  partner.  The  agreement  is  in 
writing  inter  partes  ;  and  it  contains  no 
intimation  tliat  Knight  «&,  Surgey  were 
carrying  on  business  as  members  of  a 
more  extensive  firm.  1  know  of  no 
authority  for  introducing  the  name  of 
a  dormant  partner  into  such  a  contract. 
In  implied  contracts,  wliere  the  benefit 
is  equal,  and  the  liability  not  limited, 
a  dormant  partner  may  be  included ; 
but  there  is  no  authority  which  extends 
the  principle  to  express  contracts." 
Bosanquet,  J.  :  "  Tlie  ijlaintiflT  is  pre- 
cluded, by  the  form  of  the  contract, 
from  saying  that  any  other  person  en- 
tered into  it  besides  himself  and  Knight 
&  Surgey."  See  also  Robinson  v.  Rud- 
kins,  E.xch.  38  Eng.  L.  &  Eq.  372.  But 
Beckham  v.  Knight,  supra,  was  after- 
wards overruled  in  the  Excliequer.  In 
Beckham  v.  Drake,  9  M.  &  W.  79, 
upon  the  same  state  of  facts,  Lord 
Abinger,  C.  B.,  said  :  "  I  am  of  the 
same  opinion  that  I  was  then,  that  tlie 
doctrine  stated  by  the  Court  of  Com- 
mon Pleas,  that,  when  a  contract  is  in 
writing  between  parties  signing  their 
names  to  it,  it  cannot  be  used  against 
other  parties  than  those  who  signed 
their  names  to  it,  —  cannot  be  supported 
either  on  principle  or  authority.  That 
position,  indeed,  is  contradicted  by  the 
whole  series  of  authorities  bearing  on 
the  subject.     There  is  no  question  that 


a  contract  in  writing  by  an  agent, 
signed  by  himself,  will  bind  his  prin- 
cipal, when  the  other  contracting  party 
discovers  tlie  principal,  although  the 
contract  was  made  vvitliout  his  know- 
ing who  the  principal  is  ;  as,  for  in- 
stance, in  the  case  of  a  bill  of  lading 
signed  by  the  master,  where  the  action 
is  brought  against  the  owners.  It  is 
also  the  case  of  every  charter-party, 
which  is  signed  by  the  owner,  where 
the  owner  is  rendered  liable  by  the  act 
of  the  master,  because  the  master  is 
his  agent.  So  it  is  in  a  vast  variety 
of  other  cases  which  frequently  occur, 
all  establishing  the  principle,  that  the 
parties  really  contracting  are  the  par- 
ties to  sue  in  a  court  of  justice,  although 
the  contract  be  in  the  name  of  another. 
...  A  contract  under  seal  can  bind 
none  but  those  who  sign  and  seal  it.  A 
contract  not  under  seal  is  open  to  all 
the  common-law  requirements  and  in- 
cidents of  a  contract,  wliether  in  writ- 
ing or  not.  Suppose  these  two  partners, 
Knight  &  Surgey,  had  made  a  contract 
verbally,  not  having  said  a  word  about 
Drake ;  no  question  could  then  have 
arisen  that  Drake  might  nevertheless 
be  liable  upon  it.  How,  then,  does  the 
fact  of  its  being  in  writing,  and  of  their 
having  put  their  names  to  it,  alter  tiie 
case  ^  The  parties  are  just  in  the  same 
situation,  and  there  can  be  no  difference. 
There  is  nothing  affirmative  on  the 
face  of  the  contract  to  show  an  inten- 
tion to  exclude  everybody  but  them- 
selves. It  is  open  to  the  defendant 
Drake  to  show  such  an  intention,  but, 
unless  it  be  shown,  the  objection  does 
not  arise."'  See  Cooke  v.  Seeley,  2 
Exch.  746.  See,  to  the  same  effect, 
Snead  v.  Baringer,  1  Stew.  134 ;  Rey- 
nolds V.  Cleaveland,  4  Cow.  282 ;  Mead 
V.  Tomhnson,  1  Day,  148.  The  ques- 
tion as  to  whom  tlie  credit  was  given 
is  one  for  tiie  jury.  Webster  v.  Stearns, 
44  N.  H.  498. 


CH.  VI.]         WHO    ARE    PARTNERS    AS    TO    THIRD    PARTIES. 


117 


indebtedness  l)e  of  a  higher  nature  than  the  firm  debt,  or  pay- 
able sooner,  or  attended  witli  some   other  advantage, 
which  might  be  regarded  as  a  *  consideration,  (i)    And    *  107 


(i)  As  where  the  bond  or  other  spe- 
cialty of  one  partner  is  taken  for  the 
simple  contract  debt  of  the  partnership, 
see  Williams  v.  Hodgson,  2  Harris  &  J. 
474;  Tom  v.  Goodrich,  2  Johns.  214; 
Clement  i-.  Brush,  3  Johns.  Cas.  180 ; 
Waugh  V.  Carriger,  1  Yerg.  31 ;  Ward 
V.  Hotter,  2  Rob.  (Va.)  536  ;  Moule  v. 
Rollins,  11  Gill  &  J.  11  ;  Jacobs  v.  Mc- 
Bee,  2  McMullan,  348 ;  Bell  v.  Banks, 
3  Man.  &  G.  258 ;  Ward  v.  Johnson,  13 
Mass.  150 ;  Patterson  i'.  Brewster,  4 
Edw.  Ch.  352;  McNaugliten  v.  Par- 
tridge, 11  Ohio,  223.  In  United  States 
V.  Astley,  3  Wash.  C.  C.  612,  Washing- 
ton, J.,  said  :  "  Tlie  reason  upon  which 
the  doctrine  is  founded  is  obvious.  The 
bond  is  clearly  obligatory  upon  the 
parties  who  e.xecuted  it,  and  is  there- 
fore an  extinguishment  of  the  simple 
contract  debt  as  to  him.  A  joint  action, 
therefore,  to  recover  on  the  original 
debt  could  not  be  supported  against 
both  partners.  Neither  could  an  action 
be  maintained  against  the  partner  wlio 
did  not  execute  the  bond,  because  he 
has  a  right  to  insist  that  his  partner 
should  be  joined  with  him  in  the  action  ; 
of  which  right  the  creditor  and  the 
other  partner  cannot,  without  his  con- 
sent, deprive  him.  It  is  precisely  like 
the  case  of  a  release,  which,  if  given  to 
one  joint  debtor,  discharges  both.  A 
bond  given  for  a  simple  contract  debt 
operates  as  a  release  of  that  debt,  and 
creates  another  of  a  superior  dignity, 
wliich  can  be  enforced  only  against  the 
person  who  executed  tlie  bond." 

The  above  reasoning  seems  conclu- 
sive, and  appears  to  place  the  doctrine 
in  question  upon  a  foundation  entirely 
independent  of  the  intentions  of  the 
parties.  A  different  principle,  however, 
is  intimated  in  some  of  the  authorities. 
Thus,  in  United  States  v.  Lyman,  1 
Mason,  505,  506,  Story,  J.,  says:  "  The 
doctrine,  that  in  general  a  higher  secu- 
rity taken  from  the  debtor  himself 
extinguishes  the  original  contract,  pro- 
ceeds upon  a  presumption  of  law  that 


it  is  taken  in  satisfaction  of  the  original 
debt ;  for,  if  it  appear  otherwise  upon 
the  face  of  the  security,  it  will  not 
operate  as  an  extinguishment.  ...  It 
is,  therefore,  after  all,  a  mere  question 
of  interest ;  and  the  law,  in  the  absence 
of  all  other  evidence  of  the  interest, 
construes  the  higher  security  of  the 
debtor  himself  as  an  extinguishment, 
because  it  gives  a  higher  remedy.  I 
admit,  also,  that  a  higher  security  by  a 
third  person,  if  taken  at  the  time  of 
making  the  original  contract  or  after- 
wards, in  satisfaction  of  the  debt, 
operates  as  an  extinguishment.  But 
there  is  this  difference  between  the 
case  of  a  higher  security  of  the  debtor 
himself  and  of  a  third  person,  that,  in 
the  latter  case,  the  law  does  not  presume 
the  security  taken  in  satisfaction,  unless 
it  is  averred  and  proved  to  be  the  agree- 
ment of  the  parties  so  to  consider  it. 
Whether  the  receiving  of  a  higher  secu- 
rity from  one  partner  for  a  partnership 
debt  be  an  extinguishment,  unless  ex- 
pressly taken  in  satisfaction  of  such 
debt,  may  perliaps  admit  of  some  doubt, 
notwithstanding  the  language  of  some 
highly  respectable  authorities."  So  in 
Bond  V.  Aitkin,  6  Watts  &  S.  165,  the 
language  of  the  court  is  :  "  Where  the 
bond  of  one  of  the  partners  is  taken  for 
an  antecedent  partnership  debt,  it  may 
be  considered  either  as  payment  and  ex- 
tinguisliment  of  such  debt,  or  only  a  col- 
lateral security,  according  to  the  nature 
of  the  transaction  and  the  circumstan- 
ces attending  it.  Wallace  '•.  Fairman 
(4  Watts,  378).  But  where  there  is  no 
antecedent  debt,  but  the  bond  of  one 
partner  is  taken  at  the  time  money  is 
loaned  to  the  partnership,  and  as  the 
consideration  for  loaning  the  mone}',  it 
can  hardly  be  treated  as  a  collateral 
security.  It  must  be  considered  as  all 
one  transaction,  and  the  bond  as  the 
only  security  contemplated  ;  unless,  per- 
haps, there  were  strong  and  positive 
evidence  to  show  an  express  agreement 
to  the  contrary  by  all  parties."     See 


118 


THE   LAW    OF   PARTNERSHIP. 


[CH.  VI. 


*  108    a  judgment  obtained  against  one  partner,  wlietlier  *  the 
others  be  ostensible  or  secret,  discharges  the  firm  from 
liability  to  be  sued  for  the  same  debt.  (Z) 


Collier  v.  Leech,  29  Penn.  St.  404.  And 
where  two  partners  agreed  to  borrow 
money  for  partnership  purposes,  and, 
upon  its  being  loaned  to  them,  one  of 
them  gave  his  sole  bond  for  the  amount, 
with  the  other  as  a  witness,  it  was  held, 
upon  the  insolvency  of  the  firm,  that 
the  obligee  might  be  admitted  as  cred- 
itor under  a  joint  commission.  Ex  parte 
Brown,  1  Atk.  225,  cited.  See  Horton 
V.  Child,  4  Dev.  400  ;  Ross  v.  Lawhorn, 
Dudley,  300;  Doniphan  v.  Gill,  1  B. 
Mon.  199.  See  Despatch  Line  of  Pack- 
ets V.  Bellamy  Man.  Co.,  12  N.  H.  234. 
But  the  ground  upon  which  the  rule  is 
placed  in  the  passage  above  quoted 
from  Washington,  J.,  certainly  seems 
to  be  more  consonant  with  the  weight 
of  the  authorities.  In  Clement  v.  Brush, 
3  Johns.  Cas.  180,  the  understanding 
of  the  parties  that  the  partnership  was 
not  to  be  released  was  evinced  on  the 
face  of  the  specialty,  which  was  taken 
by  the  creditor  for  the  firm  debt,  by  its 
being  signed  by  the  partner  with  the 
name  of  the  firm.  But  the  court  said  : 
"  One  partner  cannot  bind  his  copartner 
by  seal.  The  defendant  Brush,  who 
executed  it,  is  alone  bound  by  the  spe- 
cialty ;  and,  it  being  a  debt  of  a  higher 
nature,  it  extinguishes  the  simple  con- 
tract or  partnership  debt."  So  in  Wil- 
liams V.  Hodgson,  2  Harris  &  J.  474, 
and  in  McNaughten  v.  Partridge,  11 
Ohio,  223. 

(/)  King  V.  Hoare,  13  M.  &  W.  494 ; 
Maule,  J.,  in  Bell  v.  Banks,  3  Man.  &  G. 
207 ;  Lechmere  v.  Fletcher,  1  Cromp. 
&  M.  035  ;  Trafton  v.  United  States,  3 
Story,  048,  651 ;  United  States  v.  Cush- 
man,  2  Sumner,  437,  440 ;  Pearce  v. 
Kearney,  5  Hill,  82 ;  Suydam  v.  Barber, 
6  Duer,  34,  38  ;  McMaster  v.  Vernon,  3 
id.  249;  Peters  v.  Sandford,  1  Denio, 
224.  See,  however.  Collier  v.  Leech,  29 
Penn.  St.  404.  But  this  is  not  upon 
the  ground  that  the  creditor  who  thus 
obtains  judgment  against  one  partner 
alone  thereby  agrees,  or  is  on  that  ac- 
count presumed  to  agree,  to  release  the 


other  partners.  If  that  were  so,  the 
presumption  might  be  rebutted  ;  as,  for 
instance,  in  the  case  of  a  secret  partner, 
and  the  firm  held,  notwithstanding  a 
prior  judgment  against  one  partner 
upon  the  same  cause  of  action.  But 
the  real  reason  in  case  of  a  judgment, 
as  well  as  of  a  bond,  is,  that  the  cred- 
itor, by  taking  the  higher  form  of  a 
judgment  security  against  one  partner 
for  a  debt  due  jointly/  from  <dl  the  part- 
ners, thereby  changes  the  relations  and 
liabilities  of  the  parties  under  the  orig- 
inal contract,  and  cannot,  therefore, 
afterwards  hold  them  upon  it,  what- 
ever may  be  his  intention.  Perhaps 
these  two  views  of  the  effect  of  a  cred- 
itor's taking  the  separate  higher  secu- 
rity of  one  partner  for  a  partnership 
debt  arise  from  a  partnership's  being 
regarded  in  two  different  liglits.  If  a 
partnership  be  treated  as  a  person,  en- 
tirely distinct  from  the  individual  part- 
ners, then  a  contract  between  a  creditor 
of  the  firm  and  one  of  the  partners,  by 
which  the  former  receives  from  the  lat- 
ter, for  a  firm  debt,  his  sole  obligation 
of  a  higher  nature,  is  res  inter  alios  acta, 
and  may  be  said  not  to  discharge  the 
firm,  unless  clearly  proved  to  have  been 
intended  by  all  the  parties  to  have  that 
effect.  If,  on  the  other  hand,  a  part- 
nership be  considered  simply  as  so 
many  persons,  who  contract  and  are 
bound  jointl}',  but  in  no  other  way,  a 
person  who  has  made  a  contract  with 
the  partnership,  but  who  afterwards  in 
some  way  absolves  one  of  the  partners 
from  liability  to  be  sued  upon  it  to- 
gether with  the  other  partners,  has 
thereby  precluded  himself  from  suing 
on  the  original  contract,  because  by  his 
own  act  he  has  deprived  himself  of  the 
proper  parties. 

We  have  already  seen  that  a  judg- 
ment against  an  ostensible  partner, 
upon  a  joint  claim,  though  unsatisfied, 
and  obtained  during  the  concealment 
of  the  secret  partner,  is  a  bar  to  a  sub- 
sequent suit  upon  the  same  cause  of 


CH.  VI.]         WHO    ARE    PARTNERS    AS    TO    THIRD    PARTIES.  119 

*  If  a  creditor  of  a  firm  has  lost  his  remedy  against  *  109 
the  partnership  by  taking  from  one  partner  a  security 
of  a  higlier  nature,  it  may  not  be  quite  determined  whether 
equity  will  give  relief;  or,  if  it  can,  under  what  circumstances 
and  in  what  manner  this  relief  will  be  afforded.  Perhaps  the 
question,  in  each  case,  would  be  determined  by  the  intention 
of  the  parties  ;  for,  if  they  purposed  and  desired  to  extinguish 
the  joint  debt  and  substitute  an  individual  debt,  neither  equity 
nor  law  would  keep  the  joint  debt  alive.  It  is  held,  in  several 
cases,  that  it  is  no  ground  for  the  interposition  of  equity,  that 
a  creditor  of  a  partnership  has,  in  ignorance  of  a  secret  partner, 
extinguished  his  remedy  at  law  against  him  by  taking,  for  the 
debt  of  the  firm,  either  a  judgment  against  the  ostensible 
partner,  or  his  separate  bond  or  specialty,  (m)  If,  however, 
a  partner  attempts  to  bind  the  partnership  by  a  specialty, 
but,  failing  for  want  of  authority,  binds  himself  only,  and 
thereby  discharges  the  partnership  at  law  altogether,  —  equity 
will  give  relief  against  the  other  partner,  if  it  be  shown  that 
the  contract  was  really  on  the  partnership  account,  and  was 
intended  by  all  parties  to  bind  the  firm,  (w) 

action  brought  against  botli  the  osten-  his  firm,  all  the  parties  to  this  instru- 

sible   and  the   secret  partners.     Upon  nient  and  all  the  partners  supposing, 

the  same   principles,   the  bond  of  an  at  the  time,  that  the  partnership  was 

ostensible  partner,  taken  for  a  partner-  bound  by  such  execution.     It  was  held, 

ship  debt,  extinguishes    the   claim   as  that,  on  the  ground  of  the  mistake  of 

against  a  secret  partner,  who  may  be  the  parties  as  to  the  legal  effect  of  the 

afterwards  discovered.     See  a  full  dis-  execution   of   the  bond,  equity  miglit 

cussion  of  this  point  in  Ward  v.  Hotter,  relieve    against    the    firm.      But    the 

2  Rob.  ( Va.)  606  ;  also,  Anderson  u.  Le-  obligee,   having,   after   the    discovery 

van,  1  Watts  &  S.  334  ;  Spear  v.  Gillet,  of   the   mistake,  pursued   his   remedy 

1  Dev.  Eq.  466.  against  the  executing  partner  individ- 

{m)  Penny  r.  Martin,  4  Johns.  Ch.  ually,   on   the  aforesaid   bond,  it  was 

566 ;  Willings  v.  Consequa,  1  Pet.  C.  Iidd,  tliat  this  was  a  ratification  of  the 

C.  301 ;  Williams  v.  Hodgson,  2  Har.  «&  arrangement  by  which  the  partnership 

Johns.  474 ;  Smith  v.  Black,  9  S.  &  R.  had  been  discharged,  and  that  equity 

142 ;    How    V.    Kane,    2    Chand.    222 ;  could  not  now  relieve.     The  doctrine 

Ledam  u.  Williams,  4  McLean,  51.    See  in  Virginia  is  tlms  set  forth  in  a  late 

Spear  r.  Gillet,  1  Dev.  Eq.  466.  case  (Nadnay  v.  Harvey,  9  Gratt.  466) 

(n)  Wliarton  17.  Woodburn,  4  Dev.  &  by  Daniel,  J.:  "It  may,  however,  I 
Bat.  507  ;  Blanchard  t'.  Parteur,  2  think,  be  stated  as  the  well-settled  doc- 
Hay  w.  393 ;  James  v.  Bostwick,  Wriglit,  trine  of  this  court,  that  whilst  the  mere 
142.  Gunter  v.  Williams,  40  Ala.  561.  acceptance  of  such  higher  security  by 
See  McKee  v.  Bank  of  Mt.  Pleasant,  7  a  creditor  from  one  member  of  a  firm, 
Ohio,  175.  In  McNaughten  v.  Par-  for  a  partnership  debt  due  by  simple 
tridge,  11  id.  223,  one  partner  executed  contract,  destroys  the  right  of  the  cred- 
a  bond  for  a  joint  debt  in  the  name  of  iter  to  proceed  at  law  against  the  mem- 


120 


THE    LAW    OF    PARTNERSHIP. 


[CH.  YI. 


*  110  *  If  there  be  no  new  consideration  for  the  new  prom- 
ise, as  all  the  partners  were  equally  liable  in  solido  for 
the  firm  debt,  the  new  promise  of  any  one  of  them  to  pay  it, 
should,  by  itself  alone,  be  no  consideration  for  releasing  the 
rest,  (o)  It  is,  however,  the  doctrine  of  some  well-considered 
cases,  that  it  is  for  the  jury  to  decide  whether  the  creditor  in- 
tended to  accept  the  sole  liability  of  a  partner  in  discharge  of 
the  joint  debt  of  the  firm  ;  for  if  there  was  such  an  intention, 
and  no  fraud,  the  new  promise  would  be  supported  on  the 
ground  that  the  sole  promise  must  have  been  more  beneficial 
than  the  joint  promise,  or  it  would  not  have  been  accepted  in- 
stead of  the  joint  promise.  (/>) 


ber  wlio  was  not  a  party  in  giving  such 
higher  security,  yet  tliat  a  court  of 
equit}'  will  look  at  the  original  char- 
acter of  the  debt,  and  will  not  withhold 
relief  against  the  member  not  uniting 
in  the  higher  security,  merelj'  because 
of  the  merger  and  destruction  of  the 
legal  remedy  against  him ;  but  will 
treat  that  simple  contract  as  a  debt 
still  subsisting  inforo  conscienticE,  unless 
it  is  shown  that  the  creditor  intended, 
by  accepting  such  higher  securit}',  to 
abandon  all  recourse  upon  his  original 
demand.  In  other  words,  that  in  a 
court  of  law  the  higher  security  oper- 
ates per  se  a  destruction  of  the  simple 
contract ;  but  that,  in  a  court  of  equity, 
whether  such  is  to  be  the  effect  of  the 
transaction,  is  a  question  to  be  decided 
by  proof  of  the  intention  of  the  parties. 
If  by  taking  such  higher  security  it 
was  not  the  design  of  the  parties  that 
the  social  debt  should  be  wholly  extin- 
guished, equity  will  still  hold  all  the 
partners  bound.  If,  on  the  other  hand, 
the  higher  security  is  given  and  ac- 
cepted as  a  substitute  for  the  original 
simple  contract  of  the  firm,  and  with 
the  intention  to  absolve  the  firm,  all 
remedy  upon  the  latter  is  gone,  in 
equity  as  well  as  at  law."  See  Sale  v. 
Dishman,  3  Leigh,  548  ;  Gait  v.  Cal- 
land,  7  id.  594  ;  Weaver  v.  Tapscott,  9 
id.  424  ;  Ward  v.  Motter,  2  Kob.  (Va.) 
552 ;  Moser  v.  Libenguth,  1  Rawle, 
255  ;  Hart  v.  Withers,  1  Penn.  St.  285, 
290. 


(o)  Attwood  V.  Banks,  2  Beav.  192  ; 
Lodge  V.  Dicas,  3  B.  &  Aid.  611  ;  Liv- 
ingston V.  RadcliflT,  6  Barb.  201  ;  David 
V.  EUice,  5  B.  &  C.  196 ;  Cole  v.  Sack- 
ett,  1  Hill,  516  ;  Waydell  v.  Luer,  5  id. 
448  ;  Wildes  v.  Fessenden,  4  Mete.  12  ; 
Frentress  v.  Marble,  2  Greene  (la.),  553. 
See  Pierce  v.  Cameron,  7  Rich.  114; 
Stone  V.  Chamberlin,  20  Ga.  259.  [If 
a  creditor  of  the  firm,  after  dissolution, 
knowing  that  one  or  more  of  the  part- 
ners have  agreed  to  assume  and  pay 
the  firm  debts,  accepts  the  note  of  those 
agreeing  to  pay,  in  payment  of  his 
debt,  it  is  a  discharge  of  the  other 
partners.  Millerd  v.  Thorn,  56  N.  Y.  402. 
So  where  each  partner  gives  his  note 
for  his  share  of  a  debt,  it  is  a  discharge 
of  the  partnership  debt.  Maxwell  v. 
Day,  45  Ind.  509.] 

(/))  Thus  it  was  said  by  Denman,  C. 
J.,  in  Thompson  v.  Percival,  5  B.  & 
Aid.  925 :  "  Many  cases  may  be  con- 
ceived in  which  the  sole  liability  of  one 
or  two  debtors  may  be  more  beneficial 
than  the  joint  liability  of  two,  either 
in  respect  of  the  solvency  of  the 
parties  or  the  convenience  of  the  rem- 
edy, as  in  cases  of  bankruptcy,  or 
survivorship,  or  in  various  other  ways  ; 
and  whether  it  was  actually  more  bene- 
ficial in  each  particular  case  cannot  be 
made  the  subject  of  inquiry."  Kirwan 
V.  Kirwan,  2  Cromp.  &  M.  617,  623; 
Hart  V.  Alexander,  2  M.  &  W.  484 ; 
Waydell  v.  Luer,  3  Denio,  410;  Liv- 
ingston V.  Radcliff,  6  Barb.  301  ;  Van 


CH.  VI.]         WHO    ARE   PARTNERS    AS   TO    THIRD   PARTIES. 


121 


From  the  language  used  in  some  cases,  it  might  be  inferred 
that  the  taking  of  a  new  security  of  the  same  class  from  one 
partner  for  a  partnership  debt  is  of  itself  sufficient  to  extinguish 
tlie  partnership  debt,  and  to  discharge  the  firm.  But  the 
principle  now  applied,  l)otli  in  England  and  generally  in  this 
country,  is,  that  the  acceptance  by  a  creditor  of  the  firm  of  one 
partner's  separate  security  of  the  same  class  with  the  joint 
security  discharges  the  other  partners  only  when  an  ex- 
press or  implied  *  agreement  that  such  shall  be  the  effect  *  111 
of  the  transaction  is  clearly  made  out.  (^q) 

Instances  of  partners  using  the  name  or  credit  of  the  firm 
for  their  personal  advantage,  and  without  authority,  are  con- 
stantly occurring  ;  and,  as  we  have  seen,  when  this  is  known  to 
the  person  dealing  with  them,  the  firm  are  not  held.     Some 


Eps  V.  Dillage,  id.  244 ;  also,  Harris  v. 
Lindsay,  4  Wash.  C.  C.  271 ;  Marshall, 
C.  J.,  in  Shelby  v.  Mandeville,  6  Cranch, 
264 ;  Ex  ]>arte  Liddiard,  4  Deacon  & 
Ch.  603  ;  Oakeley  v.  Paslieller,  10  Bligh, 
548 ;  Anderson  v.  Henshaw,  2  Day, 
272 ;  Thomas  v.  Shillibeer,  1  M.  &  W. 
124.  The  principle  of  these  latter 
cases  seems  also  to  have  been  asserted 
in  Evans  v.  Drumraond,  4  Esp.  92,  and 
in  Reed  v.  White,  5  id.  122.  In  the 
former,  Lord  Kenj'on  said  :  "  Is  it  to 
be  endured,  that,  when  partners  have 
given  their  acceptance,  and  when  per- 
haps one  of  two  partners  has  made 
provision  for  the  bill,  the  holder  shall 
take  the  sole  bill  of  the  other  partner, 
and  yet  hold  both  liable  ?  I  am  of 
opinion,  that,  when  the  holder  chooses 
to  do  so,  he  discharges  the  other  part- 
ner." [Acceptance  by  a  firm  creditor 
of  a  note  made  by  the  surviving  part- 
ner, who  had  been  authorized  to  take 
this  in  liquidation,  does  not  discharge 
the  estate  of  the  deceased  partners. 
Titus  V.  Todd,  25  N.  J.  Eq.  458.] 

(7)  Ex  parte  Hodgkinson,  19  Ves. 
295 ;  Newmarch  v.  Clay,  14  East,  239 ; 
Kirwan  r.  Kirwan,  4  Tyrw.  491 ;  2  C. 
&  M.  617  ;  Harris  v.  Farwell,  15  Eng. 
L.  &  Eq.  70,  15  Beav.  31  ;  Winter  v. 
Innes,  4  Myl.  &  Cr.  108,  109;  Estate 
of  Davis  V.  Desauque,  5  Whart.  530 ; 


Arnold  v.  Camp,  12  Johns.  409 ;  Smith 
V.  Rogers,  17  id.  340  ;  Muldon  r.  Whit- 
lock,  1    Cow.  290 ;  Frisbie  v.  Earned, 

21  Wend.  450;  Waydell  v.  Luer,  3 
Denio,  410  ;  Parker  v.  Cousins,  2  Gratt. 
372  ;  Mason  v.  Wickersham,  4  Watts  & 
S.  100;  Kinslerr.  Pope,  5  Strobh.  126; 
Yarnell  v.  Anderson,  14  Mo.  019 ;  Pot- 
ter V.  McCoy,  26  Penn.  St.  458; 
Hill  V.  Voorhies,  22  id.  68 ;  Nichols  v. 
Cheairs,  4  Sneed,  229.  And  even  in 
those  States,  where,  as  in  Maine, 
Massachusetts,  and  Vermont,  the  tak- 
ing of  a  negotiable  note  or  bill  is  re- 
garded as  prima  facie  evidence  of  pay- 
ment of  the  debt,  it  may  be  believed 
that  the  acceptance  by  a  partner- 
ship creditor  of  such  separate  secu- 
rity would  not  discharge  the  firm,  un- 
less it  were  clearly  sliown  that  such 
was  the  intention  of  the  parties.  Bar- 
ken-. Blake,  11  Mass.  20,  21.  See  also 
Melledge  v.  B.  Iron  Co.,  5  Cush.  170; 
Fowler  v.  Ludwig,  34  Me.  455;  Tracy 
V.  Pearl,  20  Vt.  162 ;  Heald  v.  Warren, 

22  id.  410.  The  security  of  one  or 
more  of  the  partners  for  a  firm  debt  is 
more  frequently  taken  by  a  creditor 
where  the  partnership  is  dissolved  by 
the  retirement  of  one  or  more  of 
its  members.  See  ch.  31,  §  2,  for 
a  more  detailed  examination  of  the 
cases. 


122  THE   LAW    OF    PARTNERSHIP.  [CH.  VI. 

difficulty  often  arises  as  to  the  proof  of  such  knowledge  on  the 
part  of  the  creditor.  Tliere  is  a  rule,  however,  which  rests  on 
strong  authority,  and  is  in  itself  reasonable,  just,  and  convenient, 
which  would  settle  most  of  these  cases,  or  at  least  reduce  them 
to  mere  questions  of  fact.  It  is,  that  whenever  a  party  re- 
ceives from  any  partner,  in  payment  for  a  debt  due  from  that 
partner  only,  whether  the  debt  be  created  at  the  time  or  before 
existing,  or  by  way  of  settlement  of  or  seciirity  for  a  debt  or 
indebtedness  or  obligation  of  the  firm  in  any  form,  the  pre- 
sumption of  the  law  is,  that  the  partner  gives  this  and  the 
creditor  receives  it  in  fraud  of  the  partnership,  and  has  con- 
sequently no  demand  upon  them,  (r)  And  upon  the 
*  112  *  same  principle,  if  one  partner  releases  a  debt  due  to 
his  firm,  in  consideration  of  a  release  to  him  of  a  debt 
due  by  him  solely,  the  presumption  will  be  that  the  transaction 
was  fraudulent,  (s) 

The  presumption  of  fraud  in  these  cases  is  never  absolute. 
It  may  be  rebutted  by  proof  of  the  authority  given  by  the 
other  partners,  or  of  their  knowledge  and  consent,  or  their 
ratification  ;  and  these,  or  either  of  them,  may  be  express,  or 

{)•)  Hope  V.  Cust,  cited  in  Shirreff  v.  Blackf.  57,  261 ;  Hickman  v.  Reine- 
Wilks,  1  East,  48;  Ridley  l-.  Taylor,  13  king,  6  id.  388;  Lanier  v.  M'Cabe,  2 
id.  175  ;  Green  v.  Drakin,  2  Stark.  347  ;  Fla.  32  ;  Clay  v.  Cottrell,  18  Penn.  St. 
Ex  parte  Goulding,  2  Glyn  &  J.  118;  408;  King  v.  Faber,  22  id.  21 ;  Darling 
Heath  1-.  Sansom,  2  B.  &  Ad.  291 ;  Ex  v.  March,  22  Me.  184  ;  Elliott  v.  Dud- 
parte  Thorpe,  3  Mont.  &  Ayr.  716;  ley,  19  Barb.  326;  Miller  v.  Hines,  15 
Wintle  V.  Crowtlier,  1  Cromp.  &  J.  316  ;  Ga.  197.  See  Leveson  v.  Lane,  13  C.  B. 
Snaith  v.  Burridge,  4  Taunt.  684 ;  Ex  n.  s.  278 ;  Williams  v.  Brimhall,  13 
parte  Aagace,  2  Cox,  312;  Davenport  Gray,  462  ;  Casey  i;.  Carver,  41  111.228; 
V.  Runlett,  3  N.  H.  386 ;  Greeley  v.  Rutledge  v.  Squires,  23  Iowa.  53. 
Wyeth,  10  id.  15;  Williams  v.  Gil-  (s)  Evernghim  u.  Ensworth,  7  Wend. 
Christ,  11  id.  535;  Livingston  r.  Hastie,  326;  Gram  v.  Cadvvell,  5  Cow.  489; 
2  Caines,  246  ;  Lansing  v.  Ten  Eyck,  2  Farrar  v.  Hutchinson,  9  A.  &  E.  641 ; 
Johns.  300;  Livingston  v.  Roosevelt,  4  Greeley  v.  Wyeth,  10  N.  H.  15.  If  a 
id.  251;  Dob  v.  Halsey,  16  id.  34;  firm  is  sued  upon  a  note  given  in  the 
Foot  V.  Sabin,  19  id.  154  ;  Laverty  v.  partnership  name,  partly  for  a  partner- 
Burr,  1  Wend.  529  ;  Whitakery.  Brown,  ship  debt  and  partly  for  the  separate 
11  id.  75  ;  Gansevoort  v.  Williams,  14  debt  of  one  or  more  of  the  partners,  it 
id.  133 ;  Wilson  v.  Williams,  id.  146 ;  seems  that  the  firm  is  liable  so  far  as 
Chazournes  v.  Edwards,  3  Pick.  5  ;  the  note  is  founded  upon  a  partnership 
Rogers  v.  Batchelor,  12  Pet.  221 ;  Baird  consideration.  Wilson  v.  Lewis,  2 
V.  Cochran,  4  S.  &  R.  397;  Cotton  v.  Man.  &  G.  197;  Barker  v.  Burgess,  3 
Evans,  1  Dev.  &  B.  Eq.  284;  Wead  v.  Mete.  273.  See  Barber  v.  Backhouse, 
Richardson,  2  Dev.  &  B.  535 ;  Piercer.  1  Peake,  61;  Wintle  v.  Crowther,  1 
Pass,  1  Porter,  232 ;  Mauldin  v.  Branch  Cromp.  &  J.  316 ;  Ex  parte  Kirby,  Buck, 
Bank,  2  Ala.  511  ;  Hagar  v.  Mounts,  3  511. 


CH.   VI.]         WHO    ARE    PARTNERS    AS    TO    THIRD    PARTIES. 


123 


be  inferred  from  their  acts,  or  usage,  or  any  circumstances 
whicli  reasonably  imply  them.  (^)  The  presumption  seems  to 
be  held  much  more  strongly  in  this  country  than  in  England. 
There,  indeed,  the  conrts  would  seem  to  hold,  that,  if  the  name 
of  the  partnership  be  used  by  a  partner  even  for  his  private 
debt,  the  partners  will  be  held,  unless  they  can  show  covin 
or  fraud  on  the  part  of  the  holder ;  and  the  mere  fact  that  it 
was  the  private  debt  of  one  partner  to  him  will  not  amount  to 
primd  facie  proof  of  this,  (w)     In  a  recent  English  case,  in  a 


(t)  Frankland  v.  M'Gusty,  1  Knapp, 
Pr.  C.  274;  Ex  jiarte  Bonbonus,  8  Ves. 
540;  Ex  parte  Thorpe,  3  Mont.  &  A. 
710  ;  Gansevoortw.  Williams,  14  Wend. 
133  ;  Wilson  v.  Williams,  id.  146;  Cot- 
ton V.  Evans,  1  Dev.  &  B.  Eq.  295; 
Noble  V.  M'Clintock,  2  W.  &  S.  152; 
Pierce  v.  Pass,  1  Porter,  232 ;  Brewster 
i".  Mott,  4  Scam.  378 ;  Jones  i'.  Booth, 
10  Vt.  268;  Miller  v.  Hines,  15  Ga. 
197;  Darling  v.  March,  22  Me.  184. 
See  Corbin  v.  McChesncy,  26  111.  231 ; 
Warren  c.  Dickson,  30  111.  363 ;  Stern- 
burg  V.  Callaman,  14  Iowa,  251, 
adopted  and  confirmed  in  Cadwal- 
lader  v.  Blair,  18  Iowa,  420;  Carver 
V.  Dows,  40  111.  374  ;  Wise  v.  Copley,  36 
Ga.  508.  But  proof  of  knowledge  that 
the  indebtedness  or  obligation  of  the 
partnership  had  been  applied  by  one 
partner  to  pay  his  own  debt  is  not 
proof  of  consent  to  or  satisfaction  of 
such  misapplication  by  the  other  part- 
ners, so  as  to  rebut  the  presumption  of 
fraud  in  the  creditor.  Ex  parte  Aagace, 
2  Cox,  312  ;  Elliott  v.  Dudley,  19  Barb. 
326. 

(i()  Compare    Ridley    i'.  Taylor,  13 
East,   175;    Frankland   i'.   M'Gusty,    1 
Knapp,  Pr.  C.  274  ;  Ex  parte  Aagace,  2 
Cox,  312  ;  Ex  parte  Bonbonus,  8  Ves 
540;   Ex  parte  Thorpe,    3   Mont.  &  A 
716;  Musgrave  v.  Drake,  5  Q.  B.  185 
with   Davenport  v.   Runlett,   3  N.    H 
386 ;  Lansing  v.  Gaine,  2  Johns.  305 
Dob  V.  Halsey,  16  Johns.  34  ;   Ganse 
voort    V.    Williams,    14    Wend.    133 
Chazournes    v.   Edwards,   3    Pick.    5 
Rogers  v.  Batchelor,  12  Pet.  221 ;  Cot 
ton   V.   Evans,   1   Dev.  &   B.  Eq.  284 
Pierce  v.  Pass,  1  Port.  232.     In  Dob  v 


Halsey,  supra,  Spencer  J.,  said  :  "  The 
only  diflference  between  the  decision  of 
this  court  and  that  of  the  King's  Bench 
consists  in  this :  We  require  the  sepa- 
rate creditor,  who  has  obtained  the 
partnership  paper  for  the  private  debt 
of  one  of  the  partners,  to  show  the 
assent  of  the  whole  firm  to  be  bound. 
The  rule  of  the  King's  Bench  throws 
the  burden  of  avoiding  such  security 
on  the  firm,  by  requiring  them  to 
prove  that  the  act  was  covinous  on 
the  part  of  the  partner  for  whose  pri- 
vate debt  the  paper  of  the  firm  was 
given,  by  showing  that  it  was  done 
without  the  knowledge,  and  against 
the  consent,  of  tlie  other  partners, 
and  that  the  fact  was  known  to  the 
separate  creditor  when  he  took  the 
paper  of  the  firm."  In  Rogers  v. 
Batchelor,  12  Pet.  221,  the  question 
was  raised  whether  it  made  any  differ- 
ence that  at  the  time  of  the  transaction 
the  separate  creditor  had  no  knowledge 
that  there  was  a  misappropriation  of 
the  partnership  funds  ?  Judge  Story 
said  :  "  It  is  true  that  the  precise  point 
now  before  us  does  not  appear  to  have 
received  any  direct  adjudication;  for 
in  all  the  cases  above  mentioned  there 
was  a  known  application  of  the  funds 
or  securities  of  the  partnership  to  the 
payment  of  the  separate  debt.  But 
we  think  that  the  true  principle  to  be 
extracted  from  the  authorities  is,  that 
one  partner  cannot  ai)ply  the  partner- 
ship funds  or  securities  to  the  discharge 
of  his  own  private  debt  without  their 
consent ;  and  that  without  their  consent 
their  title  to  the  property  is  not  di- 
vested in  favor  of  such  separate  creJ- 


124  THE   LAW    OF    PARTNERSHIP.  [CH.  VI. 

suit  on  a  bill  of  exchange  accepted  by  a  partner  in  the  name  of 

the  firm,  Avhich  bill  includ,ed  with  the  debt  of  the  firm  a  private 

debt  of  the  partner,  the  court  directed  a  verdict  for  only 

*  113    the  amount  that  was  due  from  the  firm,  (wv)    We  *  shall, 

in  a  future  chapter,  speak  of  this  question  more  fully  in 
regard  to  negotiable  paper. 

Property  purchased  by  one  partner  with  the  funds  of  the 
partnership,  in  his  own  name  or  that  of  his  wife,  will  be  con- 
sidered in  equity  as  belonging  to  the  partnership,  and  held  in 
trust  for  it.  («u). 

If  a  partner  makes  a  fraudulent  use  of  the  name  or  property 
of  his  firm,  it  should  be  clearly  and  immediately  repudiated  by 
them  as  soon  as  it  comes  to  their  knowledge  ;  and  any  long 
delay  may  work  a  ratification,  (uuu) 

It  is  sometimes  important,  in  reference  to  liability  for  debt, 
as  in  other  respects,  to  determine  when  a  partnership  begins. 
For  example,  if  a  man  orders  goods  sent  to  another,  and  they 
are  so  sent  and  charged  to  the  first  party,  and  the  seller  dis- 
covers that  the  orderer  and  receiver  were  partners  in  the 
transaction,  both  are  liable.  But  if  the  goods  were  to  be  sup- 
plied to  the  receiver  by  the  orderer,  and  manufactured  on 
certain  terms  by  the  party  receiving  them,  and  the  new  prod- 
ucts when  manufactured  (and  not  before)  were  to  be  the 
joint  property  of  the  two  as  partners,  then  the  receiver  of  the 
goods  would  not  be  liable,  (w) 

The  general  principle  which  answers  the  question  when  a 

partnership  begins,  for  the  purpose  and  with  the  effect  of  casting 

upon  the  members  of  the  firm  the  liability  of  partners, 

*  114    must  of   course   *  be  that  the  liability   of  persons  on 

itor,  whether  he  knew  it  to  be  partner-  [nv]  Ellston   v.   Deacon,  Law  Rep. 

ship  property   or  not.      In   short,   his  26,  B.  20. 

riglit  depends,  not  upon  his  knowledge  (uu)    Holdredge      v.      Gwynne,      3 

that  it  was  partnership  property,  but  Greene     (N.    J.),     26;     [Renfrew     v. 

upon  the  fact  wliether  the  otlier  part-  Pearce,  68   111.   125.] 

ners  had   assented  to  such  disposition  {uuu)  Marine  Co.  of  Chicago  v.  Car- 

of   it  or   not."      Brewster   v.  Mott,  4  ver,   41   111.  66 ;  Casey  v.   Carver,  id. 

Scam.  378.    See  the  language  of  Spen-  225. 

cer,  J.,  in  Dob  v.  Halsey,  16  .Johns.  39.  (v)  Gardiner  v.  Cliilds,  8  Car.  &  P. 

[It  was  distinctly  adjudged  in  Acliley  345;  Broune   ly.   Gibbins,  5  Bro.  &  C. 

V.  Stachlin,  56  Mo.  558,  that  the  fact  491  (Dublin  ed.),  3  id.  127. 

that  a  creditor  had  no  knowledge  was 

immaterial. 


en.  VI.]         WHO    ARE    PARTNERS    AS    TO    THIRD    PARTIES. 


125 


contracts  not  made  by  themselves,  and  as  partners,  begins 
at  the  moment  when  they  begin  to  have  a  joint  interest  in  the 
contracts  as  partners.  For  if  a  person  purchases  goods  or  bor- 
rows money  upon  his  own  credit,  and  it  is  afterwards  discov- 
ered tiiat  the  goods  or  the  money  have  been  applied  to  the  use 
of  a  partnership  of  which  he  is  a  member,  the  firm  will  be 
liable  for  the  price  of  the  goods  or  the  amount  of  the  loan,  if, 
from  the  nature  and  circumstances  of  the  transaction,  the  firm 
may  be  regarded  as  the  real  purchaser  or  borrower,  which  has 
acted  through  its  authorized  agent ;  otherwise,  only  the  party 
to  whom  credit  was  actually  given  can  be  held.  Suppose  there 
is  no  partnership  in  contemplation  at  the  time  goods  are  sold 
or  money  is  loaned.  In  such  case,  though  the  money  or  the 
goods  subsequently  go  to  the  use  of  a  copartnership,  of  which 
the  visible  contracting  party  is  a  member,  there  can  be  no 
pretence  for  holding  the  firm  liable,  since,  at  the  time  of 
tiie  formation  of  the  contract,  it  had  no  existence  even  in 
intention.  Qw} 


(iv)  Such  was  the  case  of  Young  v. 
Hunter,  4  Taunt.  582.  Hunter  &  Kay- 
ney  had  purchased  goods  of  the  plain- 
tiffs and  other  persons,  which  they 
intended  to  ship  for  the  Baltic ;  and 
the  defendants,  HofFham  &  Co.,  who 
were  not  otherwise  partners  of  Hunter 
&  Co.,  were  afterwards  allowed  to  join 
in  the  adventure,  and  to  have  a  fifth 
share  upon  the  goods  being  put  on 
board.  The  plaintiffs  knew  nothing 
of  Hoffham  &  Co.,  but  sold  the  goods 
to  Hunter  &  Co.  only.  The  question 
was,  whether  Hoffham  &  Co.,  having 
had  the  benefit  of  the  goods,  were  lia- 
ble to  pay  for  them.  Heath,  J. :  "  The 
proposition  of  the  plaintiffs,  that,  if  it 
be  shown  that  at  any  one  period  of  the 
transaction  thei-e  was  a  partnership 
subsisting,  it  was  therefore  to  be  in- 
ferred that  there  had  been  a  partner- 
ship in  the  original  purchase,  is  wholly 
unfounded."  Chambre,  J.,  was  of  the 
same  opinion ;  and  Gibbs,  J.,  said : 
"  The  only  possible  ground  for  a  new 
trial  would  be,  if  the  plaintitt's  could 
show  that  at  the  time  of  the  purchase 
of  the  goods  from  the  plaintiffs,  Hoff- 
ham &  Co.  and   Hunter   and    liayney 


were  concerned  in  that  purchase  on 
their  joint  account.  Now,  the  only 
evidence  given  of  it  was,  that  at  the 
time  of  the  shipment  they  were  so  in- 
terested. How  long  before  the  ship- 
ment the  purchase  was  made,  does  not 
appear ;  but  it  is  not  to  be  inferred, 
from  Hoffham  &  Co.  being  interested 
at  the  time  of  the  shipment,  that  they 
were  interested  at  the  time  of  the  pur- 
chase. It  is  for  the  plaintiffs,  who 
seek  to  implicate  them,  to  make  it  out 
by  evidence. 

On  the  other  hand,  if  parties  have 
agreed  to  be  partners  for  the  prosecu- 
tion of  a  joint  adventure,  and  one  of 
them  with  the  view  pledges  his  credit 
for  his  allotted  contribution  to  the 
joint  capital,  he  only  can  be  made 
liable  upon  the  contract,  unless,  at  the 
time  of  making  it,  the  partnership 
was  in  existence  and  capable  of  being 
a  contracting  party.  And  hence,  if 
by  the  parties'  agreement  the  begin- 
ning of  the  partnership  appear  clearly 
dependent  upon  some  act  or  event 
subsequent  to  the  making  of  the  con- 
tract in  question,  the  possibility  of  the 
firm's  being  liable  thereon  is  at  once 


126 


THE    LAW    OF   PARTNERSHIP. 


[CH.  VI, 


SECTION   V. 

WHEN  A  PERSON  IS  LIABLE  BECAUSE  HE  IS  HELD  OUT  AS  A 
PARTNER. 


We  have  already  seen  that  one  may  be  liable  as  a  partner 
who  is  not  so  in   fact,  if  he  suffers  himself  to  be  held  out 


excluded.  This  proposition  is  illus- 
trated by  the  case  of  Saville  v.  Rob- 
ertson, 4  T.  11.  720.  There  the  action 
was  for  goods  sold  and  delivered. 
The  defendants,  J.  Robertson  and  J. 
Hutchinson,  had  entered  into  the  fol- 
lowing (amongst  others)  articles  of 
agreement,  with  S.  Pearce  and  Wil- 
liam Robertson  :  "  Articles  of  agree- 
ment nuide  tlie  19th  of  April,  1787, 
between  J.  Robertson  and  J.  Hutcliin- 
son  of  London,  merchants  and  co- 
partners, as  well  on  the  part  of  them- 
selves as  of  others  who  have  or  shall 
subscribe  their  names  on  the  back  of 
these  presents,  of  the  one  part,  and  S. 
Pearce  &  Co.,  merchants,  of  the  other 
part,  namely,  Whereas  the  said  S. 
Pearce  is  the  sole  owner  and  proprie- 
tor of  the  ship  Triumph,  &c.,  and 
whereas  the  said  J.  Robertson,  J. 
Hutchinson,  S.  Pearce,  and  others  who 
have  subscribed  their  names  on  the 
back  of  these  presents,  have  mutually 
agreed  upon  a  joint  undertaking,  and 
risk  as  to  profit  and  loss  in  a  certain 
voyage  or  maritime  adventure  about 
to  be  performed  under  the  direction 
of  the  said  parties,  who  have  or  shall 
have  a  majority  of  interest  therein,  or 
by  a  committee  appointed  by  them  ; 
now  these  presents  witness  that  they, 
the  said  J.  R.  &  J.  H.,  on  behalf  of 
themselves  and  all  others  who  have 
or  shall  subscribe,  &c. ;  and  the  said 
S.  P.  for  himself,  in  consideration  of 
the  trust  which  they  severally  repose 
in  each  other,  and  also  in  pursuance 
of  the  said  agreement,  have  and  do, 
each  for  himself,  his  heirs,  executors, 
&c.,  mutually  covenant  and  agree 
with  each  other,  &.c. :  1.  That  the 
said  ship  '  Triumph,'  whereof  the  said 
S.  Pearce    is  sole  owner,  shall,  from 


the  day  of  this  date  and  until  her  re- 
turn from  her  intended  voyage,  be  at 
the  disposal,  direction,  and  risk  of  all 
the  said  parties  hereto  jointly,  at  the 
valuation  of  3,750/.,  &c.  2.  That  the 
said  J.  R.  &  J.  H.,  by  themselves  and 
others  who  have  or  shall  subscribe, 
&c.,  shall  and  will  on  or  before  the 
24th  August  next  procure  and  provide 
a  cargo  of  goods  for  the  said  intended 
voyage,  to  the  value  of  between 
22,000/.  and  25,000/.,  and  which  goods 
shall,  in  the  judgment  and  opinion  of 
the  majority  of  the  parties  to  these 
presents,  be  deemed  eligible  and  proper 
for  the  voyage  and  markets  ;  and  that 
the  said  goods  shall  be  furnished  or 
purchased  at  the  lowest  cash  prices, 
although  not  payable  till  the  usual 
period  of  credit  is  expired ;  the  differ- 
ence between  the  said  cash  terms  and 
the  given  credit  to  be  made  good  by 
giving  bonds  bearing  interest  from  the 
date  of  the  contract  of  such  goods ; 
and  that  they,  the  said  J.  R.  &  J.  H., 
and  other  the  persons  who  subscribe, 
&c.,  shall  and  will  prepare  and  ship 
the  said  cargo  at  such  time  and  in  such 
manner  as  the  majority  of  the  said 
concerned  or  their  committee  shall 
direct.  3.  That  all  additional  outfits 
of  the  ship  '  Triumph,'  in  cables,  &c., 
which  she  may  require,  &c.,  after  the 
date  hereof,  until  her  voyage  be  con- 
cluded, shall  be  on  the  joint  account, 
&c.  4.  That,  in  case  the  said  S. 
Pearce  shall  be  desirous  to  increase 
his  interest  in  the  said  joint  concern, 
he  shall  be  permitted  so  to  do,  by 
shipping  on  the  joint  account  as  many 
goods  over  and  above  the  goods  to  be 
shipped  by  the  said  J.  R.  &  J.  H.,  and 
others  who  shall  subscribe,  &c.,  as  he 
may  think  proper ;  but  the  said  goods 


CH.  VI.]         WHO    ARE    PARTNERS    AS    TO    THIRD    PARTIES. 


127 


to  the  world  *  as  a  partner,  (cc)     The  reason  is  obvious. 
Any  person  may  lend  his  credit  to  another,  as  he  may 


116 


so  to  be  sliipped  by  tbe  said  S.  Pearce, 
are  to  be  such  articles  as  tlie  majority 
of  the  concerned  or  their  committee 
sliall  approve  of  as  proper  for  tlie 
voyage  and  market.  5.  Tiiat  the  said 
3,750/.,  together  with  tiie  amount  of 
the  additional  outfits  to  be  advanced 
by  the  said  S.  Pearce,  the  amount  of 
half  of  the  premiums  of  insurance  to 
be  made  the  said  S.  P.  on  the  said 
ship,  freight,  and  cargo,  and  such 
amount  of  goods  as  the  said  S.  P.  may 
ship  on  the  joint  account  as  above 
mentioned,  shall  be  considered  as  the 
said  S.  P.'s  share  or  capital  in  the  said 
joint  undertaking ;  and  lie  the  said 
S.  P.  shall  be  entitled  to  receive  the 
profit  or  bear  the  loss  thereon  in  the 
exact  proportion  as  the  amount  of  all 
such  sums  shall  be  to  the  remainder 
or  otlicr  part  of  the  said  joint  concern  ; 
and  that  the  said  J.  K.  &  J.  H.,  and 
the  subscribers,  &c.,  shall  receive  the 
profit  and  bear  the  loss  in  the  like 
proportion  as  to  the  sums  set  opposite 
to  their  several  names.  11.  That  in 
case  the  said  S.  P.  shall  want  the  assist- 
ance of  the  said  J.  R.  &  J.  H.,  or  the 
subscribers,  &c.,  to  procure  him  the 
loan  of  any  money  to  enable  him  to 
complete  the  outfits,  they  engage  to 
procure  him  500/.,  to  be  rejjaid  by  him 
in  a  manner  as  therein  stipulated." 
On  the  28th  July,  1787,  the  following 
memorandum  was  indorsed  on  the  said 
article  bj*  the  same  persons  :  "  Notwith- 
standing what  may  be  understood  to 
be  tiie  meaning  of  the  foregoing  arti- 
cles, it  is  hereby  declared  by  all  the 
parties,  that  the  minute  made  on  the 
26th  June  last  and  signed  by  us,  re- 
specting each  of  us  holding  the  pro- 
portions of  one  quarter  each,  that  is  to 
say,  Robertson  &  Hutchinson  one-half, 
and  S.  Pearce  and  W.  Robertson  one- 


quarter  each,  it  is  now  fully  to  be  con- 
sidered and  understood  that  that  min- 
ute is  now  declared  null  and  void,  and 
that  each  party  whose  name  is  here- 
unto subscribed  is  to  hold  no  other 
share  or  proportion  in  the  said  concern 
than  the  amount  of  what  each  sepa- 
rately orders  and  ships ;  and  which 
interest  will  be  hereafter  declared 
agreeably  to  the  true  intent  and 
meaning  of  this  agreement.  And  it 
is  further  declared  that  the  orders 
given  for  the  cargo  and  outfit  of  the 
ship  are  to  be  each  separately  paid, 
and  that  one  is  not  bound  for  any 
goods  or  stores  ordered  or  shipped  by 
the  other.  And  that  the  said  S. 
Pearce  has  full  liberty  to  ship  what 
goods  are  suitable  for  the  voyage, 
over  and  above  the  ship  and  outfit, 
leaving  room  clearly  for  those  ordered 
by  Robertson  &  Hutchinson,  and  W. 
R. ;  and  it  is  to  be  understood  that 
the  ship  is  made  over  in  trust  for  the 
general  concern."  In  May,  1787,  the 
plaintiff,  by  the  order  of  Pearce, 
supplied  copper  to  sheathe  and  repair 
the  ship  '  Triumph,'  to  the  amount  of 
48/.  In  August,  1787,  tlie  plaintiff,  by 
the  order  of  Pearce,  delivered  copper 
on  board  the  said  ship  to  the  amount 
of  938/.  3s.  'id.,  which  formed  part  of 
the  cargo  thereof.  In  October,  1787, 
the  said  ship  sailed  from  London  for 
Ostend,  and  proceeded  from  thence  to 
the  East  Indies  with  the  goods  so  fur- 
nished by  the  plaintiff,  and  other  goods 
on  board.  In  January,  1788,  Pearce 
became  a  bankrupt,  and  Saville  proved 
his  debt  under  the  commission  against 
him;  and  in  I'ebruary,  1788,  William 
Robertson  also  became  a  bankrupt. 
On  the  ship's  return  in  1789,  Robertson, 
without  advising  Pearce's  assignees, 
went  on  board  and  took  her  to  Ostend, 


(x)  See  Edmundson  v.  Thompson,  rod  v.  Langdon,  21  Iowa,  518  ;  [Rice 
2  Post.  &  Pin.  564;  Reber  v.  Col.  y.  Barrett,  116  Mass.  312.  i«  re  Jew- 
Machine  Manuf.  Co.,  12  Ohio,  175;  ett,  15  N.  B.  R.  126;  Cushing  i>.  Smith, 
Drennan  v.  House,  41  Penn.  30;  Sher-  43  Texas,  261.] 


128 


THE   LAW    OF    PARTNERSHIP. 


[CH.  VI. 


*  117    lend  his  money  or  property  ;  and  *  if  lie  chooses  to  lend 
his  credit  or  responsibility,  he  must  of  course  abide  by 


and  sold  her  for  his  own  and  Hut- 
chinson's benefit,  because,  as  he  ad- 
mitted, "  he  and  liis  partner  were 
liable  to  pay  the  whole  debt,  for  ship 
and  cargo."  In  January,  1790,  the 
defendants  became  bankrupts.  It  be- 
ing admitted  that  the  plaintiff  was  en- 
titled to  recover  for  the  copper  for 
sheathing,  the  question  in  the  case 
was,  whether,  upon  a  construction  of 
the  above  articles,  taken  in  connection 
with  the  defendants'  admission  and 
their  acceptance  of  bills  drawn  for  the 
price  of  these  very  goods,  the  plaintiff 
could  recover  for  the  residue  of  the 
copper.  It  was  held  that  he  could 
not ;  and,  further,  that  the  contract  of 
sale  not  having  originally  been  with 
the  partnership,  no  act  which  passed 
subsequent  to  the  delivery  of  the 
goods  could  have  any  retrospect  so  as 
to  alter  the  nature  of  the  contract. 
Lord  Kenyon  said  :  "  The  facts  of  the 
case  are  shortly  these :  several  persons 
who  had  no  general  partnership,  nor 
any  connection  with  each  other  in 
trade,  formed  an  adventure  to  the 
East  Indies.  The  outfit  of  the  vessel 
was  a  joint  concern  of  all  the  partners ; 
and  that  delivers  the  case  from  one  con- 
sideration, namely,  the  parcel  of  copper 
for  sheathing  the  ship,  which  is  admitted 
to  be  a  partnership  concern.  But  be- 
yond that  I  see  no  partnership  between 
the  parties  till  all  the  parcels  of  the 
cargo  were  delivered  on  board;  and 
that  made  it  a  combined  adventure 
between  all  the  parties.  I  cannot, 
therefore,  see  how  it  can  be  said  that 
these  goods,  which  were  sold  to  Pearce 
only,  and  on  his  sole  credit  and  ac- 
count, were  sold  and  delivered  on  the 
partnership  account.  Afterwards,  in- 
deed, these  defendants  were  to  gain 
or  lose  by  the  joint  cargo :  when  the 
other  goods  were  brought  in,  the  part- 
nership arose  ;  but  each  was  to  bring  in 
his  own  particular  stock.  But  in  this  case 
I  think  that  the  question  stops  short 
of  affecting  the  defendants,  and  I  can- 
not see  how  the  plaintiff  can  have   a 


right  to  call  on  the  defendants,  as 
partners,  for  the  value  of  these  goods, 
on  a  supposed  contract,  when  the  real 
contract  between  the  buyer  and  seller 
was  consummated  before  the  joint 
risk  began."  The  case  of  Post  i\  Kim- 
berly,  9  .Johns.  470,  is  somewhat  analo- 
gous in  its  facts,  and  exemplifies  the 
same  principle.  See  Ward  i'.  Thomp- 
son, 1  Newb.  Adm.  95,  where,  how- 
ever, the  question  arose  between  the 
partners  :  Spalding  v.  Hedges,  2  Barr, 
240,  243 ;  Dunham  v.  Rogers,  1  Barr, 
255.  On  the  other  hand,  Gouthwaite 
V.  Duckworth,  12  East,  421,  is  a  case 
in  which,  from  the  character  of  the 
agreement  between  the  parties,  the 
partnership  was  deemed  to  be  in  no 
Avay  dependent  for  its  beginning  upon 
any  commingling  of  the  several  part- 
ners' contributions,  nor  upon  any  other 
appropriation  thereof  to  the  joint 
fund ;  but  to  have  been  in  existence 
at  the  time  of  and  for  the  purpose  of 
the  purchase  of  such  contributions. 
Lord  Ellenborough,  C.  J.,  there  said : 
"  It  comes  to  the  question,  whether, 
contemporary  with  the  purchase  of 
the  goods,  there  did  not  exist  a  joint 
interest  between  these  defendants. 
The  goods  were  to  be  purchased,  as 
Duckworth  states  in  his  examination, 
for  the  adventure  ;  that  was  the  agree- 
ment. Then  what  was  this  adventure  ? 
Did  it  not  commence  with  the  pur- 
chase of  these  goods  for  the  purpose 
agreed  upon,  in  the  loss  and  profits  of 
which  the  defendants  were  to  share  1 
The  case  of  Saville  v.  Robertson  does 
indeed  approach  very  near  to  this ; 
but  the  distinction  between  the  cases 
is,  that  there  each  party  brought  his 
separate  parcel  of  goods,  which  were 
afterwards  to  be  mixed  in  the  common 
adventure  on  board  the  ship,  and  till 
that  admixture  the  partnersliip  in  the 
goods  did  not  arise.  But  here  the 
goods  in  question  were  purchased,  in 
pursuance  of  the  agreement  for  the 
adventure,  of  which  it  had  been  before 
settled  that  Duckworth  was  to  have  a 


CH.  VI.]         WHO    ARE    PARTNERS    AS    TO    THIRD    PARTIES. 


129 


tlie  consequencesof  any  contracts  made  on  the  faith  of  *  it.    *  118 
Most  cases  of  this  kind  occur  where  a  partner  retires 


moiety.  There  seems,  also,  to  have 
been  some  contrivance  in  this  case  to 
keep  out  of  general  view  the  interest 
whicii  Duckworth  had  in  the  goods : 
the  other  two  defendants  were  sent 
into  the  market  to  purchase  the  goods 
in  which  he  was  to  have  a  moiety ; 
and  though  they  were  not  authorized, 
he  says,  to  purcliase  on  the  joint  ac- 
count of  the  tlireo  ;  yet,  if  all  agree  to 
share  in  goods  to  be  purchased,  and 
in  consequence  of  that  agreement  one 
of  them  go  into  the  market  and  make 
the  purchase,  it  is  tiie  same,  for  this  pur- 
pose, as  if  all  the  names  had  been 
announced  to  the  seller,  and  therefore 
all  are  liable  for  the  value  of  them." 
Bayley,  J.,  said  :  "  In  Saville  v.  Rob- 
ertson, after  the  purchase  of  the  goods 
made  by  the  several  adventurers, 
tliere  was  still  a  further  act  to  be 
done,  which  was  the  putting  them  on 
board  tlie  ship  in  which  they  had  a 
common  concern  for  the  joint  adven- 
ture ;  and,  until  that  further  act  was 
done,  the  goods  purchased  by  each 
remained  the  separate  property  of 
each.  But  here,  as  soon  as  the  goods 
were  purchased,  the  interest  of  the 
three  attached  in  them  at  the  same 
instant  by  virtue  of  the  previous 
agreement."  So  in  Everitt  v.  Chap- 
man, 6  Conn.  347.  There  A.,  B.,  & 
C.  were  in  partnership  in  the  business 
of  tanning  hides,  under  an  agreement 
by  whicli  A.  was  to  furnish  hides  for 
one-half  of  the  stock,  and  was  to  re- 
ceive and  make  market  for  one-half 
of  the  leather,  and  B.  &  C.  were  to 
furnish  the  other  half  of  the  stock, 
and  to  make  market  for  the  other 
half  of  the  leather  ;  each  of  the  part- 
ners to  purchase  on  his  own  separate 
credit.  B.  bought  hides  of  the  plain- 
tiff, which  were  charged  to  him  indi- 
vidually. But,  afterwards  discovering 
the  partnership,  the  plaintiff  brought 
his  action  against  A.,  B.,  &  C.  It 
was  held,  that  tlie  firm  were  liable  for 
the  value  of  the  hides.  The  court 
cited  Gouthwaite  v.  Duckworth,  supra, 


and,  commenting  on  Saville  v.  Robert- 
son, referred  to  by  the  defendants, 
said  :  "  This  authority,  then,  is  so  far 
from  justifying  the  defence,  that  it 
vindicates  the  claim  of  the  plaintiff ; 
for  these  defendants  were  in  partnership 
when  the  hides  were  purchased  —  they 
were  bought  for  the  concern  —  they  were 
delivered  into  their  tannery  —  they 
went  to  their  joint  benefit,  having 
been  purchased  by  H.  R.  Mott,  with- 
out disclosing  the  names  of  his  co- 
partners." See  also,  to  the  same 
effect,  a  dictum  of  Gibbs,  J.,  in  Young 
V.  Hunter,  4  Taunt.  583 ;  Brooke  v. 
Evans,  5  Watts,  196;  Grifiith  v.  Buf- 
fum,  22  Yt.  181.  In  Wilson  v.  White- 
head, Ackerman  &  Carleton,  10  M.  & 
W.  503,  the  action  was  assumpsit  for 
goods  sold  and  delivered  to  the  defend- 
ant. Whitehead,  to  be  used  in  printing 
the  "  Sporting  Review."  To  establish 
the  joint  liability  with  him  of  Acker- 
man  &  Carleton,  a  verbal  agreement 
between  the  three  was  proved  that 
they  should  bring  out  and  be  jointly 
interested  in  the  "  Sporting  Review  ;  " 
Ackerman  was  to  be  tlie  publisher,  and 
to  make  and  receive  general  payments, 
Carleton  to  be  the  editor,  and  White- 
head the  printer ;  and,  after  payment 
of  all  expenses,  the  three  were  to  share 
the  profits  of  the  publication  equally. 
Whitehead  was  to  furnish  tlie  paper 
for  the  work,  and  to  charge  it  to  the 
account  at  cost  price,  and  was  also  to 
charge  the  printing  at  "  master's 
prices."  On  this  evidence,  the  court 
directed  a  nonsuit,  on  the  ground  that 
the  other  defendants  were  not  jointly 
liable  with  Whitehead  in  this  action, 
giving  the  plaintiffs  leave  to  move  to 
enter  a  verdict  for  the  admitted  value 
of  the  paper.  On  the  hearing  of  the 
motion,  Parke,  B.,  said :  "  The  ques- 
tion is,  Did  the  other  defendants  au- 
thorize Whitehead  to  purchase  the 
paper  on  their  account,  or  on  his  own  1 
It  appears  to  me,  on  the  true  construc- 
tion of  the  contract,  that  the  latter  was 
the  case.     When  the  paper  was  in  his 


9 


130  THE    LAW    OF    PARTNERSHIP.  [CH.  VI. 

from  a  firm,  and  his  retirement  is  unknown,  either  through 
his  wish  or  his  negligence.  These  we  propose  to  consider 
together  in  reference  to  the  duties  and  liabilities  of  a  retiring 
partner. 

It  has  been  said,  holding  out  one's  self  as  partner  to 
*  119  the  world  "  is  *  not  a  wise  expression ; "  and  the  question 
should  be,  "  whether  he  so  held  himself  to  the  plaintiff, 
or  under  such  circumstances  of  publicity  as  to  satisfy  a  jury 
that  the  plaintiff  knew  of  it  and  believed  him  to  be  a  part- 
ner."(?/)  But  to  hold  one's  self  out  "  to  the  world"  means, 
precisely,  so  to  hold  one's  self  out  as  to  justify  anybody 
and  everybody  in  believing  him  a  partner ;  and  it  seems  to  be 
a  very  good  expression  for  this  purpose.  It  is  a  different  case, 
when  the  plaintiff  relies  upon  the  fact  that  the  party  sought  to 
be  charged  so  held  himself  out  specifically  to  the  individual 
charging  him. 

Where  a  creditor  sues  a  firm,  and  seeks  to  put  the  liability 
of  a  partner  upon  one  who  is  only  a  nominal  partner,  it  is  a 
somewhat  difficult  question,  whether  the  plaintiff  can  recover 
without  proof  that  he  himself  believed  the  person  whom  he 
seeks  to  charge  to  be  a  partner.  The  authorities  on  this  ques- 
tion are  far  from  unanimous :  some  holding  that  one  put  forth 
to  the  world  as  a  partner  is  liable  as  such  to  every  creditor  of 
the  firm  ;  while  others  hold  that  he  is  thus  liable,  only  because 
he  was  a  partner  in  fact  and  in  interest,  or  because  the  plaintiff 
regarded  him  as  one,  and  dealt  with  the  firm,  in  some  degree 
at  least,  on  his  credit,  (t/y)  We  think  a  reasonable  rule  may 
be  stated  thus :  Where   one  is  held  forth  to  the  world  as  a 

possession,  he  was  at  liberty  to  have  pinwall    v.   Williams,   1    Hamm.    38  ; 
appropriated   it  to  any  other  purpose  Austin     v.     Williams,     id.     282.      Of 
than  to  the  '  Sporting  Review.' "    That  course,  the   same    considerations    are 
is,  from  the  nature  of  the  agreement  applicable,  where,  in  pursuance  of  an 
between  the  parties,  it  was  apparent  agreement  to  prosecute  an  adventure 
that,  contemporary  with  the  purchase  in  company,  one  or  more  of  the  part- 
of  the  goods  in  question,  there  was  no  ners,  on  Ins  own  credit,  borrows  money, 
joint  interest  in  them  on  the   part  of  and  puts  it  into  the  firm  as  his  con- 
the    defendants ;  but  their  joint  inter-  tribution  to  the  joint  fund.     Smith  v. 
est  therein   arose   subsequent  to    the  Craven,  1  Cromp.  &  J.  500. 
contract  of  sale,  and  only  after  some  (y)  So  said,  by  Parke,  J.,  in  Dick- 
act  had  been  performed  by  Whitehead  inson  v.  Valpy,  10  B.  &  C.  140. 
by  whicli  the  paper  was  appropriated          (yy)  Wood  v.  Pennell,  61    Me.  52; 
to  the  use  of  the  partnership."     See  Fitch  v.  Harrington,  13  Gray,  468. 
Barton  v.  Hansom,  2  Taunt.  49 ;  As- 


CH.  VI.]         WHO    ARE    PARTNERS    AS    TO    THIRD    PARTIES. 


131 


partner,  the  first  question  is,  Was  he  so  held  out  by  his  own 
authority  and  assent,  or  connivance,  or  negligence  ?  If  by  his 
authority,  assent,  or  connivance,  the  presumption  is  absolute, 
that  he  was  so  held  out  to  every  creditor  or  customer.  If  so 
held  out  by  his  own  negligence  only,  he  should  be  held  only  to 
a  creditor  who  had  been  actually  misled  thereby,  (^z) 


(z)  In  Young  v.  Axtell,  cited  in  2 
H.  Bl.  242,  Lord  Mansfield  said  that 
the  defendant,  Mrs.  Axtell,  "  as  she 
suffered  her  name  to  be  used,  and  held 
herself  out  as  a  partner,  was  certainly 
liable,  though  the  plaintiff"  did  not,  at 
the  time  of  dealing,  know  that  she  was 
a  partner,  or  that  her  name  was  used." 
See  Dolman  v.  Orchard,  2  C.  &  P.  104. 
And  there  can  be  no  doubt  that,  in  a 
great  majority  of  the  cases  on  this 
point,  a  party  has  been  allowed  to 
charge  a  person  as  a  partner,  by  prov- 
ing that  he  has  publicly  held  himself 
forth  as  one ;  without  being  further 
required  to  prove  a  knowledge  of  such 
holding  out,  on  his  part,  contempora- 
neous with  the  making  of  the  contract 
sued  upon.  But  there  are  authorities 
which  seem  to  be  in  favor  of  the  dictum 
of  Parke,  J.,  as  quoted  in  the  text.  In 
Shott  V.  Streatfield,  1  Moody  &  R.  8, 
the  question  was,  whether  Green  was 
liable  as  a  partner  with  Streatfield.  A 
witness  testified  that  he  had  been  told, 
in  Green's  presence,  that  Green  liad 
become  a  partner  with  Streatfield. 
The  witness  then  being  asked  whether 
he  had  afterwards  reported  tliat  Streat- 
field and  Green  were  partners,  it  was 
objected  that  this  was  not  evidence, 
unless  it  was  shown  that  the  defend- 
ants, or  one  of  them,  were  present 
when  it  was  reported.  Lord  Tenter- 
den,  C.  J. :  "I  think  it  is  ;  because 
otherwise  it  will  be  said  presently  that 
what  was  said  was  confined  to  the 
witness,  and  the  plaintiffs  could  not 
have  acted  on  it."  In  Alderson  v. 
Pope,  1  Camp.  404,  note  (o),  where  C. 
was  held  out  to  the  world  as  a  partner 
with  A.  &  B.,  but  was  not  one  in  real- 
ity, this  fact  being  known  to  tlie  plain- 
tiff" was  held  to  preclude  him  from 
holding    C.   liable   as    partner.      See, 


however.  Brown  v.  Leonard,  2  Chitty, 
120.  In  Carter  v.  Whalley,  1  B.  &  Ad. 
11,  the  action  was  assumpsit  by  the 
indorsee  against  the  acceptors  of  a  bill 
of  exchange.  The  facts  were  these : 
S.  and  others,  the  defendants,  had  car- 
ried on  business  under  the  name  of 
the  "  Plas  Madoc  Colliery  Company." 
But,  some  time  before  the  acceptance 
of  the  bill  in  question  by  the  company, 
S.  had  retired  from  the  firm,  though 
no  notice  of  his  withdrawal  had  ever 
been  given,  either  to  the  plaintiff  or  to 
the  public.  The  question  was  as  to 
the  liability  of  S.  upon  the  bill  thus 
accepted  by  the  company  after  his 
retirement ;  and  it  being  proved  that 
the  plaintiff  had  not  dealt  with  the 
company  while  S.  was  a  member,  and 
that  the  partnership  during  that  time 
had  not  been  so  known  when  tiie 
plaintiff  did  business,  that  he  must  be 
supposed  to  have  looked  upon  Saun- 
ders as  a  partner,  in  default  of  notice 
to  the  contrary.  Lord  Tenterden  or- 
dered a  nonsuit.  On  motion  for  a  rule 
to  show  cause,  Parke,  J.,  said  :  "  Saun- 
ders had  given  no  direct  authority  : 
he  was  not  a  partner  at  the  time.  But 
he  may  by  his  conduct  have  repre- 
sented himself  as  one,  and  induced  the 
plaintiff  to  give  him  credit  as  such, 
and  so  be  liable  to  the  plaintiff".  Such 
would  have  been  the  case  if  he  had 
done  business  with  the  plaintiff  before 
as  a  member  of  a  firm,  or  had  so  pub- 
licly appeared  as  a  partner  as  to 
satisfy  a  jury  that  the  plaintiflt"  must 
have  believed  him  to  be  such;  and  if 
he  had  suffered  the  plaintiff  to  con- 
tinue in  and  act  upon  that  belief,  by 
omitting  to  give  notice  of  his  having 
ceased  to  be  a  partner,  after  he  really 
had  ceased,  he  would  be  responsible 
for   the   consequences  of  his   original 


132 


THE   LAW    OF    PARTNERSHIP. 


[CH.  VI. 


*  120         *  Persons  may   come  under  a  general  liability,  by 

merely  liaving  the  same  firm  name,  provided  they  do 

*  121    business  in  such  a  way   as  *  to  lead  to  the  inference 


representation,  uncontradicted  by  a 
subsequent  notice.  But,  in  order  to 
render  him  liable  on  these  grounds,  it 
is  necessary  that  lie  should  have  been 
known  as  a  member  of  the  firm  to  the 
plaintiff,  either  by  direct  transactions, 
or  public  notoriety.  In  the  present 
instance,  that  was  not  so.  The  name 
of  the  company  gave  no  information 
as  to  the  parties  comjiosing  it ;  and  the 
plaintiff  did  not  show  that  Saunders 
had  dealt  with  him  in  thecliaracter  of  a 
partner,  or  had  held  liimself  out  so 
publicly  to  be  one  as  that  the  plain- 
tiff must  liave  known  it.  Carter,  the 
plaintitf,  lived  at  Birmingham  ;  it  should 
have  ajipeared  that  there  had  been  such 
a  dealing  at  that  place  by  Saunders, 
or  that  his  connection  with  the  com- 
pany had  been  so  generally  known 
there  that  a  knowledge  of  it  by  Carter 
must  have  been  presumed.  There 
having  been  no  evidence  for  the  jury 
on  these  points,  I  think  the  nonsuit 
was  right."  —  Rule  refused.  So  in 
Pott  V.  Eyton,  3  C.  B.  39,  the  same 
view  seems  to  be  taken  by  the  court. 
The  American  cases,  Benedict  v.  Da- 
vis, 2  McLean,  347,  Markham  v.  Jones, 
7  B.  Men.  456,  are  to  a  similar  effect. 
See  also  Buckingham  v.  Burgess,  3 
McLean,  364,  549 ;  Hicks  v.  Cram,  17 
Vt.  449. 

Regarding  the  question  with  refer- 
ence to  the  principle  which  underlies 
it,  Mr.  CoUyer,  referring  to  the  lan- 
guage of  Lord  Mansfield,  in  Young  v. 
Axtell,  above  quoted,  says  :  "  It  ap- 
pears from  this  case,  that  it  is  not 
necessary  for  a  person  charging  a 
nominal  partner  to  have  been  aware 
of  the  partnership  at  the  time  of  the 
contract.  And  this  doctrine  seems 
satisfactory  when  we  consider,  that 
the  object  of  the  rule  is  to  prevent  the 
extension  of  unsound  credit."  Colly er  on 
Part.  (Perkins'  ed.)  §  86.  On  the  other 
hand,  in  1  Smith  Lead.  Cas.  507,  it  is 
remarked,  that  "  this  position  appears 
very  questionable ;  for  the  rule  which 


imposes  on  a  nominal  partner  the  re- 
sponsibilities of  a  real  one  is  framed  in 
order  to  prevent  those  persons  from 
being  defrauded  or  deceived,  who  may 
deal  with  the  firm  of  which  he  holds 
himself  out  as  a  member,  on  the  faith 
of  his  personal  responsibility."  Now, 
it  is  clear  that  in  these  two  extracts 
the  liability  of  a  nominal  partner  rests 
upon  two  different  i^rinciples,  leading 
to  two  diflferent  rules  of  law.  If  a 
nominal  partner  is  to  be  made  liable, 
"  to  prevent  the  extension  of  unsound 
credit,"  then  that  liability  is  to  be  im- 
posed upon  him  whenever  he  has  held 
himself  forth  to  the  world  as  a  partner, 
whether  he  has  in  fact  deceived  the 
particular  creditor  or  not.  For,  if  it 
be  proved  that  a  man  has  exhibited 
himself  to  the  world  as  a  partner,  then 
unsound  credit  has  been  extended ;  and 
the  reason  for  preventing  it,  by  mak- 
ing him  liable,  is  in  no  way  weakened 
by  the  fact  that  a  particular  creditor 
has  not  been  deceived.  The  fact  that 
mischief  has  not  been  done  in  the  par- 
ticular case  is  no  proof  that  the  general 
and  public  injury  against  which  the 
rule  was  designed  to  guard  has  not 
been  caused,  and  is  not  therefore  any 
reason  for  the  non-application  of  the 
rule  to  that  case.  On  the  other  hand, 
if  a  nominal  partner  is  to  be  made 
liable  as  a  real  one,  simply  to  compel 
him  to  make  good  the  assurances  he 
has  given,  and  to  fulfil  the  engage- 
ments he  has  led  others  to  suppose  he 
has  made,  then  the  doctrine  is  one  of 
private  justice,  rather  than  of  public 
policy.  Hence,  though  a  man  has 
held  himself  out  as  a  partner  to  the 
world,  yet,  if  he  has  not  appeared  as  a 
contracting  party  to  a  particular  cred- 
itor, there  is,  in  the  absence  of  consid- 
erations of  public  policy,  no  ground 
for  holding  him  liable  to  that  creditor, 
since  to  him  he  has  given  no  assur- 
ances of  his  personal  responsibility,  and 
with  him  he  has  made  no  engagements. 
See  Wood  v.  Pennell,  51  Me.  62. 


en.   VI.]         WHO    ARE    PARTNERS    AS    TO    THIRD    PARTIES. 


133 


suggested  by  the  name,  of  an  identity  of  interest,  (a)  So, 
too,  if  one  is  a  partner  in  a  house  for  some  business,  and  the 
other  partners  carry  on  another  business  in  which  he  has  no 
interest,  if  nothing  is  done  or  said  and  no  circumstances 
exist  to  indicate  his  want  of  community  in  this  last  busi- 
ness, so  that  those  dealing  with  the  other  partners  are  justified 
in  believing  that  they  are  dealing  with  him  also,  he  is  then 
liable  as  a  partner.  (Z>) 


(a)  James  Spencer  carried  on  busi- 
ness in  Mancliester  under  the  firm  of 
James  Spencer  &  Co. ;  and  William 
Spencer,  in  London,  under  the  style  of 
Spencer  &  Co.  It  was  held,  that  Wil- 
liam Spencer,  having  been  in  the 
habit,  personally,  or  by  his  clerk,  of  ac- 
cepting bills  drawn  upon  James  Spen- 
cer &  Co.,  and  addressed  to  William 
Spencer's  place  of  business  in  London, 
had  thereby  held  himself  out  as  a 
partner  of  James,  and  became  liable 
accordingly.  Spencer  v.  Billing,  3 
Camp.  310.  [And  two  firms  will  be 
held  to  be  one,  if  they  assume  to  con- 
stitute one.  Beall  v.  Lowndes,  4  S.  C. 
258.] 

(6)  Wood  &  Paj'ne  were  in  partner- 
ship as  wholesale  grocers.  Wood, 
Payne,  &  Steele  were  partners  in  buy- 
ing and  selling  cotton  ;  this  last  busi- 
ness being  carried  on  at  Wood  & 
Payne's  counting-house,  and  in  the 
name  of  Wood  &  Payne.  Steele, 
however,  had  no  concern  in  the  gro- 
cery business,  nor  did  he  take  an  ac- 
tive part  in  the  cotton  business  ;  nor 
was  he  known  as  a  partner  therein, 
either  to  the  plaintiffs  or  to  the  world. 
Wood  &  Payne  bought  groceries  of 
the  plaintiffs;  for  which  they  gave  a 
bill  of  exchange  received  by  Wood  & 
Payne,  as  cotton  dealers,  for  cotton  sold 
to  the  drawer,  and  in  which  Steele  was 
interested.  This  bill  was  payable  to 
the  defendants  or  order,  and  was  in- 
dorsed by  either  Wood  or  Payne,  by 
the  name  of  the  firm  of  Wood  & 
Payne.  Held,  that  Steele  was  liable 
as  partner  on  such  indorsement.  Swan 
V.  Steele,  7  East,  210.  See  Miner  v. 
Downer,  19  Vt.  14.  Assumpsit  on  a 
biU    of    exchange    by    the    indorsees 


against  the  defendant  as  one  of  the 
drawers,  the  other  drawer  having  be- 
come bankrupt.  The  bill  was  drawn 
in  the  name  of  "  James  King  &  Co.," 
under  which  firm  the  defendant  and 
his  partners  had  traded.  It  also  ap- 
peared that  tliere  were  other  partner- 
ships carried  on  under  the  firm  of 
"  James  King  &  Co.,"  in  which  the 
other  drawers  were  concerned,  but  in 
which  the  defendant  had  no  share. 
The  defendant  offered  to  show  that 
this  bill  was  not  drawn  on  account  of 
the  partnership  in  which  he  was  con- 
cerned, but  on  account  of  one  of  the 
others,  and  that  he  knew  nothing  of 
it.  Lord  Kenyon  was  of  opinion  that 
the  defendant  was  nevertheless  liable  ; 
he  had  traded  with  the  other  partners 
under  that  firm,  and  persons  taking 
bills  under  it,  though  without  his 
knowledge,  had  a  right  to  look  to  him 
for  payment.  Baker  v.  Charlton, 
Peake,  80.  See  Fleming  v.  McNair, 
cited  in  1  Montagu  on  Part.  37,  note 
(c) ;  and  in  3  Dow,  229.  In  Baker  v. 
Nappier,  19  Ga.  520,  it  ajipeared  that 
Kilgrow  &  Price  were  in  partnership 
in  the  hotel  business,  and  Kilgrow  & 
Patillo  in  the  grocery  business.  From 
the  evidence,  also,  it  was  doubtful 
whether  each  firm  did  not  sometimes 
use  or  recognize  the  name  of  E.  W. 
Kilgrow  &  Co  as  its  own.  For  goods 
bought  of  Kilgrow,  in  the  name  E.  W. 
Kilgrow  &  Co.,  the  plaintiffs  sought  to 
hold  the  firm  of  Kilgrow  &  Price. 
The  court  held,  that  the  jury  should 
be  instructed,  "  that,  if  Baker  &  Plart 
(the  plaintiffs),  after  taking  reasonable 
care  to  find  out  which  firm  Kilgrow 
was  dealing  for,  really  thought  lie  was 
dealing  for  that  in  which  Mrs.   Price 


134 


THE    LAW    OF    PARTNERSHIP. 


[CH.  VI. 


*  122       *  111  general,  conversations,  assertions,  or  admissions, 

and  acts  tending  to  show  that  parties  are  partners,  and 
have  that  joint  interest  in  the  business  which  makes  them  lia- 
ble as  partners,  will  often  have  that  effect,  (c)  although 

*  123    it  might  be  quite  insufficient  *  to  prove  a  partnership  as 

between  the  partners,  if  no  third  parties  were  interested 
in  the  question.  (^) 


was  a  member,  and  so  sold  him  the 
goods,  intending  tliem  for  that  firm, 
and  if  tlie  goods  were  adapted  to  tlie 
business  of  that  firm, —  then  that  firm 
was  liable  to  pay  for  the  goods,  al- 
though Kilgrow,  in  truth,  intended 
them  for  the  other  firm,  and  although 
they  went  into  the  other  firm." 

(c)  An  admission  by  a  person  that 
he  is  a  partner  will  not  estop  him  from 
contradicting  it  by  evidence,  if  the  ad- 
mission was  made  after  the  contract 
upon  which  it  is  sought  to  charge  him 
was  entered  into.  Thus,  Ridgway,  the 
plaintiff,  applied  to  Brown  to  build  him 
a  gas  vacuum  engine.  Brown  after- 
wards showed  him  the  draft  of  an 
agreement  therefor,  purporting  to  be 
between  the  plaintiff  and  Brown  &  Co. 
The  plaintiff  desiring  to  know  who 
composed  that  firm.  Brown  indorsed 
on  the  back  of  the  draft  the  names  of 
"  John  Broadhurst,  Esq.,  and  Dr.  Wil- 
son Philip."  The  agreement  was  not 
fulfilled,  and  the  plaintiff  resolved  to 
proceed  for  the  breach.  But,  before 
suit  brought,  his  son  called  on  the 
defendant  Broadhurst,  and  mentioning 
his  father's  intention,  and  the  indorse- 
ment made  by  Brown  upon  the  agree- 
ment, begged  to  know  if  Brown  had 
been  correct  in  so  doing.  Broadhurst 
replied  that  Brown  was  right  in  so  do- 
ing, and  stated  that  he  bought  his  orig- 
inal interest  of  the  other  defendant, 
Philip.  It  was  also  in  evidence,  that, 
while  the  engine  was  building,  Broad- 
hurst attended  very  frequently  at  the 
manufactory,  to  inquire  as  to  its  prog- 
ress, to  give  advice,  &c.  In  answer 
to  this,  an  agreement  or  license  to 
Broadhurst,  from  Brown  and  the  other 
parties  interested  in  the  patent,  was 
put  in  on  the  part  of  Broadhurst,  au- 


thorizing him  to  use  the  patent  for  the 

erecting  of  engines  in  certain  parts  of 
Cornwall  onli/ ;  and  it  was  contended 
that  the  admissions  of  Broadhurst  were 
to  be  taken  with  reference  to  the  inter- 
est which  he  thus  possessed  in  the 
invention,  and  not  to  any  participation 
either  in  the  patent  generally,  or  in 
the  particular  transaction  in  question. 
Gaselee,  J.,  left  it  to  the  jury  to  say 
whether  Broadhurst,  at  the  time  he 
made  the  admission,  was  under  a  mis- 
take, and  whether  the  acts  he  was 
proved  to  have  done  did  or  did  not  af- 
ford a  sufficient  ground  for  supposing  it 
to  be  a  mistake  ;  and,  with  regard  to 
those  acts,  he  left  it  to  the  jury  to  say 
whether  they  were  referable  to  a  part- 
nership in  the  patent  in  general,  or  in 
this  particular  transaction,  or  whether 
they  were  done  by  Broadhurst  to  sat- 
isfy himself  as  to  the  license  he  had 
obtained  for  erecting  the  same  engines 
in  Cornwall,  being  likely  to  be  produc- 
tive to  him  or  not.  The  jury  having 
found  a  verdict  for  the  defendants  on 
the  ground  that  Broadhurst  was  not  a 
partner,  a  rule  for  a  new  trial  was  re- 
fused. Ridgway  v.  Philip,  1  C,  M.  & 
R.  415. 

{d)  Action  for  money  had  and  re- 
ceived, to  determine  whether  the  plain- 
tiff had  been  a  trader  within  the  mean- 
ing of  the  bankrupt  laws.  The  plaintiff 
resided  under  the  roof  of  Greenwood, 
his  brother-in-law,  who  had  long  been 
a  trader.  Greenwood  persuaded  the 
plaintiff  to  enter  into  partnership  with 
him.  There  was  a  long  negotiation 
between  them  ;  and  numerous  conver- 
sations were  proved,  in  which  the  plain- 
tiff said,  sometimes  that  he  had  become 
a  partner,  sometimes  that  he  was  about 
to   become   one.     There    was    no   evi- 


CH.  VI.]         WHO    ARE   PARTNERS    AS    TO    THIRD    PARTIES. 


135 


The  rule  must  be,  that  every  one  who  authorizes  another 
to  believe  him  a  partner,  is,  as  to  the  person  so  authorized,  a 


dence  of  any  express  agreement,  nor 
of  any  interference  in  the  business  by 
tlie  plaintiff,  except  that  he  had  once 
gone  in  company  with  Greenwood  to  a 
dyer's,  and,  having  inquired  about  some 
goods  that  were  left  with  him  to  be 
dj-ed,  spoke  of  them  as  the  joint  prop- 
erty of  himself  and  Greenwood.  The 
partnership,  if  any  existed,  only  lasted 
from  tiie  22d  of  March  till  the  9th  of 
May,  during  which  time  no  act  of  buy- 
ing and  selling  was  proved.  The  jury, 
upon  this  evidence,  having  found  for 
the  defendant,  and  having  thereby 
established  that  the  plaintiff  was  a 
partner  with  Greenwood,  and  therefore 
liable  to  the  bankrupt  laws,  the  Court 
of  Common  Pleas  refused  to  disturb 
the  verdict.  Parker  u.  Barker,  1  Brod. 
&  B.  9.  In  Goode  v.  Harrison,  5  B.  & 
Aid.  147,  the  facts  were  these  :  In 
April,  1818,  Goode  &  Bennion  called 
upon  Fair,  a  broker  at  Manchester, 
when  Goode  introduced  Bennion  as  a 
friend  of  his  from  Liverpool,  and  said, 
"  We  want  goods."  Fair  introduced 
them  to  Harrison  and  other  houses  in 
Manchester,  as  the  firm  of  Goode  & 
Bennion.  They  bought  goods  of  Har- 
rison and  other  persons  to  a  consider- 
able amount,  the  invoices  of  which 
were  made  out,  some  to  the  firm  of 
Goode  &  Bennion,  others  to  John  Goode 
&  T.  Bennion,  and  were  seen  by  them. 
The  goods  were  forwarded  to  the  ad- 
dress of  Goode  &  Bennion.  At  this 
time,  also,  Goode  said,  in  the  hearing 
of  Bennion,  that  if  the  goods  they  then 
bought  would  answer  the  purpose,  in  a 
very  short  time  they  would  have  five 
hundred  pieces  of  one  sort,  and  five 
hundred  of  another  sort.  After  this. 
Fair  corresponded  with  the  firm  of 
Goode  &  Bennion.  In  April,  1818, 
Goode  &  Bennion  had  a  counting-house 
in  Liverpool,  and  the  name  of  Goode 
(who  had  been  some  time  in  the  count- 
ing-house before  this  transaction  of 
Goode  &  Bennion,  but  had  not  shipped 
goods  before)  appeared  on  the  private 
door,  and  remained  there  till  August, 


1819.  But  the  name  of  Bennion  never 
appeared  on  the  door  at  all.  In  Jan- 
uary, 1819,  Fair  received  a  letter  order- 
ing more  goods,  in  the  handwriting  of 
Goode,  in  which  the  pronoun  we  was 
used  throughout,  and  which  concluded, 
"  I  am,  for  G.  &  B.,  very  respectfully 
yours,  John  Goode."  Fair  consequently 
bought  goods  of  Harrison,  and  for-  • 
warded  the  same,  as  also  a  bill  of 
parcels,  to  the  direction  of  Goode  & 
Bennion.  He  also  drew  a  bill  of  ex- 
change, for  the  amount  of  these  goods, 
upon  Goode  &  Bennion,  which  bill  was 
accepted  by  Goode  in  the  name  of  the 
firm.  Fair  did  not  see  Bennion  from 
the  time  of  his  being  in  Manchester,  in 
April,  1818,  till  February,  1819;  at 
which  time  Bennion  asked  Fair  for  the 
account  current  of  Goode  &  Bennion 
for  goods  bought  when  he  and  Goode 
came  to  Manchester  in  April,  1818,  and 
said  that  the  transaction  of  April,  1818, 
was  the  only  one  that  he  was  engaged 
in  with  Goode, and  that  all  that  account 
should  be  paid.  But  Bennion  did  not 
say  in  1818,  that  he  was  going  to  enter 
into  only  one  adventure  with  Goode, 
and  there  was  further  put  in  a  letter 
from  him  to  Fair  in  the  following 
terms  :  "  Liverpool,  20th  April,  1819. 
Dear  sir,  we  shall  be  obliged  by  your 
purchasing  for  our  account  one  hundred 
pieces  of  the  fancied  bordered  gingham, 
&c.  I  remain,  dear  sir,  for  Goode  and 
self,  yours,  T.  Bennion."  On  the  other 
hand,  it  was  testified  by  Riley,  who 
was  in  the  employ  of  Goode,  and  kept 
the  books  till  the  end  of  April,  1818, 
but  who  then  went  to  Barbadoes  with 
the  goods  first  purchased  of  Harrison, 
that  he  never  knew  Bennion's  name  to 
be  used  in  the  purchase  of  goods  after 
April,  1818.  A  principal  question  in 
the  case,  being  how  far  Bennion  was 
liable  as  a  partner  with  Goode,  for  the 
goods  purchased  as  above,  it  was  held, 
by  the  Court  of  King's  Bench  that 
from  the  above  facts  it  appeared  that 
he  had  been  so  held  out  as  partner  as 
to  be  liable  for  the  goods  bought  after 


136 


THE   LAW    OF    PARTNERSHIP. 


[CH.  VI. 


*  12-4  partner:  *  hut  it  must  also  be  true  that  this  authoriza- 
tion must  be  such  as  would  be  so  regarded  by  a  reason- 
able and  fair  man  ;  and  a  mere  conjecture  that  a  man  is  a 
partner,  even  from  circumstances  tending  that  way,  is  not 
sufficient  to  hold  him  as  such,  (g) 


as  well  as  in  April,  1818.  Palmer  v. 
Pinkham,  33  Me.  32,  illustrates  the 
same  rule.  Tliere  the  question  was 
whether  Say  ward  had  been  held  out  as 
a  partner  with  Pinkliani  upon  the  fol- 
lowing facts  :  In  October,  1848,  Pink- 
ham  applied  to  the  plaintiffs  to  purchase 
goods,  representing  himself  as  in  com- 
pany with  Sayward,  under  the  firm  of 
Horace  A.  Pinkham  &  Co.  The  plain- 
tiffs thereupon  sold  him  goods  on 
credit,  and  cliarged  them  to  Horace 
A.  Pinkham  &  Co.  Tliey  afterwards 
directed  their  attorney  to  ascertain 
whether  Pinkham  and  Sayward  were 
really  in  partnership.  The  attorney 
testified  that  he  called  upon  Pinkham, 
and  received  assurances  from  him 
that  they  were  so.  Of  Sayward  he 
asked  the  question,  "Are  j'ou  in  com- 
pany in  the  store  with  Pinkham  1 "  and 
received  the  answer,  "  Yes  "  But  it 
appeared  that  Sayward  was  the  owner 
of  the  store  in  which  the  business  in 
question  was  done,  subject  only  to  a 
right  of  redemption  in  Pinkham  ;  and 
that  he  might  therefore  have  supposed 
that  the  question  of  tlie  plaintiffs'  attor- 
ney referred  to  the  store  only,  and  not 
to  the  business  there  transacted,  and 
might  have  framed  his  answer  accord- 
ingly. Upon  this  ground,  the  verdict 
of  the  jury  at  nisi  pi-ius,  in  favor  of 
the  defendant,  was  attempted  to  be  sup- 
ported. But  the  court  Iield,  that  the 
word  "  company,"  when  applied  to  per- 
sons engaged  in  trade,  denoted  those 
united  for  the  same  purpose  in  a  joint 
concern  ;  that  it  was  so  commonly  used 
in  this  sense,  as  indicating  a  partner- 
ship, that  few  persons  accustomed  to 
purchase  goods  at  shops  where  they 
are  sold  by  retail  would  misappreliend 
that  such  was  its  meaning ;  that  the 
defendant  Sayward  must  be  supposed 
to  have  understood  its  meaning  as  used 
in  common  parlance ;  that  he  must  be 


responsible  for  the  ideas  which  the 
language  of  his  answer  was  suited  to 
convey  to  other  minds ;  and,  that  if 
there  was  any  thing  equivocal  in  it, 
and  other  persons  were  fairly  entitled 
to  receive  it  as  making  known  to  them 
that  he  was  a  partner  of  Pinkham  in 
the  business  transacted  in  that  store, 
he  could  not  be  relieved  from  the  con- 
sequences resulting  from  his  own  lan- 
guage, fairly  interpreted.  See  further 
Dutton  V.  Woodman,  9  Cush.  255. 

{e}  This  is  well  illustrated  by  the  lan- 
g)iage  of  the  court  in  Baker  r.  Nappier, 
19  Ga.  520.  Tliere  were  two  firms  :  the 
one  composed  of  Kilgrow  &  Price,  hotel- 
keepers;  the  other,  of  Kilgrow  &Patillo, 
grocers.  From  the  evidence,  it  was 
doubtful  whether  either  partnership  had 
a  well-settled  firm-name,  or  whether 
each  did  not  sometimes  use  or  rec- 
ognize the  name  of  E.  W.  Kilgrow  & 
Co.  as  its  own.  For  goods  sold  to 
Kilgrow,  it  was  sought  to  liold  the  firm 
of  Kilgrow  and  Price.  By  the  court  : 
"  A  merchant,  in  dealing  witli  a  person 
known  to  him  to  be  a  member  of  two 
different  firms,  and  in  respect  to  goods 
suitable  to  either  firm,  would  in  gen- 
eral be  in  the  exercise  of  no  more  than 
ordinary  care,  if  he  called  on  tliat  per- 
son to  know  which  was  the  firm  lie 
was  dealing  for.  And  if,  without  mak- 
ing any  such  inquiry,  the  merchant 
should  sell  the  person  the  goods,  think- 
ing him  to  be  acting  for  one  firm  when 
he  was  acting  for  the  other,  the  mer- 
chant could,  in  general,  hold  only  the 
firm  for  wliich  the  person  was  really 
acting,  liable."  And  it  was  held,  that 
the  jury  should  have  been  instructed 
as  follows:  "If  Baker  &  Hart  (the 
plaintifls),  after  taking  reasonable  care 
to  find  out  which  firm  Kilgrow  was 
dealing  for,  really  thought  he  was  deal- 
ing for  that  in  which  Mrs.  Price  was 
a  member,  and  so  sold  him  tlie  goods, 


CH.  VI.]         WHO    ARE    PARTNERS    AS    TO    THIRD    PARTIES. 


137 


*  Every  partnership  should  have  its  proper  name  *125 
or  style.  It  may  be  whatever  name  the  partnership 
chooses ;  (ee)  and  this  name  need  not  be  prescribed  in  the  arti- 
cles, or  determined  upon  by  express  agreement.  It  may  grow 
out  of  the  custom  of  the  firm,  and  the  manner  in  which  it  carries 
on  its  transactions.  (/)  If  it  have  no  name,  and  even 
if  it  avoid  having  one,  *  the  responsibilities  of  those  who  *  126 
can  be  shown  to  be  actually  partners  will  not  be  prevented 


intending  them  for  tliat  firm,  and  if 
tlie  goods  were  adapted  to  tlie  business 
of  tliat  firm,  —  then  that  firm  was  liable 
to  pay  for  the  goods,  altliough  Kilgrow, 
in  truth,  intended  them  for  the  other 
firm,  and  although  they  went  into  the 
other  firm." 

{ee)  Crawford  v.  Collins,  45  Barb. 
269. 

(/)  In  Le  Roy  v.  Johnson,  2  Pet.  186, 
Hoffman  &  Johnson  had  entered  into 
articles  of  copartnership,  and  one  of  the 
questions  in  the  case  was,  what  the 
firm-name  was.  Washington,  J.,  said  : 
"  It  is  quite  clear  that  the  name  of  this 
firm  is  nowhere  designated  in  the  arti- 
cles of  copartnership  which  have  been 
referred  to.  The  mode  in  which  a 
particular  branch  of  their  business 
was  to  be  conducted  cannot  reason- 
ably be  construed  to  give  a  name  to 
the  firm.  It  manifestly  had  no  allu- 
sion to  that  subject.  The  stipulation 
that  the  funds  necessarj'  for  the  pur- 
poses of  the  concern  should  be  raised 
upon  the  paper  of  Johnson,  to  be  in- 
dorsed by  Hoffman,  or  in  such  other 
shape  as  might  be  found  most  suitable 
to  the  object  of  the  parties,  no  more 
designated  Jacob  Hoffman  than  it  did 
George  Johnson  as  the  name  of  the 
copartnership.  It  is  unnecessary  to 
decide  whether  the  omission  to  agree 
upon  a  partnership  name  in  the  body 
of  the  instrument  was  or  was  not  sup- 
plied by  the  signatures  of  the  contract- 
ing parties  to  it ;  because  it  was  in  full 
and  uncontradicted  proof,  that,  after 
the  concern  went  into  operation  under 
tlie  articles,  their  books  were  kept,  and 
the  bills  and  accounts  relating  to  their 
business  were  made  out  at  their  ware- 
house, in  the  joint  names  of  Hofiman 


&  Johnson,  by  which  name  the  firm 
was  generally  known  in  Alexandria, 
and  in  which  they  acted  in  relation  to 
the  business  of  the  concern,  and  ad- 
vertised in  the  newspapers.  Now,  it 
cannot  be  questioned  Init  that  a  name 
thus  assumed,  recognized,  and  publicly 
used,  became  the  legitimate  name  and 
style  of  the  firm,  not  less  so  than  if  it 
had  been  adopted  by  the  articles  of  co- 
partnership." W.  G.  &  C.  agreed  to 
enter  into  partnership  ;  but  the  articles 
were  silent  as  to  the  name  of  the  firm. 
C.  bought  merchandise  on  joint  account, 
and  executed  a  note  therefor,  signed 
in  the  name  of  himself  &  Co.  It  was 
held,  that,  in  the  silence  of  the  articles 
on  the  subject,  the  fair  presumption 
was  that  the  style  adopted  by  C.  was 
that  agreed  upon  by  the  parties  as  the 
name  of  the  firm.  Aspinwall  v.  Wil- 
liams, 1  Hamm.  38  ;  Drake  v.  Elwyn,  1 
Caines,  184.  In  Ripley  v.  Colby,  3 
Foster,  443,  the  court  said  :  "  Was  the 
evidence  competent  to  show  that  the 
plaintiffs  constituted  the  firm  of  S.  F. 
Ripley  &  Co.  The  evidence  was  direct 
that  the  plaintiffs  agreed  to  hire  a  stable 
for  their  common  use  ;  that  they  after- 
wards occupied  this  stable  according  to 
this  agreement  ;  that  they  furnished 
money  in  the  stipulated  proportions 
to  pay  their  hostler,  and  to  pay  the 
rent.  They  made  these  repairs  on  the 
building  while  they  so  occupied  it. 
They  entered  and  held  under  a  lease 
made  by  the  defendants  to  S.  F.  Ripley 
&  Co.  This  must  be  licld  competent 
and  quite  satisfactory  evidence  that 
the  plaintiffs  were  i)artners  under  the 
firm  of  S.  F.  Ripley  &  Co.,  and,  as 
such,  made  the  repairs  in  question." 


138 


THE    LAW    OF    PARTNERSHIP. 


[CH.  VI. 


or  lessened,  (g')  But,  when  there  is  an  adopted  and  recognized 
style,  nothing  else,  as  such,  binds  the  partnership,  (gg')  But 
tliough  a  partnership  style  has  been  agreed  on  in  the  articles  or 
otherwise,  and  has  been  used  accordingly,  proof  that  another 
name  is  also  customarily  emjtloyed  in  the  dealings  of  the  firm, 
with  the  concurrence  of  all  the  partners,  or  even  of  the  managing 
partner  alone,  will  suffice  to  make  that  name  one  by  which 
the  partnership  will  be  bound.  (A)  If  the  style  be  A.,  B.,  & 
Co.,  the  Co.  being  C,  a  note  signed  A.,  B.,  &  C,  in  which 
they  jointly  and  severally  promise  to  pay,  is  not  a 
*  127    partnership  note.  (^)     *  Neither   would   a  note   signed 


{g)  See  Bank  of  Rochester  v.  Mon- 
teath,  1  Dcnio,  402. 

(,'/7)  See  o'l^e,  p.  *95. 

(h)  Williamson  v.  Johnson,  1  B.  & 
C.  146.  Abbott,  C.  J. :  "  It  appears 
from  the  evidence  that  Hopgood, 
Dixon,  and  a  person  named  L^'e,  car- 
rying on  business  in  partnership  to- 
gether, were  known  by  the  description 
of  Hopgood  &  Co.  All  their  transac- 
tions of  buying  and  selling  were  carried 
on  in  that  name  ;  but  Dixon,  who  was 
proved  to  be  the  manager  of  the  wliole 
business,  was  also  in  the  habit  of  in- 
dorsing bills  in  the  name  of  Hopgood 
&  Fowler,  by  procuration,  for  the  pur- 
pose of  getting  them  discounted.  The 
question  then  is,  whether  that  suffi- 
ciently proves  the  existence  of  per- 
sons using,  for  the  purposes  of  business, 
the  style  and  firm  of  Hopgood  &  Fowl- 
er 1  At  the  trial  I  was  at  first  inclined 
to  yield  to  the  objection,  but  afterwards 
altered  my  opinion.  I  still  think  that, 
as  between  third  persons,  there  was 
sufficient  evidence  of  an  indorsement, 
by  persons  using  the  style  and  firm  of 
Hopgood  &  Fowler ;  inasmuch  as  Dixon, 
the  managing  partner  in  the  firm  of  Hop- 
good  &  Co.,  was  in  the  habit  of  issuing 
bills  into  the  world,  indorsed  under  the 
former  designation."  See  Faith  v.  Rich- 
mond, 11  A.  &  E.  339 ;  Rogers  v.  Coit, 
6  Hill,  322;  Mifflin  v.  Smitli,  17  S.  & 
R.  165  ;  Palmer  v.  Stephens,  1  Denio, 
471 ;  Tams  v.  Hetner,  9  Penn.  St.  441  ; 
Le  Roy  v.  Johnson,  2  Pet.  186. 

(i)  Perring   v.   Hone,   4   Bing.  32  ; 


Crouch  V.  Bowman,  3  Humph.  209. 
See  Marshall  v.  Colman,  2  Jac.  &  W. 
266 ;  Kendrick  v.  Tarbell,  1  Williams, 
512;  In  re  Warren,  Daveis,  320;  Filley 
V.  Phelps,  18  Conn.  294.  In  Lord  Gal- 
way  V.  Matthew  &  Smithson,  1  Camp. 
403,  wliere  the  action  was  against  the 
defendants  as  surviving  partners,  Lord 
Ellenborough  held,  that  a  note  made  in 
the  following  manner  was  sufficient  on 
the  face  of  it  to  bind  the  wliole  firm  : 
"'  Sixty  days  after  date,  I  pay  Lord 
Viscount  Galway,  or  order,  200/.  value 
received.  For  J.  Matthew,  T.  Whit- 
smith,  and  T.  Smithson,  J.  Matthew." 
But  this  must  of  course  proceed  on  the 
presumption  that  the  names  of  all  the 
partners,  as  subscribed  by  the  partner 
acting  for  the  firm,  were  to  be  con- 
sidered the  style  of  the  firm  until  the 
contrary  was  proved.  Caldwell  v. 
Sithens,  5  Blackf.  99.  In  Norton  v. 
Seymour,  3  M  ,  G.  &  Sc.  792,  the  action 
was  upon  a  note  drawn  in  the  following 
form  :  "  Two  months  after  date,  we 
promise  to  pay,"  &c.,  and  signed, 
"  Thomas  Seymour,  Sarah  Ayres,"  in 
the  handwriting  of  Se^'mour.  The 
defendant  Ayres  had  formerly  carried 
on  business  at  the  place  at  wliich  the 
goods,  in  respect  of  wliich  the  above 
note  had  been  given,  had  been  supplied, 
and  had  admitted  that  she  was  in  part- 
nership with  Seymour.  A  circular  and 
invoice  issued  by  Seymour  were  also 
in  evidence;  the  circular  stating  that 
the  business  would  in  future  be  carried 
on  in  the  names  of  Seymour  &  Ayres, 


CH.  VI.]         WHO    ARE    PARTNERS   AS   TO   THIRD    PARTIES. 


139 


"  A.  &  B."  be  the  note  of  the  firm.  In  either  case,  or  al- 
most any  other,  upon  proof  tliat  the  partnership  was  really 
the  party  in  interest  and  under  obligation,  and  that  another 
style  than  that  of  the  partnership  was  used  through  inadver- 
tence or  fraud,  the  partnership  would  be  held  liable  ;  (/)  but  no 
signature  other  than  their  own  would  hold  them  as  their  signa- 
ture. (A;) 


and  the  invoice  being  lieadcd  Seymour 
&  Ayres.  It  was  objected,  on  the  part 
of  the  defendant  Ayres,  that,  assuming 
the  existence  of  a  partnership  between 
herself  and  Seymour,  the  latter  had  no 
authority  to  bind  her  by  a  bill  or  note 
signed  otherwise  than  with  the  name 
of  the  firm.  On  motion  for  a  new  trial 
of  the  case,  Maule,  J.,  said  :  "  As  to 
the  form  of  the  note,  it  is  to  be  observed 
that  it  is  signed  by  Seymour  in  the 
name  of  himself  and  the  other  member 
of  the  firm.  Suppose  there  was  no 
authority  so  to  sign  it,  other  than  the 
general  authority  conferred  by  the  part- 
nership, I  should  hesitate  to  say  that 
one  of  two  partners  could  not  bind  the 
other  by  signing  the  true  names  of 
both,  instead  of  the  fictitious  name. 
That,  however,  is  not  the  question 
here.  The  circular  states  that  the 
business  will  in  future  be  carried  on 
in  the  names  of  Seymour  &  Ayres  ; 
that  is,  in  the  names  of  the  two  persons 
mentioned,  whatever  those  names  may 
be.  Thomas  Seymour  is  the  name  of 
the  one,  and  Sarah  Ayres  that  of  the 
other.  There  is,  therefore,  sufficient 
evidence  of  a  special  authority  to  sign 
the  note  in  those  names,  if  such  special 
authority  were  necessary." 

ij)  Kinsman  v.  Dallam,  5  Monr. 
382;  Crozier  v.  Kirker,  4  Tex.  252. 
In  Faith  v.  Richmond,  11  Ad.  &  Ell. 
339,  Richmond,  Barbour,  &  Hannay 
were  in  partnership,  under  the  style 
of  "  The  Newcastle  &  Sunderland 
Wall's  End  Coal  Company."  A  prom- 
issory note  was  made  by  Richmond, 
signed  as  follows  :  "  For  the  Newcastle 
Coal  Company,  William  Richmond, 
manager.  At  the  London  and  West- 
minster Bank."  It  was  objected  that, 
admitting  Richmond  to  be  entitled,  as 


a  partner,  to  make  promissory  notes 
on  behalf  of  The  Newcastle  &  Sunder-  " 
land  Wall's  End  Coal  Company,  yet 
this  was  not  a  note  drawn  in  their 
behalf,  and  could  not  bind  them ; 
"  The  Newcastle  Coal  Company  "  not 
being  their  firm,  nor  the  London  & 
Westminster  Bank  one  with  which 
they  dealt.  The  Lord  Chief  Justice, 
in  summing  up,  observed,  that  the 
three  defendants  were  partners,  and 
Richmond  might  draw  bills  or  notes 
as  their  agent ;  and  that  if  he  had  done 
so  in  the  name  of  The  Newcastle  & 
Sunderland  Wall's  End  Coal  Com- 
pany, or  if  the  plaintiff  had  been 
used  to  deal  with  them  as  the  New- 
castle Coal  Company,  the  defendants 
would  have  been  bound  :  but  he  left 
it  to  the  jury  to  say,  whether,  on  the 
evidence,  the  note  in  question  was  one 
which  Richmond,  as  a  partner  in  the 
first-mentioned  firm,  had  authority  to 
draw.  A  verdict  being  found  for  the 
defendants,  the  Court  of  Queen's 
Bench  refused  a  rule  for  a  new  trial, 
on  the  ground  of  misdirection. 

{k)  "If,  in  the  body  of  a  promis- 
sory note,  made  by  one  partner,  the 
language  be,  '  I  promise  to  pay,'  &c., 
but  the  note  be  signed  with  the  co- 
partnership name,  such  note  is  bind- 
ing on  the  firm,  and  not  alone  on  the 
partner  who  executed  it."  Doty  v. 
Bates,  11  Johns.  544.  But  if  an  obliga- 
tion on  its  face  purports  to  be  the  act 
of  one  partner,  and  to  be  made  to  se- 
cure a  debt  due  from  him  individually, 
the  mere  fact  that  the  partnership 
name  is  signed  to  this  instrument  is 
not  sufficient  to  bind  the  firm  thereby. 
Scott  V.  Dansley,  12  Ala.  714.  If  a 
note  be  made  as  follows  :  "  I  promise 
to  pay,"  &c.,  and  be  signed  "  For  A., 


140  THE    LAW    OF    PARTNERSHIP.  [CH.  VI. 

*  128  *  Questions  of  this  kind  sometimes  arise  where  part- 
ners in  business  do  not  advertise  or  in  any  public  way 
make  known  the  fact  of  partnership,  but  transact  their  business 
under  the  name  of  one  of  their  partners  only.  (Z)  When  par- 
ties agree  to  transact  business  jointly,  or  under  an  agreement  to 
share  in  the  profits,  the  name  or  firm  which  they  use  is  arbi- 
trary and  conventional.  They  may  use  the  name  of  both,  or  of 
one  of  them  alone,  or  any  distinct  designation,  by  which  all 
will  be  included  and  bound,  as  if  their  names  were  used,  (wi) 
But  though  the  business  of  a  copartnership  may  be  transacted 
in  the  name  of  one  partner,  that  partner  alone  cannot  bring  an 
action  for  the  price  of  goods  sold  by  the  house.  The  other 
acting  and  ostensible  partners  must  be  co-plaintiffs,  (w)  And 
in  assumpsit  by  a  copartnership,  the  plaintiffs  must  prove  who 
compose  the  firm,  (uti)  These  questions  are  much  complicated 
when  this  partner  does  business  on  his  own  account  also, 
for  then  the  signature  may  do  nothing  toward  determining 
whether  a  purchase  was  made,  or  a  bill  accepted,  or  a  note 
given  by  that  individual  alone,  or  by  a  partnership  of  which  he 
was  a  meml)er.  All  questions  of  this  kind  are  questions  of  fact 
rather  than  of  law.  Nothing  better  can  be  said,  perhaps,  than 
that  they  must  be  answered  accordingly  as  the  evidence  brings 
them  under  this  or  that  general  principle  of  the  law  of  partner- 
ship. If,  for  example,  the  character  of  the  goods  purchased, 
the  circumstances  of  the  purchase,  the  use  made  of  them,  or 

B.,  C,  &  D.,  A."  or  "  By  A.,"  it  seems  name  of  one  partner  is  the  style  of  tlie 

that  tlie  wliole  firm  is  liable  thereon,  firm,    that   partner's   name,    with    the 

Galway  v.   Smith,  1   Camp.  403;   Hall  addition  of  "&  Co.,"  will  not  operate 

V.    Smitli,   1    B.  &   C.    407  ;    Ex  parte  as   the    signature    of    the   partnership. 

Buckley,  14  M.  &  W.  469.     Whether  As   where  J.  B.  &  C.  H.,  carrying  on 

upon  such  a  note   there  is  a  separate  business  as  partners   under  the  name 

rigiit  of  action  against  the  executing  of  J.  B.  &  C.  H.,  made  and  indorsed  a 

partner,  see  post,  p.  *  199,  et  seq.  bill  of  exchange  in  the  name  of  "  J.  B. 

(/)  The    style   of   a    copartnership  &  Co.,"  held,  that  J.  B.  was  not  bound 

may  be  the  name  of  one  of  its   mem-  thereby.     Kirk  v.  Blurton,  9  M.  &  W. 

bers.  Ex  jmrte,  Bolitho,  1  Buck,  100 ;  284.     See  Maclae  v.  Sutherland,  3  El. 

South   Carolina  Bank  v.  Case,  8  B.  &  &  Bl.  34,  35,  25  Eng.  L.  &  Eq.  92,  110; 

C.  427  ;  Palmer  v.  Stephens,  1  Uenio,  Forbes  v.  Marshall,  11  Exch.  176,  180. 
471 ;  or  of  one  who  is  not  a   partner,  (n)  Wilson   v.    Wallace,  8  S.  &  R. 

Bank    of    Rochester    v.    Monteath,    1  53. 

Denio,  402;  Williamson  v.  Johnson,  1  (nn)  Patten  v.  Wliitehead,  13  Rich- 

B.  &  C.  146.  ardson,  L.  150.   See  Pursley  v.  Ramsey, 

(/«)  Per   Shaw,   C.  J.,  in  Baring  v.  31    Ga.   403;    Tilford   v.    Ramsey,   37 

Crafts,  9  Mete.   392.     And  where  the  Mo.  563. 


CH.   VI.]         WHO    ARE    PARTNERS    AS    TO    THIRD    PARTIES. 


141 


the  circumstances  attending  the  giving  of  tlie  paper,  or 
any  or  all  of  these,  sufficiently  indicate  that*  the  trans-    *  129 
action  was  in  fact  on  account  of  the  partnership,  it  will 
be  held  as  the  transaction  of  the  partnership,  (o) 


(o)  Ex  parte  Bolitho,  1  Buck,  100. 
See  Truman  v.  Loder,  11  Ad.  &  El. 
693.  In  United  States  Bank  v.  Binney, 
5  Mason,  170,  the  two  Binneys  and 
John  Winship  carried  on  business  as 
partners,  under  the  name  and  firm  of 
"  John  Winsliip."  By  the  present  suit, 
it  was  attempted  to  recover  of  all  the 
partners,  as  indorsers,  upon  certain 
promissory  notes  indorsed  with  tlie 
name  of  John  Winship,  and  which 
had  been  protested  for  non-payment. 
Story,  J.,  said:  "In  respect  to  the 
general  and  limited  partnerships,  the 
same  general  principle  applies,  that 
each  partner  has  authority  to  bind  the 
firm  as  to  all  things  within  the  scope 
of  the  partnership,  but  not  beyond  it. 
Where  the  contract  is  made  in  the 
name  of  the  firm,  it  will,  prima  facie 
bind  tlie  firm,  unless  it  is  ultra  the 
business  of  the  firm.  Where  the  firm 
imports,  on  its  face,  a  company,  as  A., 
B.,  &  Co.,  or  A.,  B.,  &  C,  then  the 
contracts  made  by  the  partners  in  that 
name  bind  the  firm,  unless  they  are 
known  to  be  beyond  the  scope  and 
business  of  tlie  firm.  But  where  the 
business  is  carried  on  in  the  name  of 
one  of  the  partners,  and  his  name  alone 
is  the  name  of  the  firm,  then,  in  order 
to  bind  the  firm,  it  is  necessary  to  prove 
not  only  the  signature,  but  that  it  was 
used  as  the  signature  of  the  firm  by  a 
party  authorized  to  use  it  on  that  occa- 
sion and  for  that  purpose.  In  other 
words,  it  must  be  shown  to  be  used 
for  partnership  olyects  and  as  a  part- 
nership act.  The  proof  of  the  signa- 
ture is  not  enough.  The  plaintifTs 
must  go  farther,  and  show  that  it  is  a 
partnership  signature.  In  the  present 
case,  tlie  signature  of  "  John  Winsliip  " 
may  be  on  his  individual  account,  or 
his  personiil  contract,  or  it  may  be  on 
account  of  tlie  partnership.  Upon  the 
face  of  the  paper  it  stands  indifferent. 
The  burden  of  proof,  then,  is  upon  the 


plaintiffs  to  establish  that  it  is  a  con- 
tract of  the  firm,  and  ought  to  bind 
them."  s.  c.  5  Pet.  529;  Manuf.  & 
Mech.  Bank  v.  Winship,  5  Pick.  11; 
P>theridge  v.  Binney,  9  id.  272 ;  Buck- 
ner  v.  Lee,  8  Ga.  285 ;  Mercantile  Bank 
V.  Cox,  38  Me.  500.  But  if  the  person 
whose  name  is  adopted  as  the  style 
of  the  partnership  does  not  carry  on 
a  separate  business,  then  that  name, 
attached  to  a  note  or  other  obligation, 
will  be  presumed  to  be  the  signature 
of  the  firm.  Bank  of  Rochester  v. 
Monteath,  1  Denio,  402  ;  Oliphant  v. 
Matthews,  16  Barb.  608.  See  Mifilin 
V.  Smith,  16  S.  &  R.  165.  By  the 
court,  Johnson,  J.  :  "  It  seems  to  be 
well  settled,  that  where  a  partnership 
is  carried  on  in  the  name  of  an  individ- 
ual, and  a  suit  is  brought  against  the 
partners  upon  a  note  or  other  obliga- 
tion signed  by  such  individual,  the 
legal  presumption  is  that  it  is  the  note 
of  the  individual,  and  not  of  the  part- 
ners. And  the  plaintiff,  in  order  to 
recover  against  the  partners,  must  not 
only  prove  the  execution  of  the  note, 
but  go  farther,  and  prove,  either  that 
the  money  for  which  the  note  was 
given  was  borrowed  on  the  credit  of 
the  partnership,  or  that,  when  obtained, 
it  was  used  in  the  business  of  the  part- 
nership. If  the  individual  whose 
name  is  used  declares  at  the  time 
of  the  transaction  that  it  is  on  account 
of  the  partnership,  that  is  sufficient  to 
bind  the  partners.  And  it  would  seem, 
from  an  examination  of  the  reported 
cases,  that  the  legal  presumption  that 
the  debt  is  the  debt  of  the  individual 
in  whose  name  the  obligation  is  made, 
and  not  of  the  firm,  may  be  repelled 
and  overcome  by  proof  as  to  the  busi- 
ness in  which  such  person  was  engaged. 
Thus,  in  Mifflin  o.  Smith,  17  S.  &  R. 
165,  where  it  appeared  that  the  usual 
and  regular  business  of  the  borrower 
was  on  account  of  the  partnership,  and 


142 


THE   LAW    OF   PARTNERSHIP. 


[CH.  VI. 


*  130  *  In  all  such  cases,  it  must  be  remembered  that  the 
individual  partner  whose  name  is  used,  has,  by  law,  full 
authority  to  represent  and  act  for  the  rest,  and  use  his  own 
name  as  the  name  of  the  firm  ;  and  his  representations  in  a 
matter  of  business  which  might  be  theirs  bind  them  all,  how- 
ever fraudulent  on  his  part.  If,  therefore,  when  he  purchases 
goods,  or  gives  a  note,  or  offers  a  note  for  discount  with  his 
indorsement,  he  represents  that  he  acts  for  the  partnership,  and 
the  person  with  whom  he  deals  believes  honestly  and  rationally 
that  he  does  so  act,  the  partnership,  and  of  course  all  the  part- 
ners, arc  bound,  although  no  name  but  that  of  the  individual 
was  used  in  the  transaction. 

The  use  of  such  a  name  as  usually  indicates  partnership, 


tliat  no  business  was  done  by  him  on 
his  own  account,  except  an  occasional 
speculation,  it  was  held,  tliat  tlie  trans- 
action must  be  presumed  to  be  on  part- 
nership account.  So,  in  the  case  of 
South  Carolina  Bank  v.  Case,  8  B.  & 
C.  427,  wliere  it  appeared  that  the  part- 
ners were  Crowder,  Clough,  &  Prefect, 
and  the  name  of  the  firm  in  England 
was  Crowder,  Clough,  &  Co.,  but  in 
their  business  in  the  United  States  the 
name  of  Clough  alone  was  used,  and 
tliat  Clough,  while  he  resided  here, 
never  traded,  or  drew  or  indorsed 
bills  on  his  own  account,  but  did  on 
account  of  the  firm,  —  it  was  held,  "un- 
der the  circumstances,  that  a  bill  indorsed 
here  by  Clough  must  be  regarded  as 
a  bill  indorsed  by  the  firm."  Manuf.  & 
Mech.  Bank  v.  Winship,  5  Pick.  11 ; 
Etheridge  v.  Binney,  9  id.  272 ;  Bank 
of  Rochester  v.  Monteath,  1  Denio, 
402 ;  Buckner  v.  Lee,  8  Ga.  285.  In 
United  States  Bank  v.  Binney,  5  Ma- 
son, 189,  wliere  the  two  Binneys  and 
John  Winship  were  in  partnership, 
under  the  firm  and  style  of  "  John 
AVinship,"  and  the  action  was  against 
all  the  partners,  as  indorsers  upon 
promissory  notes  indorsed  in  the  name 
of  John  Winship,  Story,  J.,  said : 
"  The  notes  are  all  indorsed  in  the 
name  of  'John  Winship.'  For  aught, 
therefore,  that  appears  on  the  face  of 
them,  they  were  notes  only  binding 
him  personally.     The  plaintiffs  must, 


then,  go  farther  and  show,  either  ex- 
pressly or  by  implication,  that  these 
notes  were  offered  by  Winship  as  notes 
binding  the  firm,  and  not  merely  him- 
self personally,  as  that  the  discounts 
were  made  for  the  benefit  and  in  the 
course  of  the  business  of  the  firm.  It 
is  not  sufficient  for  the  plaintiffs  to 
prove  that  the  bank,  in  discounting 
these  notes,  acted  upon  the  belief  that 
they  bound  the  firm,  and  were  for  the 
benefit  and  business  of  the  firm.  They 
must  go  farther,  and  prove  tliat  that 
belief  was  known  to  and  sanctioned  by 
Winship  himself  in  offering  the  notes, 
and  that  he  intentionally  held  out  to 
them  that  the  discounts  were  for  the 
credit  and  on  the  account  of  the  firm, 
and  that  his  indorsement  was  the  in- 
dorsement of  the  firm  and  to  bind 
them  ;  and  that  the  bank  discounted 
the  notes  upon  the  faith  of  such  acts 
and  representations  of  Winship.  The 
jury  will  judge,  from  the  whole  evi- 
dence, how  the  case  stands  in  these 
respects.  The  mere  fact  that  the 
discounts  so  procured  were  applied  to 
the  use  of  the  firm,  is  not,  of  itself, 
sufficient  to  prove  that  the  discounts 
were  procured  on  account  of  the  firm. 
It  is  a  strong  circumstance,  entitled  to 
weight,  but  not  decisive."  See,  to  the 
same  effect,  the  language  of  the  court 
in  Etheridge  v.  Binney,  9  Pick.  275. 
See  also  Oliphant  v.  Matthews,  16 
Barb.  608. 


CH.  VI.]         WHO    ARE    PARTNERS    AS    TO    THIRD    PARTIES.  143 

while  it  may  be  primd  facie  evidence  of  partnership,  is  slight 
and  easily  rebuttable,  (oo) 

Under  the  topic  of  the  liability  of  a  person  as  partner  because 
he  is  so  held  out,  a  question  arises  which  may  be  attended  with 
some  difficulty.  If  a  person,  who  is  not  generally  or  publicly 
declared  to  be  a  partner,  is  declared  with  his  consent  to  be  a 
partner  to  one  customer,  and  that  customer  communicates  the 
fact  to  another,  is  the  person  thus  disclosed  to  be  held 
as  a  partner  by  this  other  *  customer,  if  he  be  not  a  *  131 
partner  in  fact  ?  If  he  is  a  partner  in  fact,  he  is  liable  as 
such  whenever  he  is  discovered  to  be  one,  without  any  reference 
to  the  means  or  manner  of  the  discovery,  or  the  time,  whether 
before  or  after  the  contract.  But  if,  not  being  a  partner,  he  is 
chargeable,  if  at  all,  because  he  is  held  out  as  one,  can  he 
be  thus  charged  by  one  to  whom  he  was  not  so  held  out  by 
himself,  or  with  his  direct  consent  ?  The  cases  and  principles 
which  we  have  already  considered  in  treating  of  a  closely  related 
question  touch  upon  this  also,  (p)  It  seems,  however,  to  be  a 
distinct  question.  But  though  there  are  cases  which  touch  on  . 
this,  there  are  none  that  we  are  aware  of  which  determine  the 
question. 

We  suppose  the  answer  must  depend  in  each  case  upon  the 
circumstances  and  manner  of  the  first  or  original  disclosure, 
and  the  intention  of  the  parties  therein.  If  the  alleged  partner, 
who  is  to  be  held  only  because  he  has  loaned  his  credit,  in- 
tended to  lend  it  only  to  the  very  person  and  in  the  very  trans- 
action in  which  he  made  or  permitted  the  disclosure,  then  he 
should  not  be  held  any  further,  unless  through  his  own  fault  or 
negligence.  Whatever  was  his  original  intention,  and  however 
limited  it  might  have  been,  if  he  did  not  limit  this  giving  of 
his  credit  in  fact,  he  must  be  bound  to  all  to  whom  the  fact  to 
which  he  gives  circulation  is  afterwards  communicated.  If,  on 
the  other  hand,  he  says  to  the  customer,  I  am  a  partner  as  to 
you,  but  I  tell  you  so  in  confidence,  and  you  must  not  mention 
this  to  any  person ;  and  the  customer  mentions  it,  and  with  it  the 

(oo)  Cliarman  v.  Henshaw,  15  Gray,  210 ;  Berkom  v.  Smith,  1  Esp.  29 ;  Fox 

293.  V.    Clifton,    6    Bing.    79-4 ;    Carter    v. 

{}>)  Shott  V.  Strcatfield  &  Green,  1  Whalley,  1  B.  &  Ad.  11. 
M.  &  Hob.  9;  Swan  v.  Steele,  7  East, 


144 


THE   LAW   OF   PARTNERSHIP. 


[CH.  VT. 


injunction  of  secrecy  to  another  customer,  the  first  one  does 
what  he  had  no  right  to  do,  and  the  second  knows  that  the  first 
had  no  right  to  do  it,  and  therefore  can  acquire  no  right  by  receiv- 
ing wliat  he  knew  tlie  giver  had  no  right  to  give.  If  the  second 
customer  did  not  know  that  the  first  broke  his  promise  in  telling 
him,  or,  what  is  the  same  thing,  did  not  know  that  the  alleged 
partner  gave  no  authority  for  being  called  a  partner  to  him,  it 
may  be  a  more  difficult  question,  whetlier  he  can  hold  this 
person  as  partner.  But  we  think  he  can;  because  the  innocent 
customer  should   be  protected,  rather  than  the  guilty  party, 

who    migiit    have    effectually    limited    his    credit    by 
*  132    *  guaranty  or   the    like,  instead    of  putting  it  into  a 

form  by  which  others  might  be  deceived. 
Usually,  the  question  whether  one  is  liable  as  a  partner 
because  so  held  out  by  himself,  or  with  his  consent,  turns  upon 
the  force  and  meaning  of  his  acts.  If  his  name  is  adver- 
tised, (5-)  or  is  on  the  painted  signs  over  the  door,  (r)  on 
the  shop-bills  or  cards,  (s)  and  he  knows  this  and  makes  no 


(9)  In  Ex  parte  Matthews,  3  Ves.  & 
Bea.  125,  the  petitioner  prayed  that 
the  joint  commission  against  himself 
and  John  Matthews  as  partners  might 
be  superseded :  and  stated,  that  he, 
the  petitioner,  never  was  a  partner, 
nor  interested  with  John  Matthews 
nominally  or  really  in  the  property  or 
profits  of  his  trade,  or  any  other 
trade;  that  he  was  merely  the  sliop- 
riian  to  John  Matthews,  and  not  a 
trader;  and  that  there  was  no  pre- 
tence for  supposing  him  a  partner 
with  John  Matthews,  except  an  adver- 
tisement in  the  Gazette,  declaring  the 
partnership  between  them  dissolved; 
which  advertisement  was  inserted  for 
the  purpose  of  counteracting  a  report 
that  they  were  partners.  The  Lord 
Chancellor  held,  that  upon  the  affida- 
vits he  could  not  possibly  decide  that 
there  was  no  partnership  ;  and,  accord- 
ingly, that  an  issue  must  be  directed 
to  try  that  question. 

(r)  Wilhams  v.  Keats,  2  Stark.  290; 
Dolman  v.  Prichard,  2  C.  &  P.  104. 

(s)  Young  V.  Axtell,  2  H.  Bl.  242; 
Gill  V.  Kuhn,  6  S.  &  R.  338  ;  Benedict 


V.  Davis,  2  McLean,  348.  See  f  urtlier, 
for  illustrations  of  the  methods  by 
which  persons  may  exhibit  themselves 
as  partners,  Ex  parte  Langdale,  18 
Ves.  300,  s.  c.  2  Kose,  444  ;  Bond  v. 
Pittard,  3  M.  &  W.  357;  Guidon  v. 
Robson,  2  Camp.  302;  Geddes  v.  Wal- 
lace, 2  Bligh,  296 ;  Stearns  v.  Haven, 
14  Vt.  540 ;  Hicks  v.  Cram,  17  id.  449 ; 
Cottrill  V.  Vanduzen,  22  id.  511; 
Matthews  f.  Felch,  25  id.  536;  Perry 
V.  Randolph,  6  Sinedes  &  M.  335 ; 
Chapman  v.  Wilson,  1  Rob.  ( Va.)  267  ; 
Mershon  v.  Hobensack,  2  N.  J.  372; 
Smith  V.  Smith,  7  Post.  244 ;  Holmes 
V.  Porter,  39  Me.  157;  Barnett  v. 
Smith,  17  111.  5G5  ;  McMulhm  v.  Mac- 
kenzie, 2  Greene  (la.),  368  ;  Chidney  v. 
Porter,  21  Penn.  St.  390.  If  A., 
wishing  to  get  bills  discounted,  intro- 
duces B.,  as  his  partner,  to  C,  but  the 
only  connection  between  A.  and  B.  is 
in  discounting  bills,  B.  is  not  hereby  so 
held  out  as  a  general  partner  with  A. 
as  to  be  liable  for  goods  afterwards 
bought  by  A.  of  a  person  who  liad 
been  informed  by  C.  that  A.  and  B. 
were   partners.     Berkom   v.   Smith,   1 


CH.  VI.]         WHO    ARE    PARTNERS    AS    TO    THIRD    PARTIES. 


145 


objection,  he  is  bound.  But  a  person  cannot  be  made  liable  as 
partner  because  so  held  out,  unless  the  holding  out  is  proved 
to  have  been  with  his  concurrence.  Hence  the  declaration  or 
acts  of  A.,  implicating  B.  as  his  partner,  while  they  bind 
the  former,  cannot  atfect  the  latter,  without  *  some  con-  *  133 
firmation  by  him.  (i)     As  to  public  acts  of  this  kind, 


Esp.  29.  See  Ridgway  v.  Philip,  5 
Tyrw.  131.  A  person  is  not  liable  as 
partner  because  so  held  out,  who  has 
signed  his  name  to  an  instrument  im- 
porting that  the  subscribers  intend, 
upon  the  fulfilment  of  certain  condi- 
tions, to  carrj'  on  business  in  part- 
nership. He  has  not  thereby  held 
himself  out  to  the  world  as  a  partner 
in  a  company  already  formed.  Bourne 
V.  Freeth,  9  B.  &  C.  632.  Nor  is  one 
who  has  retired  from  a  firm,  and 
given  due  notice  thereof,  liable  as  a 
partner  to  third  persons  for  goods  sup- 
plied to  a  ship,  because,  having  before 
retirement  defectively  conveyed  his 
interest  as  a  partner  therein,  his  name 
appears  on  the  ship's  register  down  to 
a  period  subsequent  to  the  delivery  of 
the  goods,  when  he  joins  with  the 
assignees  of  the  other  partners  in  mak- 
ing a  good  title  thereto  to  their  ven- 
dee. M'lver  V.  Humble,  16  East,  169. 
See  Hoare  v.  Dawes,  1  Doug.  371. 

(<)  Whitney  v.  Ferris,  10  Johns.  66; 
McPherson  i\  Eathbone,  7  Wend.  216 ; 
Jennings  v.  Estes,  16  Me.  323  ;  Thorn- 
ton V.  Kerr,  6  Ala.  823  ;  Tuttle  v. 
Cooper,  5  Pick.  414 ;  Anderson  v.  Le- 
van,  1  Watts  &  S.  334;  Taylor  v. 
Henderson,  17  S.  &  R.  458.  See  Mat- 
thews V.  Felch,  25  Vt.  536;  McBride 
V.  Protection  Ins.  Co.,  22  Conn.  248, 
259.  In  Fox  v.  Clifton,  6  Bing.  776,  4 
Moore  &  P.  713,  the  action  was  brought 
by  the  plaintiff  for  goods  sold  and  de- 
livered and  for  work  and  labor  done, 
upon  a  contract  made,  not  with  the 
defendants  personally,  but  with  the 
chairman  and  directors  of  the  "  Impe- 
rial Distillery  Company."  It  was  con- 
tended, that  the  defendants  had  allowed 
themselves  to  be  held  out  as  partners 
in  this  company,  upon  the  following 
evidence,  as  stated  in  the  opinion  of 
the  court :  "  The  secretary  of  the  com- 


pany had  prepared  a  book  containing 
a  list  of  the  names  of  all  those  persons 
to  whom  shares  had  been  allotted  in 
the  concern,  in  which  list  the  names  of 
the  seven  defendants  had  been  included. 
This  list  had  been  left  with  the  bankers 
of  the  company,  to  enable  them  to  re- 
ceive the  deposits  from  the  contrib- 
utors, upon  which  list  the  payments 
had  been  made,  and  receipts  given  at 
the  banking  house  ;  and  a  copy  of  it 
was  lying  upon  the  table  of  the  count- 
ing-house belonging  to  the  company, 
where  it  was  seen  by  the  plaintiff  when 
he  called  upon  the  subject  of  the  con- 
tract ;  and  on  one  occasion,  when  the 
plaintiff  was  expressing  a  doubt  about 
trusting  such  a  numerous  company,  the 
secretary  opened  the  book,  and  the 
plaintiff  looked  over  some  of  the  names. 
The  book  itself,  when  referred  to,  con- 
tained lists,  on  the  different  pages,  of 
the  names  of  the  several  persons  to 
whom  shares  had  been  allotted,  ar- 
ranged alphabetically,  one  leaf  being 
assigned  to  each  letter  of  the  alphabet, 
and  the  whole  number  of  names  con- 
sisted of  upwards  of  two  hundred  ;  so 
that  merely  opening  the  book  in  the 
counting-house,  and  seeing  some  of  the 
names,  could  not,  in  the  ordinary  course 
of  things,  give  any  intimation  to  the 
plaintiff  that  the  names  of  the  seven 
defendants  were  included  in  the  lists. 
Indeed,  it  is  not  argued  on  the  ground 
that  the  plaintiff  saw  the  names  of  the 
defendants  in  this  list,  but  that  the 
bare  circumstance  that  their  names 
were  included  in  such  list  used  for  the 
purpose  above  specified,  by  their  own 
permission,  was  a  sufficient  holding 
themselves  out  to  the  world  as  part- 
ners in  the  company.  But,  in  the  first 
place,  there  was  no  evidence  that  the 
defendants  knew  of  the  existence  of 
any  copy  of  the  list  at  the  counting- 


10 


146 


THE   LAW    OF    PARTNERSHIP. 


[CH.  VI. 


*  134    there  is  some  presumption  that  he  knows  and  *  permits 
tiiem ;  and  he  can  escape  the  liabiHty  only  by  proving 
his  want  of  knowledge  and  consent,  (it) 

If  he  knew,  and  neither  consented  nor  refused,  nor  took  any 
steps  in  relation  to  it,  then  he  would  be  held  as  consenting ;  for 
he  is  in  fault,  and  he  should  suffer  rather  tlian  tlie  wholly  inno- 
cent persons  whom  he  permits  to  be  deceived.  And  if  he  does 
something  in  the  way  of  objecting,  the  question  then  is.  What, 
and  how  much  ?  (w)  and  we  take  the  only  rule  to  be,  that  if  he 
is  held  out  as  partner,  and  knows  it,  he  is  chargeable  as  one, 
unless  he  does  all  that  a  reasonable  and  honest  man  should  do, 
under  similar  circumstances,  to  assert  and  manifest  his  refusal, 


house ;  still  less,  any  evidence  that 
such  list  was  made  up,  or  shown  to 
any  one,  with  their  permission  or 
knowledge.  The  liolding  one's  self 
out  to  the  world  as  a  partner,  as  con- 
tradistinguislied  from  the  actual  rela- 
tion of  partnership,  imports  at  least 
the  voluntary  act  of  the  party  so  hold- 
ing himself  out.  It  implies  the  lending 
of  his  name  to  the  partnership ;  and  is 
altogether  incompatible  witii  the  want 
of  knowledge  that  his  name  has  been 
so  used.  Thus,  in  the  ordinary  in- 
stances of  its  occurrence,  when  a  person 
allows  his  name  to  remain  in  a  firm, 
either  exposed  to  the  public  over  a 
shop  door,  or  to  be  used  in  printed 
invoices  or  bills  of  parcels,  or  to  be 
published  in  advertisements,  the  knowl- 
edge of  the  party  that  his  name  is  used, 
and  his  consent  thereto,  is  the  very 
ground  upon  which  he  is  estopped  from 
disputing  his  liability  as  partner.  That 
there  must  have  been  a  list  of  the  sub- 
scribers to  so  numerous  a  company, 
the  defendants  may,  indeed,  be  taken 
to  have  known  :  it  would  have  been 
impossible  to  make  calls  for  deposits, 
to  give  notices,  or  to  do  any  of  the  acts 
necessary  for  carrying  on  the  concern, 
without  a  written  list  of  the  names  of 
the  subscribers.  So  far,  therefore,  the 
authority  of  the  defendants  to  the  ex- 
istence of  a  list  may  be  assumed.  But 
that  implies  no  authority  whatever 
that  a  copy  should  be  made  out  and  lie 
in  the  counting-house,  for  the  purpose 


of  being  shown  to  strangers  who  might 
demand  to  look  at  it.  And  still  less 
could  the  list  left  with  the  bankers  be 
considered  as  making  any  communica- 
tion to  the  world,  with  the  assent  of 
the  defendants.  That  list  was  a  matter 
in  strict  confidence  and  privity  between 
the  banker  who  received  the  money, 
and  the  party  who  called  with  the 
letter  in  his  hand  and  paid  the  deposit. 
It  held  out  no  information  to  the  pub- 
lic, because  not  communicated  to  any 
other  third  person  whatsoever.  Even 
upon  the  face  of  the  book  itself,  it  con- 
tained no  information  of  the  relation  in 
which  the  parties  stood  to  each  other  ; 

.     But,    without    reference 

to  the  information  wliicli  the  plaintiff 
actually  received  from  the  book,  we 
think  the  communication  of  this  book 
was  no  act  done  by  the  defendants 
themselves,  or  by  their  authority  or 
permission,  so  as  to  make  them  nom- 
inal and  ostensible  partners,  in  contra- 
distinction to  real  partners  or  sharers 
in  the  profits  of  the  concern." 

(u)  See  cases  cited  in  four  preceding 
notes. 

(v)  As  in  the  case  of  a  retiring  part- 
ner, who,  it  seems  to  be  settled,  must 
notify  the  dissolution  to  the  public  by 
proper  advertisements,  and,  perhaps, 
to  customers  by  a  particular  notice. 
Newsome  v.  Coles,  2  Camp.  617.  See 
Leavitty.  Peck,  3  Conn.  124.  See  also 
post,  ch.  13,  §  2. 


CH.  VI.]         WHO    ARE    PARTNERS    AS    TO    THIRD    PARTIES. 


147 


and  thereby  prevent  innocent  parties  from  being  misled.  If  he 
docs  any  thing  which  might  fairly  produce  the  impression  that 
he  is  a  partner,  or,  when  another  does  this,  fails  to  do  what  he 
should  to  remove  or  prevent  this  impression,  then  he  is  as 
much  liable  as  if  he  calls  himself  a  partner. 

If  one  is  chargeable  as  partner  because  so  held  out,  he  may 
be  treated  as  one,  not  only  by  being  made  responsible,  but  by 
being  joined  with  the  partners  in  a  suit  against  them,  or  in  a 
suit  by  them,  {iv')  So,  if  a  contract  be  made  with  per- 
sons as  partners,  *  they  may  sue  or  be  sued  as  part-  *  135 
ners,  whether  they  are  so  in  fact  or  not.  (x)  Where 
there  is  a  partnership  as  to  third  parties,  the  law  presumes  a 
partnership  as  between  themselves,  (y)  But,  if  one  sues  a  firm, 
he  is  not  compellable  to  join  a  person  who  is  not  a  partner, 
merely  because  he  is  held  out  by  a  partner  to  be  one.  (z) 


(uj)  That  a  nominal  partner  may  be 
joined  in  a  suit  against  the  other  part- 
ners, is  sliown  by  almost  every  case  in 
which  this  liability  of  a  nominal  part- 
ner is  tested.     See  Goode  v.  Harrison, 
5  B.  &  Aid.  150.     That  one   held  out 
as  partner  may  be  a  coplaintiff   in  a 
suit  with  the  other  partners,  see  Guidon 
V.    Robinson,    2    Camp.    302 ;    Kell   r. 
Nainby,  10  B.  &  C.  20.     In  Smith  v. 
Sherwood,  10  Jur.  214,  A.  filed  a  bill 
for  an  account  against  B.  &  C,  alleging 
himself  a  partner  witii  them.     B.  &  C, 
in  their  answer,  denied  the  existence  of 
the   partnership,  and   stated   that   the 
plaintiff  was  their  foreman,  whom  they 
had  contemplated  taking  into  partner- 
ship, and    whom,  therefore,   they  had 
allowed  to   hold   himself   out  as  their 
partner    in    many    ways.       They   ad- 
mitted   that   the    accounts    had   been 
made  out  in  the  name  of  B.,  C.,  &  A. ; 
that,  in  a  certain  specification  of  build- 
ings required  by  them,  the  buildings 
had  been  described  as  the  property  of 
B.,  C,  &.  A. ;  and  also,  that  they  had 
served  A.    with   a  notice   to   dissolve 
partnership.   The  Vice-Chancellor /ieW, 
that  there  was  sufficient  proof  of  the 
existence  of  a  partnership  between  B., 
C,  &  A.     [Such  a  partner  may  also  be 
made  a  bankrupt  as  a  member  of  the 
firm.      Re  Krueger,  2   Lowell's    Deci- 
sions, (Dist.  Ct.  U.  S.),  66.] 


[x)    Bond   V.   Pittard,   3   M.    &   W. 
357. 

{y)  Lord  Ellenborough  in  Peacock  v. 
Peacock,  2  Camp.  45. 

(z)  In  Guidon  v.  Robson,  2  Camp. 
302,  Lord  Ellenborough  apparently  held, 
that  a  merely  nominal  partner,  not  only 
might  join  with  the  other  partners  in  a 
suit,  but  in  some  cases  was  even  a 
necessary  party.  There,  the  action  was 
by  Guidon  alone  against  Robson,  upon 
a  bill  of  exchange,  drawn  in  the  name 
of  Guidon  &  Hughes  upon  Robson,  and 
by  him  accepted.  Hughes  was  simply 
a  clerk  of  Guidon.  Lord  Ellenborough  : 
"  There  being  such  a  person  as  Hughes, 
I  am  clearly  of  opinion  that  he  ought 
to  have  been  joined  as  a  partner.  He 
is  to  be  considered  in  all  respects  a 
partner  as  between  himself  and  the  rest 
of  the  world.  Persons  in  trade  had 
better  be  very  cautious  how  they  add 
a  fictitious  name  to  their  firm,  for  the 
purpose  of  gaining  credit.  But  where 
the  name  of  a  real  person  is  inserted, 
with  his  own  consent,  it  matters  not 
what  agreement  there  may  be  between 
him  and  those  who  share  the  profit 
and  loss.  They  are  equally  respon- 
sible, and  the  contract  of  one  is  the 
contract  of  all.  In  this  case,  the 
declaration  states  that  the  defendant 
promised  to  pay  the  money  specified 
in  the  bill,  to  the  plaintifi"  only,  whereas 


148  THE   LAW    OF    PARTNERSHIP.  [CH.  VI. 

Much  the  greater  number  of  cases  relating  to  the  liability  of 
one  licld  out  as  a  partner  turn  upon  the  rights  and  duties  of  a 
retiring  partner,  and  will  be  considered  when  treating  of  that 
subject. 

SECTION  VI. 


OF   LIABILITIES    ARISING   FROM    ANNUITIES,    LOANS,    LEASES,    OR 

TRUSTS. 

A  person  may  be  in  receipt  of  a  sum  from  the  profits  of  a 
partnership,  without  being  chargeable  as  a  partner,  when  one  is 
entitled  to  an  annuity  from  the  firm.  This  happens  most  fre- 
quently in  the  case  of  a  retiring  partner,  who  as  a  part  of  his 
several  property,  or  instead  of  some  portion  of  his  share  in  the 
partnership  property  which  he  leaves  behind,  is  to  receive  an 
annuity  for  life,  or  for  a  certain  number  of  years.  This  may 
occur  also  by  the  bequest  of  a  deceased  partner,  who  leaves  his 
funds  or  a  part  of  them  in  the  firm,  and  gives  an  annuity  to 
his  widow  or  some  other  person  out  of  the  profits.  It  is  agreed 
that  if  this  annuity  be  certain,  and  in  no  way  dependent  on  the 
amount  of  the  profits,  although  payable  out  of  them,  then  the 
annuitant  is  not  a  partner,  (a)     And,  if  Lord  Eldon's  rule  was 

she  promised  to  pay  it  to   the   plain-  not  entitled  himself  to  recover  alone  in 

tiff  jointly  with  another  person.     The  this  case."     And  in  Parsons  r.  Crosby, 

variance  is   fatal."      But   in   Teed   v.  5  Esp.  199,  the  same  judge  lield,  at  nisi 

Elwortliy,  14  East,  210,  where  the  bank-  prius,   that,    in   an  action  b}'  the  real 

ing  business  was  carried  on  in  the  name  party  in  interest,  the  nominal  partner 

of  John  Teed  (the  lather  of  the  present  might  be  called  as    witness    for    the 

plaintiff),  Thomas  Teed  &    Co.  being  plaintiff.     See  also  Davenport  v.  Rack- 

the  firm    in   whose    joint   names   the  straw,  1  C.  &  P.  89 ;  Harrison  v.  Fitz- 

banking    accounts    were   kept,   a   suit  henry,  3  Esp.  238;  Glossop  i-.  Colman, 

being   brought    by  John    Teed   alone  1  Stark.  25;  Kell  v.  Namby,  10  B.  & 

against  a  customer,  for  the  balance  of  C.  20 ;  Ex  parte  Watson,  19  Ves.  461; 

an   overdrawn    account.   Lord    Ellen-  Kieron  v.    Sanders,  6  Ad.  &  El.    515 ; 

borough  said  :  "  Supposing  the  plaintiff  Allen  w.  White,  Minor,  365.     See  Story 

could  sue  alone  in  this  case,  bij  showinfj  that  on  Part.  §  242,  notes  and  cases  cited, 

he  alone  was  the  proprietor  of  the  funds  (a)  See  Young  v.  Axtell,   2  H.  Bl. 

of  the  bank,  and  that  the  son  had  no  243.     In   Waugh  v.   Carver,  2  H.  Bl. 

interest  as  a  partner  in  this  account  235,  Lord  Chief  Justice  says :    "  This 

with  the  defendant,  although  the  ac-  case  has  been  extremely  well  argued, 

count  was  kept  with  the  defendant  in  and  the  discussion  of   it  has   enabled 

the  joint  names  of  the  father  and  son ;  me  to  make  up  my  mind,  and  removed 

yet  these  facts  ought  to  have  been  dis-  the   only  diflSculty  I  felt,  which  was, 

tinctly  proved  at  the  trial,  which  they  Whether,  by  construing   this  to  be  a 

were  not,  and  therefore  the  plaintiff  has  partnership,  we  should  not  determine 


CH.  VI.]  WHO    ARE    PARTNERS    AS    TO    THIRD    PARTIES. 


149 


relied  on,  it  would  probably  be  held  that,  if  the  annuity  were  to 
be  a  sum  of  money  equal  to  a  certain  proportion  of  the  profits, 
this  would  not  cast  upon  the  receiver  the  liabilities  of  a  partner, 
while  it  would  have  this  effect  if  it  were  described  as  the  same 
profjortion  of  the  profits.  But  we  think  the  rule  of  as  little 
value  in  this  case  as  in  those  to  which  it  has  been  usually  ap- 
plied. The  question  must  still  be,  Has  the  annuitant,  by  the 
terms  of  the  agreement  or  the  bequest,  an  interest  or  ownership 
in  the  property  or  the  profits  of  the  firm  while  they  are  un- 
divided, or  only  a  right  to  require  that  the  profits  should 
be  determined  and  divided  *  in  a  proper  way  and  at  a  *  137 
proper  time,  and  a  certain  part  of  them  delivered  to  him  ; 
and  may  he  have  his  action  against  the  partnership,  if  this  be 
not  done  ?  In  this  case,  he  is  not  a  partner  in  any  respect 
whatever.  (6) 


that  if  there  was  an  annuity  granted 
out  of  a  banking-house  to  tlie  widow, 
for  instance,  of  a  deceased  partner,  it 
would  make  her  Uable  for  the  debts  of 
tlie  house,  and  involve  her  in  a  bank- 
ruptcy ?  But  I  think  this  case  will  not 
lead  to  that  conclusion."  So  in  Grace 
V.  Smith,  2  W.  Bl.  1001,  Blackstone,  J., 
said  :  "  I  think  the  true  criterion  (when 
money  is  advanced  to  a  trader)  is  to 
consider  whether  the  profit  or  premium 
is  certain  and  defined,  or  casual,  in- 
definite, and  depending  on  the  accidents 
of  trade.  In  the  former  case,  it  is  a 
loan  (whether  usurious  or  not,  is  not 
material  to  the  present  question) ;  in 
the  latter,  a  partnership."  See  also 
Ex  parte  Colbeck,  Buck,  48. 

(6)  The  cases  on  this  point  are  not 
very  numerous  ;  nor  do  they,  we  think, 
give  any  strong  support  to  Lord  El- 
don's  rule.  In  Bloxham  v.  Fell,  2 
W.  Bl.  999,  Pell,  for  leaving  money  in 
a  firm,  was  to  receive  not  only  an 
annuity,  with  a  right  to  inspect  the 
partnership  books,  but  also  tlie  usual 
rate  of  interest.  It  was,  therefore, 
considered  by  Lord  Mansfield  that  he 
must  be  a  partner ;  as  otherwise  he 
would  be  a  usurious  lender,  which  it 
could  not  lie  in  his  own  mouth  to  say. 
Nor  is  Grace  v.  Smith,  2  W.  Bl.  998, 
to  be  regarded  as  conclusively  settling 


the  rule,  that  the  perception  of  an  in- 
definite proportion  of  the  profits  of  a 
trade,  in  return  for  money  invested  or 
left  therein,  necessarily  makes  one  a 
partner.  There  Smith  &  Robinson 
dissolved  partnership.  The  tenns  of 
the  dissolution  were,  that  all  the  stock 
in  trade,  debts,  &.C.,  of  the  partnership, 
should  be  carried  to  the  account  of 
Robinson  only ;  that  Smith  was  to 
have  back  4,200/.  which  he  brought 
into  the  trade,  and  1,000/.  for  the 
profits  then  accrued ;  that  Smith  was 
to  lend  Robinson  4,000/.,  part  of  this 
5,200/.,  or  let  it  remain  in  his  hands 
for  seven  years,  at  five  per  cent  inter- 
est, and  an  annuity  of  300/.  per  an- 
num, for  the  same  seven  years.  For 
all  which  Robinson  gave  bond  to 
Smith.  De  Grey,  Chief  Justice: 
"  The  only  question  is,  "What  consti- 
tutes a  secret  partner  ?  Every  man 
who  has  a  share  of  the  profits  of  a 
trade  ought  also  to  bear  liis  share  of 
the  loss.  And,  if  any  one  takes  part 
of  the  profit,  he  takes  part  of  that 
fund  on  which  the  creditor  of  the 
trader  relies  for  his  payment.  If  any 
one  advances  or  lends  money  to  a 
trader,  it  is  only  lent  on  his  general 
personal  security.  It  is  no  specific  lien 
upon  the  profits  of  the  trade,  and  yet, 
the   lender  is   generally   interested  in 


150 


THE    LAW    OF    PARTNERSHIP. 


[CH.  VI. 


*  138        *  It  has  been  thought,  in  some  cases,  that  the  question 
whether  an  annuitant  or  lender  of  money  was  or  was 


tliese   pnifits :    lie   relies  on  tliem   for 
payment.     And  there  is  no  difference 
wlietlior  tiiiit  money  be  lent  de  novo,  or 
left   beliind   in    trade   by   one   of    the 
partners    who   retires.     And    whether 
the   terms    of   that   loan   be    kind   or 
harsh,    makes,    also,    no    manner    of 
difference.     I  think  the  true  criterion 
is,  to  inquire  whether    Smith   agreed 
to  share  the  profits  of  the  trade  with 
Robinson,  or  whether   he  only  relied 
on   those  profits   as   a   fund   for   pay- 
ment,—  a   distinction   not   more    nice 
than    usually    occurs   in    questions   of 
trade  or  usury.     The  jury  have  said 
this  is  not  payable  out  of  the  profits  ; 
and  I  think  there  is  no  foundation  for 
granting   a  new   trial."     Now,   as  we 
have    already   seen    [see   p.  *71,  note 
(/)],  the  language  of  De  Grey  above 
quoted  is  by  no  means  authority  for 
tlie  rule  in  question.     The  distinction 
there    taken   is,  not   between   sharing 
definiiehj  and  sharing  indcjinitel i/  in  the 
profits  of  a  trade,  but  between  sharing 
them  at  all,  and  only  relying  on  them 
as   a  fund   of  paj'ment.     And  as  ap- 
plied  to   the  case  of  money  put  into 
a  firm,    by  which   example   the   Lord 
Cliief  Justice  illustrates  his  criterion, 
the    distinction     is    between     lending 
money  on  the  general  personal  secu- 
rity  of   the  trader,   and  lending  it  in 
such  a  way  as  to  acquire  a  specific  lien 
upon    the  profits.     By  which  lien,  as 
we   have   endeavored   to  show  in  an- 
other  place,   is   meant   nothing   more 
than    a    proprietary     interest    in    the 
profits  of  a  trade   while  they  remain 
profits  ;  that  is,  before  division.    Black- 
stone,  Justice,   however  (of  the  same 
opinion),  said:  "  I  think  the  true  crite- 
rion  (when   money   is  advanced  to  a 
trader)    is    to    consider    whether   the 
profit  or  premium  is  certain  and  de- 
fined,   or    casual,    indefinite,   and    de- 
pending upon  the  accidents  of  trade. 
In  the  former  case  it  is  a  loan  (whether 
usurious  or  not,  is  not  material  to  the 
present    question)  ;    in    the    latter,    a 
partnership.     The  hazard  of  loss  and 


profit  is  not  equal  and  reciprocal,  if 
the  lender  can  receive  only  a  limited 
sum    for   the  profits  of   his  loan,   and 
yet  is  made  liable  to  all  the  losses,  all 
the  debts  contracted  in  the  trade,  to 
any  amount."   Now,  Mr.  Justice  Black- 
stone   agrees   with   the   Chief  Justice. 
By  this  it  may  be  meant  that  he  con- 
curs  both   in   the   result   and    in   the 
grounds  of  his  opinion.     It  is  certain, 
however,  that  the  two  opinions  have 
always  been  regarded  as  entirely  har- 
monious ;  and  we   may,  therefore,  so 
consider  them.     If  so,  then   Mr.  Jus- 
tice Blackstone's  criterion  signifies  the 
same  thing  as  Cliief  Justice  De  Grey's. 
Accordingly,  Cliief  Justice  De  Grey's 
criterion    must    be    regarded    as    the 
expression  of  the  general  principle  of 
which     Mr.    Justice     Blackstone's    is 
merely  the  specific  application.     That 
is,  while    Chief  Justice   De   Grey  as- 
serts as  the  universal  principle,  that  to 
be  a  partner  one  must  have  a  specific 
interest  in  profits,  as   profits.   Justice 
Blackstone  brings  down  that  principle 
to  the  case  in  hand,  by  adding  that 
where  money  is    loaned  to   a   trader, 
whether   or   not  the    lender  has   this 
specific  interest  in  profits,  as  profits, 
will     be      determined     by     inquiring 
whether  the   return   he   is  to  receive 
for  his  money  is  definite  and  certain, 
or  casual  and  depending  on  the  acci- 
dents of   trade.     The  opinions  of  the 
two  judges,  then,  uniting  on  the  gen- 
eral   doctrine,    the    precise   difference 
between  them  seems  to  be  in  the  in- 
fluence which  they  give  to  the  fact  of 
an  indefinite   participation   in  profits ; 
Mr.    Justice    Blackstone     considering 
that,  if  a  loan  is  made,  and  the  return 
therefor  is  to  depend  upon  the  profit 
and   loss   of    the   borrower,    that  one 
circumstance  alone  is  sufficient  to  make 
him  a  partner.     If  this  be  his  view,  we 
think  he  stands  alone.     At  least,  there 
is  no  evidence  that  the  other  judges 
agreed    with  him,  while  some  of  the 
language   used    by    Chief   Justice    De 
Grey  would  certainly  seem  to  lead  to 


CH.  VI.]         WHO    ARE    PARTNERS    AS   TO    THIRD    PARTIES. 


151 


not  a  partner,  might  *  depend  upon  the  prior  question,    *  139 
whether  the  annuity  or  payment  were  to  be  made  "  in  lieu 
of  profits."    If  they  were  expressly  so  made,  the  party  could  have 
no  interest  in   profits   who  had  expressly  agreed    to  receive 
something  instead  of  them ;  and  therefore  he  could  not  be  a 


a    different    conclusion.     And    if    we 
suppose    Justice    Blackstone   to  have 
agreed   with   Cliief  Justice   De  Grey 
as   to  tlie  rule  of  law,  that  a  partner 
must  have  a  specific  interest  in  profits, 
as  profits,  then,  sharing  indefinitely  in 
profits   is   simply  a  fact   from    which 
with  all  the  other  facts  of  the  case  it 
is  to  be  determined  whether  such  par- 
ticipator   has    that    specific     interest. 
But  it   is   not   identical  with   nor  the 
same   as   that   specific  interest.     The 
circumstance   of    sharing    casually  in 
profits,  as  we  have  already  seen,  may 
be  a  strong  symptom  of  partnership ; 
but  it   is   not   necessarily  conclusive. 
Nor  is  there  any  reason  for  consider- 
ing  that   circumstance   more    conclu- 
sive  in    case    of    a    loan    (to    which 
Blackstone,  J.,  applies  it),  than  in  any 
other.    The  fact  that  the  consideration 
of  a  loan  is  a  certain  proportion  of  the 
profits   of  a  trade  is  only  one  among 
other   circumstances,   from    all    which 
put     together     it     must     be     decided 
whether  there  is  established  that  spe- 
cific   interest    in    profits,    as    profits, 
which  is  necessary  to  make  the  lender 
a  partner.     Perhaps,  if  the  latter  part 
of  Mr.  Justice  Blackstone's  opinion,  in 
which  he  appears  to  suggest  a  reason 
(evidently   an   equitable  one)    for  the 
rule    he   lays  down,  be  considered  in 
connection  with   and  as   the   basis  of 
his  criterion,  the  conclusion  may  not, 
after    all,   be    inconsistent    with    this 
view.     We  do  not  consider,  therefore, 
the  case  of  Grace  v.  Smith  to  be  one 
which  gives  any  strong  support  to  tlie 
rule,  that  the  lender  of  money,  wlio  is 
paid  by  a  certain  proportion  of  the  prof- 
its of  a  business,  is  necessarily  a  partner 
with   the   trader   to   whom    he   lends. 
Nor  is  much  more  force  added  to  the 
doctrine   by    the   inclination   of    Lord 
Mansfield's   opinion,   in  Young  v.  Ax- 


tell,  2  H.  Bl.  242;  that  Mrs.  Axtell, 
who,  beside  an  annuitj',  received  2s. 
per  chaldron  on  all  the  coal  sold,  by  the 
other  defendant,  to  customers  of  her 
recommendation,  was  therefore  a  part- 
ner with  the  other  defendant,  because 
that  payment  would  be  increased  in 
proportion  as  she  increased  the  busi- 
ness. In  the  matter  of  Colbeck  &  Co., 
1  Buck,  48,  John  Holdsworth  assigned 
all  his  share  of  the  partnership  trade 
and  premises  to  Colbeck  &  Ellis,  his 
partners,  upon  trust,  to  pay  an  annuity 
of  50/.  a  year  to  himself  for  life,  and 
after  his  death  to  his  wife  for  life, 
&c.  And  it  was  also  stipulated, 
that  if  the  proceeds  of  John  Holds- 
worth's  share  should  not  be  sufficient 
to  pay  the  annuity  of  50/.  a  year,  tlien 
that  it  should  abate  proportionably ; 
or,  on  the  other  hand,  if  his  share  so 
assigned  should  amount  in  value  to 
5,000/.,  that  then  the  annuity  should 
be  increased  to  100/.  After  the  exe- 
cution of  the  deed,  John  Holdsworth 
retired  from  the  concern,  but  the 
style  of  the  firm  was  not  altered.  The 
opinion  of  the  Lord  Chancellor  was  to 
this  effect :  "  As  to  John  Holdsworth, 
he  certainly  must  be  taken  to  have  re- 
tired from  the  business,  reserving  an 
interest  in  the  projits  of  the  trade;  for 
the  annuity  he  reserved  was  not  merely 
an  annuity  the  amount  of  which  was 
calculated  with  reference  to  the  then 
present  profits,  but  it  was  to  be  paid 
out  of  the  profits,  and  to  be  subject  to 
abatement  and  enlargement  as  the 
profits  might  fluctuate.  His  partner- 
ship, therefore,  was  never  determined." 
See  Ex  parte  Wheeler,  Buck,  25  ;  Ex 
parte  Chuck,  8  Bing.  469.  See  opin- 
ion of  Master  of  Rolls,  In  re  Stanton 
Iron  Works,  21  Beav.  1G4,  cited  ante, 
p.  *41,  note. 


152 


THE    LAW    OF   PARTNERSHIP. 


[CH.  VI. 


partner.  We  apprehend,  however,  that  these  words,  or  any- 
equivalent  words,  would  not  suffice  to  shield  from  liability  as 
partner  one  who  was  so  by  the  whole  intent  and  meaning  of 
the  bargain.  If  one  stands  in  such  a  relation  to  a  firm  that  he 
has  a  definite  interest  in  the  profits  as  they  accrue,  he  is  a 
partner,  although  he  may  agree  to  receive  his  share  of  the  prof- 
its in  a  certain  way ;  and  this  may  be  the  only  meaning  and 
effect  of  the  phrase,  "  in  lieu  of  profits."  (c)  A  similar  view 
may  be  taken  of  the  circumstances  of  a  longer  or  shorter  dura- 
tion of  the  annuity,  (c^) 


(c)  See  in  Fereday  v.  Hordem,  Ja- 
cobs, 144,  an  instance  of  an  actual 
partnership,  in  whicli  one  of  tlie  part- 
ners receives  for  his  contribution  to 
tlie  common  stock  an  assured  sum  in 
lieu  of  profits. 

(d)  If,  at  the  inception  of  a  joint 
enterprise  by  A.,  B.,  &  C.,  in  which  A. 
finds  capital,  it  is  agreed  that  A.,  for 
his  contribution  tliereto,  is  to  receive 
an  annuity,  the  term  of  that  annuity, 
whatever  it  may  be,  would  seem  to 
agree  equally  well  with  A.'s  being 
either  a  partner  or  simply  a  lender  of 
money.  If,  into  a  partnership  already 
formed,  A.  puts  money,  or,  apparently 
retiring  therefrom,  leaves  money  be- 
hind, for  which  he  is  to  receive  an 
annuity,  to  endure  as  long  as  the  other 
partners,  B.  &  C,  shall  continue  in 
trade,  —  this  identity  in  the  duration  of 
the  business  in  which  B.  &  C.  are 
engaged,  and  of  the  annuity  A.  is  to 
be  paid,  is  undoubtedly  consonant,  for 
many  obvious  reasons,  with  A.'s  being 
a  partner  with  B.  &  C.  But  it  seems 
no  less  consistent  with  the  supposition 
that  A.  is  merely  a  lender  of  money  to 
B.  &  C,  the  loan  to  continue  for  a 
time  commensurate  with  the  occasion 
for  it ;  that  is,  so  long  as  B.  &  C.  carry 
on  a  joint  business.  But  suppose  that, 
in  a  similar  case,  A.  is  to  receive  from 
B.  &  C.  an  annuity  in  duration  en- 
tirely independent  of  the  continuance 
of  the  joint  business  ;  it  ma}^  perhaps, 
be  safely  allowed  that  the  circum- 
stance that  A.'s  annuity  is  not  de- 
pendent upon  the  existence  of  the 
partnership  between  B.  &  C.  raises  a 


presumption  that  his  contribution  to 
the  funds  of  the  firm  has  not  made 
him  their  partner.  But  inasmuch  as 
the  question  is,  whether  there  is  not  a 
partnership  between  A.,  B.,  &  C,  the 
fact  that  B.  &  C.  have  agreed  that 
they  will  be  partners  for  a  certain 
length  of  time  can  at  most  be  only 
prima,  facie  evidence,  open  to  rebuttal, 
that  they  have  not  since  formed  a  new 
partnership  with  A.  for  a  different 
lengtii  of  time.  That  is  to  say,  B.  & 
C.  being  in  partnership  for  a  certain 
lengtii  of  time,  if  A.  puts  money  into 
the  firm,  in  consideration  of  an  an- 
nuity, or  a  different  length  of  time, 
this  difference  ma}^  in  the  absence  of 
other  facts,  give  the  contract  the  ap- 
pearance of  a  simple  loan.  But  there 
may  be  other  circumstances  in  the 
case,  putting  a  different  face  on  the 
agreement,  and  showing  A.  to  have, 
in  intent  and  in  act,  really  become  a 
partner.  Then,  notwithstanding  the 
difference  between  the  term  of  A.'s 
annuity  and  of  the  original  partnership 
between  B.  &  C,  there  can  be  no  doubt 
that  a  jury  might  and  should  find  the 
three  to  be  partners.  If,  then,  the 
effect  of  these  two  facts,  —  an  annuity 
expressed  to  be  in  lieu  of  profits,  and 
an  annuity  to  continue  for  a  period  not 
at  all  affected  by  the  duration  of  the 
partnership, —  when  they  occur  singly 
in  a  case,  is  not  conclusive  against  the 
supposition  of  the  annuitant's  being  a 
partner,  M'hat  effect  is  to  be  given  to 
them  occurring  conjointly  ?  That  is, 
A.  investing  money  with  B.  &,  C,  who 
are  partners,  for  no  matter  what  length 


CH.  VI.]         WHO    ARE   PARTNERS   AS   TO   THIRD   PARTIES. 


153 


*  If  money  be  lent  to  a  firm  for  more  than  legal  inter-    *  140 
est,  this  *  would  be  a  usurious  loan,  (e)  but  would  not    *  141 


of  time,  is  to  receive,  for  tlie  use 
thereof,  during  a  shorter  or  longer 
period,  an  annuity  in  lieu  of  a  share 
of  the  profits  of  the  business.  Upon 
these  facts  is  A  necessarihj  a  lender  of 
money  merely,  and  not  a  partner  ? 
Undoubtedly,  without  strongly  oppos- 
ing evidence,  he  might  and  should  be 
found  merely  a  lender  of  money  to  the 
firm  of  B.  &  C.  But,  notwithstanding 
A.'s  annuity  is  said  to  be  in  lieu  of  a 
share  of  the  profits,  and  is  independent, 
in  point  of  duration,  of  the  partnership 
of  B.  &  C,  still,  we  think,  the  arrange- 
ment between  B.  &  C.  may  be  shown 
to  be  superseded  by  one  by  which,  for 
the  term  of  A.'s  annuity,  A.  is  to  have 


(e)  Gestons  v.  Brooke,  Cowp.  793 ; 
Parker  v.  Ramsbottom,  3  B.  &  C.  257. 
When  the  principle  is  at  hazard,  there 
can  be  no  usury.  Accordingly,  in 
Morse  v.  Wilson,  4  T.  R.  353,  where 
the  lender  of  money  was  to  receive  a 
share  of  the  profits  of  a  trade  in  addi- 
tion to  legal  interest,  and  to  be  liable 
to  no  losses,  it  was  contended  in  his 
behalf  that  tlie  contract  was  not  usuri- 
ous, inasmuch  as,  by  sharing  in  the 
profits,  he  was  liable  to  creditors  for 
all  the  partnership  debts,  and  thus  his 
principal  was  in  hazard.  But  Lord 
Kenyon,  C.  J.,  said  :  "  Nothing  can  be 
clearer  than  this  case.  Tlie  plaintiff, 
without  having  any  partnership  in 
contemplation,  lent  2,000/.  to  H.  Wil- 
son, for  which  he  was  to  receive  not 
only  5/.  per  cent  interest,  but  also  such 
surplus  profits  as  should  arise  from 
these  two  shares  in  the  business,  he 
himself  not  being  bound,  on  the  other 
hand,  to  make  good  to  the  partners 
any  part  of  the  losses  which  the  trade 
miglit  sustain.  The  simple  question 
is.  Why,  then,  this  is  not  an  agreement 
to  receive  more  than  the  5/.  per  cent 
allowed  by  law  for  the  forbearance  of 
a  loan  ?  Most  unquestionably  it  is ; 
and  it  is  therefore  void.  It  has  been 
argued,  however,  that  this  was  not  an 


a  specific  interest  in  profits,  as  profits, 
with  B.  &  C.  That  is,  notwithstanding 
the  bearing  of  these  facts  to  the  con- 
trary, since  they  are  neither  of  them 
absolutely  inconsistent  with  the  exist- 
ence of  an  actual  partnership,  other 
circumstances  may  justifj'  the  jury  in 
finding  that  A.  has,  in  reality,  though 
perhaps  unintentionally,  acquired  the 
rights,  and  therefore  become  subject  to 
the  liabilities,  of  a  partner. 

We  think  the  decision  in  the  case 
which  approaches  nearest  the  one  we 
have  above  supposed  is  to  be  sup- 
ported on  this  ground,  if  at  all.  We 
refer  to  Bloxham  v.  Pell,  cited  in  Grace 
V.  Smith,  2  W.  Bl.  999.     In  this  case 


usurious  contract,  because  the  princi- 
pal was  put  in  hazard,  as  it  was  liable 
to  the  partnership  creditors  :  but  it  was 
no  farther  hazarded  than  in  the  case 
of  every  other  loan,  namely,  by  the 
risk  of  the  borrower's  insolvency  ;  for, 
as  between  the  plaintiff  and  the  part- 
ners in  the  business,  he  was  not  liable 
to  contribute  to  the  losses  in  the  trade." 
BuUer,  J. :  "  In  this  agreement  provi- 
sion is  made  to  receive  the  profits,  but 
none  to  engage  for  the  losses,  of  the 
trade.  And,  therefore,  it  is  not  true 
that  the  plaintiff's  principal  was  at 
stake  ;  since,  by  the  terms  of  the  con- 
tract, the  trade  is  to  be  carried  on  by 
the  other  partners,  and  the  plaintiff  is 
only  liable  to  make  good  the  losses  of 
the  trade  in  the  event  of  the  insolvency 
of  the  other  partners.  But,  as  between 
these  parties,  if  there  be  any  losses, 
they  must  be  borne  by  the  defendant 
and  the  other  partner ;  and,  if  there  be 
any  profit,  the  plaintiff  is  to  receive 
his  proportion  of  it."  On  the  other 
hand,  in  Morisset  v.  King,  2  Burr.  891, 
a  stipulation  between  the  parties,  by 
which  the  person  advancing  money  to 
a  trader  was  to  be  liable  for  a  moiety 
of  the  losses  by  the  trade,  seems  to 
have  determined  the  court  in  holding 
the  transaction  not  to  be  usurious. 


154 


THE   LAW    OF    PARTNERSHIP. 


[CH. 


vr. 


make  the  lender  a  partner.  If  it  be  lent  to  the  firm,  and  the 
lender  is  to  receive  a  certain  share  of  the  profits,  this  might  be 
regarded  as  a  contribution  to  the  funds  of  the  firm,  and  a  join- 
ing of  it  in  tlie  character  of  a  silent  partner,  and  the  lender 
might  then  incur  the  liability  of  a  partner.  In  the  case  of  a 
loan  of  money  to  a  firm,  the  lender  to  have  a  certain  proportion 
of  the  profits,  the  party  must,  as  in  every  other  case,  have  a 
specific  interest  in  the  profits,  as  profits,  or  he  cannot  be  held 
as  a  partner.  (/)     So  it  would   be  if  he  were  to  receive  a 


there  was  a  partnership,  for  seven 
years,  between  Brooke  &  Pell,  but,  at 
the  end  of  one  year,  agreed  to  be  dis- 
solved, though  no  express  dissolution 
was  had.  The  agreement  recited,  that 
Brooke,  being  desirous  to  have  the 
profits  of  the  trade  to  himself,  and  Pell 
being  desirous  to  relinquish  his  right 
to  the  trade  and  profits,  it  was  agreed 
that  Brooke  should  give  Pell  a  bond 
for  2,485^.,  which  Pell  had  brought 
into  the  trade,  with  interest  at  five 
per  cent,  which  was  accordingly  done. 
And  it  was  further  agreed,  that  Brooke 
should  pay  to  Pell  200/.  per  annum  for 
six  years,  if  Brooke  so  long  lived,  as 
in  lieu  of  the  profits  of  the  trade  ;  and 
Brooke  covenanted  that  Pell  should 
have  free  liberty  to  inspect  his  books. 
Hereupon,  Lord  Mansfield  held,  that 
Pell  was  a  secret  partner  ;  that,  if  there 
was  not  a  partnership,  there  was  crime ; 
and  that  it  should  not  lie  in  Pell's 
mouth  to  say,  "  It  is  usury,  and  not  a 
partnership."  But,  laying  aside  the 
question  of  usurj^  there  are  facts  in  the 
case  from  which,  perhaps,  notwith- 
standing the  annuity  received  in  lieu 
of  profits,  and  to  last  independently  of 
the  continuance  of  tlie  business,  it 
might  well  have  been  inferred  that  Pell 
was  a  partner.  In  the  first  place.  Pell 
had  the  right,  generally,  at  least,  ap- 
pertaining only  to  a  partner,  of  inspect- 
ing the  concern's  books.  Moreover, 
the  clause  of  the  agreement  by  which 
Pell  becomes  entitled  to  an  annuity  of 
200/.  a  year,  "  as  in  lieu  of  the  profits 
of  the  trade,"  seems  to  admit  and  to 
imply  Pell's  claim  to  interest  in  those 
profits,  and,  in  one  view  of  it  at  least, 
to  be  only  a  stipulation  by  which  the 


amount  of  Pell's  ultimate  share  therein 
is  fixed,  and  not  one  by  which  his 
interest  is  changed  or  diverted.  The 
remarks  of  counsel  upon  this  case,  in 
Grace  v.  Smith,  are  not  inapt  in  this 
connection.  "  Grose  &  Adair,  for  the 
defendant,  argued  that  the  present  case 
is  very  distinguishable  from  that  of 
Bloxham  v.  Pell.  Pell  was  to  be  paid 
out  of  the  profits  of  the  trade,  as 
appears  from  the  covenant  to  inspect 
the  books,  which  else  would  be  useless. 
His  annuity  was  expressly  given  as  in 
lieu  of  those  profits.  It  was  contingent 
in  another  view,  as  it  depended  on  the 
life  of  Brooke,  by  whom  those  profits 
were  to  be  made. 

(/)  It  is  entirely  possible  that  a  loan 
may  be  made  for  a  proportion  of  the 
profits  under  circumstances  which  will 
not  give  the  lender  this  specific  interest, 
and  will  not  therefore  make  him  liable 
as  a  partner.  But  we  consider  the  pre- 
ceding proposition  of  the  text  a  correct 
expression  of  the  general  rule,  as  that 
may  be  implied  from  the  authorities 
as  they  now  stand.  See  Morisset  v. 
King,  2  Burr.  S'Jl ;  Gestons  v.  Brooke, 
Cowp.  793 ;  Elgie  v.  Webster,  5  M.  & 
W.  518;  Bailey  v.  Clark,  6  Pick.  372; 
Oakley  v.  Aspinwall,  2  Sandf.  7;  Conk- 
ling  V.  Washington  University,  2  Md. 
Ch.  497  ;  Drake  v.  Rhodes,  3  Rich.  37. 
It  has  been  said  that  an  agreement  by 
which  parties  covenant  to  become  part- 
ners, one  of  them  to  put  in  a  certain 
amount  of  capital,  and  to  receive  for 
his  share  of  the  profits  a  certain  fixed 
sum  (with  the  payment  of  which  all 
the  property  of  the  concern  is  charged), 
but  not  to  be  liable  for  any  of  the  part- 
nership debts,  is  not  void  on  the  ground 


CH.  VI.]         WHO    ARE    PARTNERS    AS    TO    THIRD    PARTIES. 


155 


certain  amount  *  of  interest,  legal  or  otherwise,  and  in  *  142 
addition  thereto  a  share  of  the  profits.  (</) 

It  is  possible  that  a  contract  of  this  kind  might  be  usurious 
as  to  some  parties,  and  an  entering  into  copartnership  as  to 
others.  If,  for  example,  the  lender  was  to  receive  legal  inter- 
est, and  also  a  share  of  the  profits,  it  seems  to  be  settled  that, 
if  he  sued  the  partnership  for  the  profits,  they  could  defeat  his 
claim  on  the  ground  that  it  was  usurious.  And  yet  it  would 
seem  to  rest  on  some  authority,  that  a  lender  on  such  terms 
might  be  held  liable  as  a  partner  by  the  creditors  of  the 
firm.  (A) 

We  should  hold  the  test  of  partnership  to  be,  in  this  case, 
that  which  we  have  repeatedly  stated  and  endeavored  to  illus- 
trate. Has  the  party  lending  or  contributing  the  money  ac- 
quired by  his  bargain  a  proprietary  interest  in  the  profits  while 
they  remain  undivided  ?  If  he  has.  he  is  liable  as  a  partner ; 
otherwise,  he  is  not  so  liable,  (i) 


of  usury.  The  deed  must  be  taken 
to  disclose  the  real  intentions  of  the 
parties,  who  are  thereby  made  part- 
ners, though  of  a  pecuhar  kind.  Fere- 
day  V.  Hordem,  Jac.  144 ;  Gilpin  v. 
Enderbey,  5  B.  &  Aid.  P54.  See  Brophy 
V.  Holmes,  2  Molloy,  1  ;  Anderson  v. 
Maltby,  2  Ves.  Jr.  248  ;  Ex  parte 
Chuck,  8  Bing.  469. 

{g]  See  last  note.  Young  v.  Axtell, 
2  R.  Bl.  242 ;  Morse  v.  Wilson,  4  T.  R. 
353,  and  sttpi-a,  note  (e)  ;  17  Ves.  405; 
Bloxham  r.  Pell,  cited  in  Grace  v.  Smith, 
2  W.  Bl.  909,  and  supra,  note  (c). 

(A)  Bloxham  v.  Pell  and  Grace  v. 
Smith,  2  W.  Bl.  998,  999;  Morse  v. 
Wilson,  4  T.  R.  358 ;  supra,  note  (e)  ; 
Ex  parte  Briggs,  3  Dea.  &  Ch.  867.  In 
this  last  case,  A.  borrowed  of  B.  2-30/., 
with  which  to  begin  business,  on  inter- 
est at  five  per  cent  per  annum.  A. 
afterwards  agreed  to  pay  in  addition, 
for  the  use  of  the  money,  one-eighth  of 
tlie  annual  profits  of  the  business,  by 
monthly  instalments,  which  he  accord- 
ingly did  for  several  months,  B.  giving 
receipts  on  account.  Held,  that  the 
balance  of  the  principal  and  interest 
due  from  A.  was  a  good  petitioning 
creditors'   debt,  not  arising   out   of  a 


partnership  nor  tainted  by  usury.  See 
Bailey  v.  Clark,  6  Pick  372  ;  Sheridan 
V.  Medara,  2  Stock.  478. 

(?)  Some  confusion  appears  to  have 
arisen  on  this  point,  from  not  consider- 
ing to  what  parties  the  defence  of  usury 
is  limited,  and  the  practical  effect  of 
such  limitation.  Clearly,  the  borrower 
may  plead  it  against  the  lender;  and, 
as  clearly,  the  lender  cannot  make  use 
of  it  against  a  third  party  seeking  to 
charge  him  as  a  partner ;  for  he  can- 
not take  advantage  of  his  own  wrong. 
Suppose  A.  &  B.  to  be  in  partnership, 
and  C.  to  loan  them  money  in  consider- 
ation of  a  share  of  the  profits,  or  legal 
interest  as  well  as  a  share  of  the  profits. 
We  do  not  think  that  upon  these  facts 
the  law  could  be  said  to  regard  C.  as  a 
usurer  with  respect  to  A.  &  B.,  and  as 
a  partner  with  respect  to  their  cred- 
itors; and  for  the  simple  reason,  that 
the  same  circumstances  which  would 
show  C.  to  be  merely  a  lender  of  money 
as  to  A.  &  B.  would  also  show  that  he 
had  not  that  specific  interest  in  profits, 
as  profits,  wliich  alone  could  make  him 
a  partner  as  to  the  creditors  of  A.  &  B. 
And  this  is  evident  if  we  lay  out  of  view 
altogether  the  question  of  usury.     But 


156 


THE    LAW    OF    PARTNERSHIP. 


[CH. 


VI. 


*  143        *  It  is,  however,  possible  that  the  question  of  the 

liabiHty  of  the  lender  of  money  to  a  partnership  would 
be  dealt  with  more  severely  than  that  of  one  receiving  wages, 
or  quasi  wages,  or  even  an  annuity  from  a  firm.  For  any  loan 
of  money  which  entitles  the  lender  to  share  in  the  profits  would 
be  more  easily  held  to  constitute  him  a  partner. 

There  are  two  classes  of  contracts  by  which  profits  are  to  be 
divided  between  the  parties,  which  do  not,  however,  constitute 
them  partners,  for  reasons  of  a  peculiar  nature,  perhaps,  and 
not  of  general  application.     One  of  these  is  where  an  owner 

of  a  farm  lets  it  on  half  profits.     Here  the  landlord  and 

*  144    tenant  certainly  are  *  not  partners ;  (A;)  for  if  we  sup- 


this  may  be  said  :  If,  in  such  a  case, 
C.  sues  A.  &  B.  to  enforce  the  contract 
he  has  made  witli  tliem,  they  may  suc- 
cessfully resist  his  claim  by  sliowing 
that  the  transaction  was  really  a  usuri- 
ous loan.  On  the  other  hand,  if  the 
creditors  of  A.  &  B.  seek  to  fix  C.  as  a 
partner,  he  cannot  defend  by  proving 
the  usury,  but  must  avoid  liability  as  a 
partner  in  some  other  way.  That  is  : 
C.  has  made  a  bargain  with  A.  &  B. 
whicli  is  clearly  illegal,  because  against 
the  statute  respecting  usurj' ,  but  yet  is 
only  a  contract  of  loan.  But  if  it  is 
sought  to  charge  C.  as  a  partner 
through  tliis  very  contract,  he  cannot 
defend  by  showing  the  real  nature  of 
the  transaction.  It  of  course  then  be- 
comes exceedingly  difficult  for  C.  to 
show  that,  notwithstanding  his  contri- 
bution to  the  joint  capital,  and  his  par- 
ticipation in  profits,  he  is  not  a  partner. 
—  But  this  is  a  difl[iculty  in  practice, 
and  not  one  of  principle.  It  must  still 
be  true,  tliat,  as  matter  of  principle,  a 
man  cannot  be  charged  as  a  partner 
without  proving  him  to  have  a  specific 
interest  in  profits,  as  profits.  And  this 
principle  is  not  at  all  invalidated  by  tlie 
consideration,  that  there  are  cases  in 
which  a  man  may  be  held  a  partner 
simply  because,  by  his  own  illegal  acts, 
he  lias  precluded  himself  from  setting 
forth  the  real  nature  of  transactions 
which,  in  the  absence  of  such  proof, 
appear  justly  to  fix  him  with  the 
character  and  liabilities  of  a  partner. 


Hence,  if  A.  &  B.  are  partners,  and  C. 
loans  them  money  for  a  share  of  the 
profits,  it  may  be  true  that,  in  a  suit  by 
C.  against  A.  &  B.,  C.  may  be  made 
out  a  usurer ;  and  that,  in  a  suit  by  the 
creditors  of  A.  &  B.,  he  may  be  made 
out  a  partner.  But  this  is  a  very  dif- 
ferent thing  from  saying  that,  upon  the 
same  state  of  facts,  the  law  may  hold  C. 
a  usurer  as  to  A.  &  B.,  and  a  partner 
as  to  their  creditors.  The  truth  is, 
that  the  state  of  facts  in  the  two  cases 
is  not  the  same.  In  the  suit  between 
C.  and  A.  &  B.,  all  the  facts  appear  ; 
while  in  the  suit  by  the  creditors  of  A. 
&  B.  against  C,  as  a  partner,  only  so 
much  of  them  appears  as  is  sufficient 
to  raise  the  presumption  of  a  partner- 
ship, C.  being  unable  to  rebut  this 
presumption  by  any  evidence  disclos- 
ing his  usury.  It  is  not  strange,  tliere- 
fore,  that,  in  such  a  case,  he  should  be 
found  a  partner. 

(k)  Perrine  v.  Hankinson,  6  Halst.  181. 
Here,  the  profits  of  a  tavern,  as  well  as 
of  a  farm,  were  to  be  divided.  Putnam 
r.  Wise,  1  Hill,  234 ;  Blue  v.  Leathers, 
15  111.  31  ;  Chase  v.  Barrett,  4  Paige, 
148.  The  lease  of  a  ferry  has  been 
considered  analogous  to  a  farming  lease, 
and  a  stipulation  by  which  the  lessee 
thereof  was  to  divide  with  the  lessor 
all  the  profits  above  a  certain  amount 
was  held  not  to  make  the  lessor  and 
lessee  liable  as  partners.  Bowyer  v. 
Anderson,  2  Leigh,  550.  So,  when 
coal  mines  were   leased.     Heckert  v. 


CH.  VI.]  WHO    ARE   PARTNERS    AS   TO   THIRD   PARTIES. 


157 


pose  the  tenant  should  go  into  great  expense  for  some  new 
mode  of  cultivation,  and  become  insolvent,  no  one  would 
think  of  calling  on  the  landlord  as  liable  on  the  tenant's  con- 
tracts. So,  in  the  very  common  case  of  shipments  on  half 
profits,  it  is  never  supposed  that  such  a  shipment  makes  a 
partnership    between    the    shipper   and   ship-owner ;  (/)    and 

Thompson  v.  Snow,  4  Greenl.  264; 
Winsor  v.  Cutts,  7  id.  261  ;  Cutler  v. 
Winsor,  6  Pick.  335.  See  Cox  v.  De- 
lano, 3  Dev.  89.  In  French  v.  Price, 
24  Pick.  13,  the  defendants  were  sub- 
scribers of  a  contract  by  which  they 
agreed  to  become  interested  in  a  voy- 
age and  adventure,  in  certain  definite 
proportions.  They  also,  by  the  same 
instrument,  appointed  two  of  their  num- 
ber to  manage  the  business  abroad,  who 
were  to  receive  a  commission  and 
monthly  wages  as  compensation  for 
their  services,  and  two  others  to  man- 
age tlie  business  in  this  country,  pur- 
cliase  a  suitable  cargo,  &c.,  and  to  be 
allowed  to  charge  two  and  a  half  per 
cent  on  the  amount  of  invoice  and 
profits,  and  the  same  on  ail  returns, 
but  no  commission  for  purchase  or 
sale  of  vessel.  They  thereby  also 
ratified  the  purchase  of  a  vessel,  which 
had  been  made  by  tlie  home  agents. 
Upon  the  question  whether  this  agree- 
ment made  the  signers  thereof  partners, 
Morton,  J.,  said :  "  Similar  transactions 
and  enterprises  are  very  common  in 
our  country  ;  and  I  believe,  among 
merchants,  never  are  considered  or 
treated  as  partnerships.  Many  cases 
occur  in  which  it  may  be  extremely 
difficult  to  determine  whether  the  joint- 
owners  of  property  hold  it  as  partners 
or  as  tenants  in  common.  The  case 
at  bar  may  be  one  of  them.  But  al- 
though the  connection  between  the 
owners  of  the  plant  and  cargo  certainly 
contains  many  of  the  ingredients  and 
properties  of  a  ijartnership,  yet,  speak- 
ing for  myself,  I  must  say  tiiat  in  my 
opinion  it  does  not  come  up  to  that 
relation.  The  case  of  Thorndike  v. 
De  Wolf  &  Tr.,  6  Pick.  121,  bears 
some  resemblance  to  this  ;  and  that  of 
Jackson  v.  Robinson,  3  Mason,  138, 
seems  to  me  decisive." 


Fegely,  6  Watts  &  S.  139,  143.  In 
Tibbalts  v.  Tibbalts,  6  McLean,  80, 
John  W.  Tibbalts,  and  Ann  Tibbalts, 
his  wife,  leased  unto  Leo  Tibbalts  a 
stock  farm  under  covenants  and  con- 
ditions substantially  as  follows :  The 
said  Leo  to  pay  no  rents  during  tlie 
term  of  the  lease,  and  to  manage  and 
conduct  the  business  of  the  farm  in 
accordance  with  his  own  judgment ;  the 
stock  and  farming  utensils  on  the  farm 
at  the  time  of  the  lease  to  be  fairly 
valued,  and  at  the  end  thereof  to  be  ac- 
counted back  in  equal  value  ;  Leo  to 
haVe  one-third,  and  John  W.  Tibbalts 
and  wife  two-thirds,  of  the  net  profits 
to  accrue  by  the  same,  and  current  ex- 
penses to  be  paid  out  of  the  general 
stock  funds  of  the  concern.  The  real 
estate  tax  was  to  be  paid  by  Jolni  W. 
Tibbalts,  and  six  per  cent  interest  to 
be  allowed  on  all  advances  made  by 
either  of  the  parties.  Leo  was  to  keep 
regular  accounts  of  the  business  of  the 
farm,  subject  at  all  times  to  the  inspec- 
tion of  John  W.  Tibbalts  and  wife ;  and, 
in  case  of  Leo  Tibbalts's  death  during 
the  term  of  the  lease,  peaceable  posses- 
sion was  to  be  given  to  John  W.  Tib- 
balts and  wife.  The  court  held,  that 
"  lookuig  at  the  nature  of  the  above 
contract,  and  the  language  used  by  the 
parties,  there  was  less  difficulty  in  con- 
sidering it  a  partnership  agreement, 
than  a  mere  lease  for  the  term  specified, 
paying  rent."  See  also  Brownlee  v. 
Allen,  21  Mo.  123 ;  Allen  v.  Davis,  13 
Ark.  28. 

(/)  Rice  V.  Austin,  17  Mass.  205,  206. 
So  a  contract  by  which  the  owner  of  a 
vessel  lets  her  in  consideration  of  a 
share  of  her  earnings,  or  of  the  pro- 
ceeds of  the  adventure,  does  not  make 
the  ship-owner  and  the  charterer  part- 
ners. Reynolds  v.  Toppan,  15  Mass. 
370  ;  Taggard  v.  Loring,  10  Mass.  330  ; 


158 


THE    LAW    OF    PARTNERSHIP. 


[CH.  VI. 


*  145    *  the  same  principle  has  been  applied  where  one   ad- 

vanced money  to  buy  goods,  and  consigned  them,  to 
be  repaid  out  of  the  goods,  and  to  have  a  part  of  the  net 
profits,  (wj)  And,  although  it  is  usual  for  factors  and  brokers 
to  charge  a  percentage  commission  for  their  services,  they 
sometimes  receive  a  share  of  the  profits  instead  of  a  commission ; 
but  tills  fact  alone  would  not  make  them  partners,  (n) 

Trustees  who  continue  to  keep  their  funds  in  the  partnership, 
and  regularly  withdraw  their  share  of  the  profits,  would 
generally  be  adjudged  partners ;  and  more  certainly  if  they 

receive  and  hold  the  profits  in  part  for  their  own  use.  (o) 

*  146    And  it  has   been   *  held  that  both   trustee   and    cestui 


(m)  In  Rice  v.  Austin,  17  Mass.  197, 
Putnam,  J.,  said :  "  So  in  the  case  of 
shipments  to  India  upon  half  profits,  so 
generally  practised  in  tliis  country ;  it 
would  liardly  be  contended  that  the 
numerous  freighters,  often  unknown  to 
each  other,  have  by  sucii  sliipments 
become  answerable  for  each  other,  or 
in  any  way  interested  as  partners  witli 
the  ship-owner,  in  respect  to  the  dol- 
lars, which  constitute  the  adventures, 
and  which  he  undertook  to  carry  to 
India  for  half  the  profits.  .  .  .  The 
resemblance  between  the  cases  now 
mentioned  and  the  case  at  bar  is  very 
strong.  The  plaintiff  advanced  his 
funds  to  be  invested  by  Lindsay  in  live 
oak  in  Florida,  to  be  procured,  cut, 
and  transported,  at  the  expense  of 
Lindsay,  but  on  tlie  account  and  risk 
of  the  plaintiff,  to  the  navy-yards  of 
the  United  States  ;  and  for  the  services 
and  disbursements  of  Lindsay,  he  was 
to  have  half  tlie  profits,  as  the  owners 
of  the  freighting  sliips  to  India  are 
compensated  for  tlieir  services  and 
disbursements ;  and  the  plaintiff,  for 
his  risks  and  advances,  was  to  have 
his  principal  sum  repaid,  and  the  resi- 
due of  the  profits.  But  it  lias  never 
been  thought  that  the  return  cargo  was 
Uable  for  the  debts  of  the  ship-owner." 

(fi)  Dixon  V.  Cooper,  3  Wils.  40j 
Benjamin  v.  Porteous,  2  H.  Bl.  690; 
Gibbons  v.  Wilcox,  2  Stark.  43 ;  ante,  p. 
*  71,  note  (/).  See  also  Miller  ;;.  Bart- 
lett,    15   S.    &   R.    137;    Blanchard    v. 


Coolidge,  22  Pick.  151 ;  Hoare  v. 
Dawes,  Doug.  371 ;  Smith  v.  Watson, 
2  B.  &  C.  401 ;  Cheap  v.  Cramond,  4 
B.  &  Aid.  663 ;  Waugh  v.  Carver,  2 
H.  Bl.  235. 

(o)  See  Barklie  v.  Scott,  1  Hu^.  & 
Bro.  83.  The  question  of  the  liability 
of  trustees  as  partners  is  perhaps  most 
frequently  raised  in  the  case  of  execu- 
tors of  deceased  partners.  See  post, 
eh.  13.  A  testator  provided  in  his  will 
that  A.  B.  should  have,  liold,  and  carry 
on,  in  a  husband-like  manner,  free  of 
rent,  a  certain  house,  store,  and  other 
real  estate  until  the  time  when  the 
eldest  son  should  be  of  age ;  and  di- 
rected that  he  should  be  trustee  of  the 
testator's  two  sons,  for  the  following 
purposes,  to  wit :  That  lie  should  re- 
tain in  his  liands,  for  their  use,  all  the 
goods,  securities,  money,  and  other 
stock  in  trade,  belonging  to  said  store, 
during  said  term  —  should  trade  upon 
the  same  in.liis  own  name,  as  said 
trustee,  and  at  the  end  of  the  time 
deliver  over  to  said  sons  all  the  origi- 
nal stock  then  remaining,  and  one  full 
lialf  of  all  the  profits,  and  also  interest 
upon  a  certain  portion  of  such  stock. 
A.  B.  accepted  the  trust,  and  carried 
on  the  business  ;  and,  on  the  arrival  of 
the  eldest  son  at  the  age  of  twenty-one, 
lie  executed  to  said  A.  B.  a  power  of 
attorney,  authorizing  him  to  continue 
the  business,  tiie  store,  &c.,  as  he  had 
done  under  the  will ;  and  it  was,  there- 
lore,  continued  until  the  youngest  son 


CH.  VI.]       WHO    ARE    PARTNERS    AS    TO    THIRD    PARTIES. 


159 


que  trusts  are  chargeable  as  partners,  where  partnership  prop- 
erty was  held  by  trustees  of  an  insolvent  for  the  benefit  of 
themselves  and  others,  creditors  of  the  assignor,  and  parties 
to  the  instrument.  (;?)  This  was  a  rigorous  application  of  the 
rule,  that  participation  in  the  profits  carries  liability  as  a  part- 
ner. It  was,  however,  confirmed  by  a  later  case  in  the  Common 
Pleas  ;  but  that  case  has  been  overruled.  Qq) 

It  seems  that  executors,  who  keep  the  funds  of  a  deceased 
partner  in  the  firm,  although  they  do  it  for  the  benefit  of  the 
next  of  kin,  are  liable  as  partners  when  the  cestui  que 
trusts  are  minors,  (r)     *  But  it  has  been  held,  that,  if  an    *  147 
executor  is  directed  by  the  will  to  retain  a  certain  amount 


became  t\vent\--one.  Held,  that  this 
did  not  constitute  a  partnership.  Gib- 
son V.  Stevens,  7  N.  H.  352. 

(p)  Owen  V.  Body,  6  A.  &  E.  28. 

(7)  Hickman  v.  Cox,  18  C.  B.  617  ; 
3  C.  B.  N.  s.  523 ;  13  E.  L.  &  Eq.  400. 
But  see  this  case  reversed  in  9  C.  B. 
N.  s.  (99  Eng.  Com.  L.  R.)  47 ;  8  H.  of 
L.  Cas.  268.  See  ante,  p.  *71  and  note. 
If  a  member  of  a  firm,  who  is  trustee 
of  the  property  of  a  tliird  person,  liav- 
ing  tlie  sole  control  thereof,  lend  the 
trust-money  to  his  firm,  and  take  their 
note  and  mortgage  therefor,  running 
to  the  cestui  que  trust,  the  delivery  of 
the  note  and  mortgage  by  the  firm  to 
the  trustee  will  be  a  sufiicient  delivery 
to  give  them  effect  in  law.  Tucker  v. 
Bradley,  33  Vt.  324.  But  the  distinc- 
tion is  to  be  noted,  that,  if  the  main 
object  of  a  deed  of  assignment  by  a 
debtor  is  to  have  his  trade  carried  on 
to  make  a  profit  for  his  creditors,  the 
parties  thereto  become  partners ;  but 
if  the  main  object  of  the  deed  is  the 
winding  up  of  the  debtor's  affairs,  and 
the  carrying  on  of  his  business  by  the 
assignees  is  merely  ancillary,  and  with 
a  view  to  the  realization  of  the  debtor's 
assets,  the  parties  executing  the  instru- 
ment are  not  thereby  made  partners. 
Janes  v.  Whitbread,  11  C.  B.  406;  5 
Eng.  L.  &  Eq.  431 ;  Coate  v.  Williams, 
7  Exch.  205;  9  Eng.  L.  &  Eq.  481. 
See  ante,  p.  *  33,  note ;  Price  v.  Groom, 
2  Exch.  542.  In  Brundred  v.  Muzzy, 
1    Dutch.  268,  Brundred,  Son,  &  Co., 


manufacturers,  in  consideration  of 
their  great  indebtedness  to  the  firm 
of  Bell  &  Son,  commission  merchants, 
entered  into  an  agreement  by  which, 
until  the  debt  should  be  reduced  to  a 
certain  sum,  they  transferred  to  Bell  & 
Son  the  entire  control  of  their  business, 
with  power  to  collect  all  moneys  due 
to  them,  and  to  pay  their  own  indebted- 
ness at  their  pleasure.  The  machinery 
on  hand,  manufactured  in  whole  or  in 
part,  it  was  stipulated  should  be  de- 
livered to  Bell  &  Son,  in  payment  of 
the  prior  indebtedness.  Brundred, 
Son,  &  Co.  were  not  to  contract  any 
indebtedness  without  the  written  con- 
sent of  Bell  &  Son,  and  the  acting 
partners  of  the  former  were  limited  to 
draw  only  specified  sums  for  the  sup- 
port of  their  families.  The  firm  of 
Bell  &  Son  were  authorized  to  employ 
an  agent  to  superintend  the  business 
under  their  direction,  part  of  whose 
salary  was  paid  by  them,  and  part  out 
of  the  business  of  Brundred,  Son,  & 
Co.  Brundred,  Son,  &  Co.,  or  Bell  & 
Son,  might  discontinue  the  business 
after  a  period  named,  and  dispose  of 
the  stock  and  fixtures  at  auction.  It 
was  held,  that,  by  this  agreement,  the 
members  of  the  two  firms  were  not 
made  liable  as  partners  for  debts  after- 
wards contracted  by  Brundred,  Son, 
&  Co.  See  Town  v.  Hendee,  27  Vt. 
258. 

(r)      In    Wightman   v.   Tounroe,    1 
Maule   &   S.  412,   the   executors   con- 


160  THE   LAW    OP   PARTNERSHIP.  [CH.  VI. 

in  the  old  firm,  the  general  assets  of  the  testator  beyond  this 
amount  are  not  liable,  (s)  nor  is  the  executor  thereby  made 
a  partner,  {ss) 

In  Ireland,  a  father  advanced  a  large  sum  to  a  partnership 
for  his  minor  son,  who  became  a  partner,  and  the  father  was 
to  have  the  right  of  knowledge,  advice,  &c.,  and  the  accounts 
of  the  partnership  were  rendered  to  him.  But,  the  firm  failing, 
he  was  adjudged  not  a  partner  ;  because  the  articles  did  not  pro- 
vide that  he  might  withdraw  any  part  of  the  profits,  and  he 
did  not  withdraw  them  in  fact.  (<) 

It  is  quite  certain  that  no  mere  interference  with  the  affairs 
of  the  partnership,  no  advice  in  respect  to  them,  not  even  a 
control  of  them,  not  even  the  right  or  the  duty  of  interference, 
advice,  or  control,  as  part  of  an  express  contract,  can  alo7ie 
make  a  party  chargeable  as  a  partner  ;  (m)  although  they  might 
be  very  influential,  in  connection  with  other  circumstances,  in 
determining  the  relation  of  a  person  to  the  partnership.  Neither 
would  the  fact  of  joining  in  an  order  for  the  purchase 
*  148    or  sale  of  goods,  (u)   or  *  for  any  mercantile  transac- 

tinued  the  money  of  a  deceased  partner  kail,  33  Md.  382  ;  Richter  v.  Poppen- 
in  the  firm,  for  the  benefit  of  the  infant  husen,  39  How.  (N.  Y.)  Pr.  82.J 
daughter  of  the- deceased.  It  was  ar-  (?)  Barklie!'.  Scott,  1  Hudson  &B.  83. 
gued,  that,  as  the  executors  did  not  (h)  In  Barklie  v.  Scott,  1  Hudson  & 
hold  themselves  out  to  the  world  as  B.  83,  the  court  said :  "  As  to  the  stip- 
partners,  nor  receive  any  part  of  the  illation  that  the  house  should  be 
profits  of  the  firm  for  their  own  use,  governed  and  directed  by  the  defend- 
but  merely  for  the  use  of  the  infant  ant's  advice,  this  does  not  constitute 
daughter  of  the  deceased,  they  could  him  a  partner,  nor  give  him  any  legal 
not  be  held  liable  as  partners  :  but  the  interest  in  the  firm  ;  it  does  not  hold 
court  held,  that  they  could  not  bind  him  out  to  the  world  as  a  partner,  nor 
the  infant  by  their  acts ;  and  that,  by  give  him  any  share  in  the  profits,  nor 
embarking  the  property  in  trade,  they  empower  him  to  dissolve,  alter,  or 
contracted  a  responsibility  which  their  affect  the  partnership.  Suppose  that 
subsequent  application  of  the  profits  the  defendant  had  not  been  the  party 
to  purposes  not  of  personal  benefit  advancing  this  money,  but  that  the 
could  not  afterwards  vary.  See  also  gift  had  been  made  by  a  third  person, 
Ex  parte  Garland,  10  Ves.  119;  Ex  who  had  been  desirous  that  the  young 
parte  Holdsworth,  1  Mont.,  D.  &  D.  man  should  have  the  advice  of  some 
475.  skilful  person  engaged  in  trade,  and 
(s)  Ex  parte  Garland,  10  Ves.  119.  had  stipulated  that  the  house  should  be 
[{ss)  The  performance  of  an  article  directed  by  that  advice,  —  could  such 
of  partnership  by  an  executor  does  not,  a  person  be  considered  as  a  partner  1  " 
ipso  facto,  render  him  personally  re-  See  Bryden  v.  Taylor,  2  H.  &  G.  400  ; 
sponsible  as  a  partner.  There  nmst  be  Taylor  v.  Perkins,  26  Wend.  124  ; 
other  facts  and  circumstances  to  show  Smith  v.  Edwards,  2  H.  &  G.  411. 
his  personal  liability.     Owens  v.  Mac-  (v)  Gibson  v.  Lupton,  9  Bing.  297. 


CH.  VI.]         WHO    ARE    PARTNERS    AS    TO    THIRD    PERSONS. 


161 


tion,  (?r)  suffice  to  create  a  partnership  or  its  liabilities  with- 
out other  circumstances. 

Whether  one  partner  only  or  all  the  partners  are  liable  for  a 
debt,  or,  in  other  words,  whetlier  a  debt  be  a  several  debt  or 
a  partnership  debt,  may  sometimes  depend  not  only  on  what 
the  person  sought  to  be  charged  is,  but  on  what  he  tvas,  and 
also  not  only  upon  what  the  debt  was  at  its  inception,  but  on  what 
it  has  become.  It  is  very  common  for  an  incoming  or  for  a  re- 
tiring partner  to  enter  into  an  arrangement  by  which  existing  ■ 
debts  change  their  character.  This  will  be  considered  when 
we  treat  of  that  class  of  i>artners.  Here,  however,  it  may  be 
remarked,  that  the  debt  may  be  changed  without  any  change 
in  the  partnership.  If,  for  instance,  a  partner  buys  something 
on  his  own  account,  and  is  alone  responsible,  the  partnership 
may  afterwards  join  in  the  promise  or  guarantee  it ;  so,  if  the 
debt  be  originally  a  partnersliip  debt,  it  may  afterwards  be  as- 
sumed by  one  partner  alone,  the  others  being  discharged.  An 
adoption  by  a  partnership  of  a  debt  due  from  a  single  partner 
may  be  made  impliedly,  by  acts  as  well  as  by  express  agree- 
ment ;  and  it  seems  that,  in  some  cases,  slight  circumstances 
will  be  sufficient  to  prove  such  adoption,  (a;) 


The  defendants,  who  were  never  gen- 
eral partners,  ordered  wheat  of  the 
plaintiffs,  by  an  order  containing  tlie 
following  words  :  "  Payment  for  the 
same  to  be  drawn  upon  each  of  us,  in 
the  usual  manner."  The  plaintiffs,  in 
a  letter  addressed  to  each  of  the  de- 
fendants, answered  :  "  We  have  made 
a  purchase  for  your  joi/it  account." 
At  the  same  time,  they  drew  upon  the 
defendants  for  one-third  of  the  price, 
upon  each  by  a  separate  bill  for  one 
moiety  of  the  third.  They  afterwards 
despatched  the  wheat,  and  drew  other 
similar  bills,  in  the  same  manner,  for 
the  remainder  of  the  price  ;  having, 
however,  previously  written  them : 
"  We  hold  j/ou  both  harmless  for  the 
advance  up  to  the  period  of  lading  and 
invoice."  The  bill  of  lading,  on  its 
reaching  the  defendants,  was  indorsed 
by  each  of  them ;  the  freight  and 
charges  were  paid  by  the  money  of 
each;  and  the  wheat  was  equally  di- 


vided between  them  when  it  was  ware- 
housed. Upon  these  facts,  it  was  held, 
that  the  defendants  were  not  jointly 
liable  as  partners  for  the  whole  price 
of  the  goods.  See  also  Jackson  v. 
Robinson,  3  Mason,  138;  Harding  v. 
Foxcroft,  6  Greenl.  76. 

(iv)  Thus  the  fact  that  two  persons 
sign  a  note  jointly  is  no  evidence  of 
copartnership  between  them.  Hop- 
kins V.  Smith,  11  Johns.  IGl.  But  it 
has  been  held  otherwise  where  two 
persons  draw  a  bill  of  exchange.  Car- 
vick  V.  Vickery,  Doug.  053,  note. 
See  also  Given  ;•.  Albert,  5  Watts  &  S. 
339 ;  MTver  v.  Humble,  16  East,  IG9  ; 
Gibbons  v.  Wilcox,  2  Stark.  43; 
Chandler  v.  Brainard,  14  Pick.  285; 
Clark  y.  Reid,  11  id.  446;  Banchor  v. 
Cilley,  38  Me.  553 ;  Chase  v.  Stevens, 
19  N.  H.  465. 

(.t)  See  Ex  parte  Clowes,  2  Bro.  C. 
C.  595 ;  Ex  parte  Seddon,  2  Cox,  49 ; 
Ex  parte  Jackson,  1  Ves.  131 ;  Ex  parte 


11 


162 


THE   LAW    OF    PARTNERSHIP. 


[CH.  VI. 


But  there  is  no  presumption  of  law  which  favors  any  such 
change.  It  must  be  shown  to  be  done  by  all  the  parties,  with 
a  full  knowledge  of  the  circumstances,  and  by  the  consent  or 
authority  of  all,  and  for  good  consideration,  if  any  party  comes 
under  a  new  obligation,  or  if  any  other  party  surrenders 
*  149  any  *  right.  (?/)  The  obligation  of  the  partnership,  and 
the  several  obligations  of  a  partner,  may  be  cumulative  ;  if 
A.  signs  a  note  beginning,  "  I  promise,"  &c., "  A.  for  A.,  B.,  & 
Co.,"  it  is  said  that  there  is  the  note  of  A.,  and  also  the  note  of 
a  partnership.  (2)     And,  generally,  if  to  the  obligation  of  the 


Lobb,  7  ill.  592 ;  Ex  parte  Hay,  15  id. 
4;  Ex  parte  Roxby,  1  Mont.  Part.  198  ; 
Ex  parte  Fairlie,  Mont.  17  ;  Ex  parte 
HoJgliinson,  Coop.  101  ;  Saville  v. 
Robertson,  4  T.  R.  720. 

(y)  In  Ex  parte  Jackson,  1  Ves.  131, 
a  widow  in  trade,  and  who  was  indebted 
by  bond,  took  lier  son  into  partnersliip. 
A  commission  liaving  issued  against 
the  tirm,  a  petition  was  put  in  to  prove 
tlie  bond  debt  against  tlie  joint  estate. 
The  Lord  Chancellor  said  :  "  If  I  can 
come  at  it  in  any  manner,  I  will.  For 
that  reason  I  asked,  if  any  interest  had 
been  paid  upon  that  bond  by  both  ?  for, 
if  so,  I  sliould  have  considered  it  as 
adopting  the  debt,  and  making  the 
partnership  liable.  Then  I  could  do 
it  consistently  with  the  principle.  If 
tliey  have,  in  any  way,  considered  the 
debt  as  a  joint  debt,  I  will  understand 
it  so,  as  it  ought  to  be ;  for  if  one 
man,  having  debts,  takes  another  into 
partnersliip  with  him,  a  very  little 
matter  respecting  those  debts  will 
make  both  liable.  Let  it  stand  over, 
to  see  if  you  can  fasten  it  in  any  way 
upon  botli,  which  I  should  be  glad  to 
do."  See  Daniel  v.  Cross,  3  Ves.  279. 
See  also  Ex  parte  Seddon,  2  Cox,  49; 
Ex  parte  Lobb,  7  Ves.  592 ;  Ex  parte 
Peele,  0  id.  602;  Ex  parte  Hay,  15  id. 
4;  Ex  parte  Roxby,  1  Mont.  Part.  198; 
Ex  parte  Fairlie,  Mont.  17  ;  Ex  parte 
Hodgkinson,  Cooper,  101 ;  Ex  parte 
Whitmore,  3  Mont.  &  A.  627.  So  held 
in  Ex  parte  Williams,  Buck,  18.  But 
the  Lord  Chancellor  said :  "  But  I 
agree  to  the  proposition,  that  a  very 
little  will  do  to  make  out  an  assent 


to  the  agreement.  If  any  of  the 
creditors  named  in  the  schedule  think 
they  can  make  out  such  a  case,  they 
may  apply  on  that  ground  to  prove 
their  debts  against  the  joint  estate." 
See  Ex  parte  Freeman,  id.  471 ;  Ex 
parte  Fry,  1  Glyn  &  J.  96  ;  Ex  parte 
AVhitmore,  supra.  See  also  Montagu 
on  Bankruptcy,  2d  part,  p.  71 ;  3d 
part,  p.  126.  It  will  be  seen,  from  the 
above  cases,  that  where,  for  the  sep- 
arate debt  of  one  partner,  a  creditor 
receives  the  joint  security  of  all,  if 
tlie  contract  to  substitute  the  one  for 
the  otlier  is  clearly  proved,  tli£re  can 
be  no  question  as  to  tlie  consideration  ; 
the  obtaining  tlie  responsibility  of  all 
the  partners,  in  lieu  of  that  of  only 
one,  being  deemed  sufficient. 

{z)  Galway  v.  Matthew,  1  Camp. 
403;  Hall  v.  Smith,  1  B.  &  C.  407; 
2  Dowl.  &  R.  584.  Upon  such  a  note, 
however,  perhaps  only  A.  could  be 
separately  sued,  since,  upon  the  face 
of  the  note,  A.'s  is  the  only  separate 
contract.  See  Clerk  v.  Blackstock, 
1  Hodg.  474 ;  Marsh  v.  Ward,  Peake, 
130;  Wilks  v.  Back,  2  East,  142.  Of 
the  decision  in  Hall  v.  Smith,  supra 
(where  it  was  held,  that  upon  a  note 
commencing,    "  1   promise,"   &c.,   and 

signed,  "For  A.,  B.,  &  C. A.," 

both  the  firm  and  A.  separately  were 
liable),  it  is  remarked  by  Mr.  Justice 
Storj',  that  "  this  construction  of  the 
instrument  certainly  goes  to  the  very 
verge  of  the  law,  and,  perhaps,  may 
be  thought  to  deserve  further  con- 
sideration." 


CH.  YI.]         WHO    ARE    PARTNERS    AS   TO    THIRD   PARTIES. 


163 


partner  that  of  the  firm  purports  to  be  superadded,  or  the  ob- 
ligation of  a  partner  to  that  of  the  firm,  it  is  no  proof,  and  does 
not  even  give  rise  to  a  presumption  that  the  prior  obligation  is 
discharged  or  lessened,  (a) 


SECTION    VII. 


HOW    FAR   PARTNERS    ARE   LIABLE    IX   SOLIDO    FOR  THE   TORTS    OF    OTHER 

PARTNERS. 

Partners  are  liable  in  solido  for  the  tort  of  one,  if  that  tort 
were  committed  by  him  as  a  partner,  and  in  the  course  of  the 
business  of  the  partnership.  This  principle  is  frequently  illus- 
trated by  cases  in  which  a  partnership  is  held  liable  for  injury 
caused  to  third  persons  by  their  having  acted  upon  the  false  and 
deceitful  representations  made  to  them  by  one  partner.  (6) 


(a)  Ex  parte  Seddon,  2  Cox,  49. 
There  the  petitioners  had  sold  goods 
to  one  of  the  bankrupts,  which  were 
paid  for  by  a  joint  note,  and  a  receipt 
was  given  by  the  petitioners  as  for 
money  paid,  not  expressing  the  pay- 
ment to  be  made  in  tlie  manner 
it  really  was.  The  question  was, 
whether  the  petitioners  had  not  ac- 
cepted the  security  of  the  joint  note, 
in  full  satisfaction  of  the  debt,  so 
as  to  preclude  their  coming  on  the 
separate  estate.  The  Lord  Chancellor  : 
"  To  be  sure,  on  the  face  of  the  note, 
it  is  a  joint  debt ;  but  the  question 
is,  whether  the  creditor  may  not 
maintain  his  debt  for  goods  sold  and 
delivered;  that  is,  Does  the  note  ex- 
tinguish the  debt  ?  If  it  had  been  a 
bond  given,  instead  of  the  note,  it 
would  clearly  have  done  so  ;  but  the 
note  was  no  payment :  and  then  as 
to  the  receipt,  if  it  had  remained  un- 
explained, it  would  have  been  evidence 
of  the  debt  being  paid ;  but,  when  it 
appears  how  it  was  given,  it  is  not 
conclusive.  I  think  this  may  be 
proved  as  a  separate  debt.  Hence, 
also,  where  several  partners  had  given 
their  separate  bonds  for  money  bor- 
rowed, which  money,  though  lent  on 
the   individual    securities    of   the    re- 


spective parties,  had  come  to  the  use 
of  the  partnership  ;  and  where,  there 
being  several  other  debts  of  the  part- 
ners under  the  same  circumstances, 
the  partners  came  to  an  agreement 
to  consolidate  them,  and  to  consider 
them  the  debts  of  the  firm,  the  Lord 
Chancellor  thought  that,  as  the  money 
was  admitted  by  all  the  partners  to 
have  come  to  the  use  of  the  joint  fund, 
it  would  entitle  the  creditors  to  con- 
sider themselves  as  joint  or  several 
creditors,  and  therefore  to  prove 
against  the  joint  or  separate  estates  ; 
it  being  a  joint  debt  in  respect  to  its 
having  come  to  the  joint  use,  and 
separate  from  the  nature  of  the  se- 
curity." 

(6)  As  where  the  plaintiffs  were  in- 
duced to  take  the  note  of  a  third  party 
in  payment  for  goods  sold  upon  the 
representation  of  one  of  the  defend- 
ants, who  were  partners,  that  it  was 
good,  when,  in  fact,  the  defendants 
knew  the  makers  were  insolvent,  and 
the  note  worthless;  it  was  held,  that 
the  defendants  were  liable,  either  in  an 
action  of  assumpsit  to  recover  the 
value  of  the  goods  sold,  or  in  an  action 
on  the  case  to  recover  damages  for  the 
deceit  practised.  Hawkins  v.  Appleby, 
2  Sandf.  421.     See  Patten  v.  Carney, 


164 


THE   LAW    OF   PARTNERSHIP. 


[CH.  VI. 


*  151        *  It  is  not  always  easy  to  draw  tlie  line  between  such 
cases  and  those  in  which   the   partners  are  not  liable. 


17  Mass.  182;  Doremus  v.  McCormick, 
7  Gill,  49  ;  Locke  v.  Stearnes,  1  Mete. 
5(50 ;  National  Exchange  Co.  v.  Drew, 
2  Macq.  (Sc.  Ap.  Cas.)  103,  32  Eng.  L. 
&  Eq.  1 ;  Blair  v.  Bromley,  5  Hare, 
542,  2  Phillips,  354.  See  Brydges  v. 
Branfill,  12  Sim.  369  ;  Coonier  v.  Brom- 
ley, 5  DeG.  &  S.  532,  12  Eng.  L.  & 
Eq.  307  ;  Chester  v.  Dickerson,  51 
Barb.  349.  In  one  case  (Willett  v. 
Chambers,  Cowp.  814),  particular  cir- 
cumstances were  held  to  make  a  part- 
ner liable  for  a  fraud  committed  by 
his  copartner  before  the  beginning  of 
their  partnership.  The  facts  were 
these  :  Prior  to  any  partnership  be- 
tween the  defendant  and  Dudley,  an 
attorney  and  conveyancer,  the  latter, 
in  the  year  1771,  received  of  a  Mr. 
Bindley  the  sum  of  350/.,  to  be  laid 
out  on  real  security.  Dudley  accord- 
ingly furnislied  him  with  a  mortgage 
from  a  Mr.  Hughes  to  that  amount, 
which,  as  it  afterward  appeared,  Dud- 
ley had  forged.  In  1776,  Dudley  and 
Chambers  entered  into  partnership, 
shortly  after  which  Bindley  wanted 
to  call  in  his  money.  Tlie  pretended 
mortgagor  was  represented  at  the  same 
time  to  want  a  further  sum  of  150/., 
which,  added  to  the  original  mortgage- 
money,  made  together  the  sum  of  500/. 
The  plaintiff,  Willett,  was  ready  to  ad- 
vance this  sum.  And,  in  consideration 
of  his  doing  so,  an  assignment  was 
made  to  him  of  the  false  mortgage, 
before  made  to  Bindley.  As  to  180/. 
part  of  this  sum  of  500/.,  Willett  paid 
it  into  Dudley's  office  to  Chambers; 
who  gave  for  it  liis  separate  receipt, 
Dudley  not  being  at  home.  He  sub- 
sequently called  at  the  office,  and  paid 
the  residue  to  Dudley,  who  gave  tliere- 
for  his  separate  receipt.  It  was  ad- 
mitted that  Chambers  was  in  no  respect 
privy  to  the  forgery.  Upon  these  facts, 
the  jury  having  found  for  the  plaintiff, 
the  Court  of  King's  Bench  held,  that 
the  verdict  should  stand ;  Lord  Mans- 
field saying  :  "  The  defendant  sutlers 
by  the  rascality  of  a  man  who  had  a 


very  good  character.  I  am  very  sorry 
for  the  defendant ;  but,  upon  this  evi- 
dence, I  cannot  say  but  that  it  is  a 
partnership  transaction."  See,  in  illus- 
tration of  the  general  principle  of  the 
text,  Brydges  v.  Branfill,  6  Jur.  310, 
s.  c.  12  Sim.  369  ;  M'Farland  v.  Crary, 
8  Cow.  258 ;  Lowell  v.  Hicks,  2  Younge 
&  C.  481 ;  Blight  v.  Tobin,  7  Monroe, 
617  ;  Hadfield  v.  Jameson,  2  Munf.  53  ; 
Simms  ;;.  Brutton,  5  fcixch.  802,  1  Kng. 
L.  &  Eq.  446  ;  State  v.  Neal,  7  Fost. 
131.  In  this  last  case  it  was  held,  that 
if  one  of  two  persons  unlawfully  sell 
spirituous  liquors  in  pursuance  of  an 
agreement  between  them,  and  for  their 
joint  account  and  benefit,  the  other 
party  may  be  liable  in  an  indictment 
for  the  sale.  State  r.  Bierman,  1 
Strobh.  256.  See  Townsend  v.  Bog- 
art,  11  Abb.  Prac.  R  355;  [doubted  in 
Stewart  v.  Levy,  36  Cal.  159 ;]  Gray 
V.  Cropper,  1  Allen,  337 ;  Taylor  v. 
Jones,  42  N.  H.  25 ;  McKnight  v. 
Ratcliffe,  44  Penn.  156.  [So  each  mem- 
ber of  a  firm  is  civilly  liable  for  a 
violation  of  the  revenue  laws  by  a 
copartner,  whether  with  or  without 
the  knowledge  of  the  others.  United 
States  r.  Thomason,  4  Biss.  99.  But, 
when  one  partner  has  obtained  credit 
for  goods  sold  the  firm  by  false  repre- 
sentations, the  innocent  partner  cannot 
be  arrested  on  civil  process,  under  a 
statute  authorizing  arrest  in  case  of 
fraud  only,  McNeely  v.  Haynes,  76 
N.  C.  122  ;  nor  adjudged  guilty  of 
actual  fraud,  Stewart  i-.  Levy,  36  Cal. 
159  ]  "  If  one  partner  of  a  firm  col- 
ludes with  one  of  another  firm,  in  a 
transaction  connected  with  the  part- 
nership, the  partners  of  the  person  so 
colluding  are  liable  for  damages  to  the 
injured  firm,  by  reason  of  that  part- 
ner's misconduct."  Per  Lord  Tenter- 
den  in  Longman  v.  Pole,  I  Dawson  & 
Lloyd,  126,  1  Mood.  &  ilalk.  223.  In 
that  case,  the  facts  were  as  follows  : 
The  plaintiffs,  Longman  &  Co.,  bankers 
with  the  defendants,  Pole  &  Co.,  and 
Hunt,  a  partner  in  the  house  of  Long- 


CH.  VI.]        WHO    ARE   PARTNERS   AS   TO   THIRD    PERSONS. 


165 


The  fact  that  money  *  procured  by  a  fraud  becomes  part-  *152 
nership  stock  does  not  render  them  lialde  witliout  their 
participation  in  or  consent  to  the  fraud.  At  tlie  same  time, 
if  money  be  raised  in  the  course  of  partnership  business,  by 
the  fraud  of  one  of  the  partners,  the  otlier  partners  will  not  be 
relieved  from  their  liability  for  the  fraud,  merely  l)y  the  want 
of  evidence  that  the  money  so  raised  was  applied  to  the  use  or 
benefit  of  the  firm,  (c) 


man  &  Co.,  sent  the  cashier  to  the  de- 
fendants witli  cash  to  take  up  bills  ac- 
cepted by  him  in  the  name  of  the  firm 
and  coming  due  the  next  day.  He 
accordingly  took  up  the  bills,  but  by 
Hunt's  order  did  not  enter  them  in  the 
plaintiff's  books.  About  the  same  time, 
Downes,  a  partner  in  Pole  &  Co.,  told 
one  of  the  defendants'  clerks  that  a 
bill  of  Longman's  would  come  in  on 
such  a  day,  which  he  was  to  pay  and 
give  to  him  (Downes),  debiting  Hunt 
with  it  in  the  note-book,  so  that  it 
might  not  go  into  the  ledger.  Downes 
afterwards  gave  similar  directions  re- 
specting another  bill.  Both  these  bills, 
which  were  acceptances  by  Hunt  in 
the  name  of  the  firm,  were  paid  and 
entered  in  the  note-book  to  the  debit 
of  Hunt  individually  ;  and  the  cash 
payments  made  by  Hunt  to  provide 
for  these  bills  were  also  entered  in  the 
same  book  to  his  credit,  so  that  no 
trace  of  these  proceedings  appeared  in 
the  pass-book  of  the  defendants  or  the 
check-book  of  the  plaintiffs.  The  cash- 
ier who  gave  the  above  statement  also 
admitted  that  there  were  bills  on  Hunt's 
private  account  to  a  large  amount, 
wiiich  appeared  in  the  pass-book  (which 
the  plaintiffs  were  not  in  the  habit  of 
examining),  but  not  in  their  check- 
book. It  also  appeared,  that,  at  the 
time  of  these  transactions,  Hunt  had  a 
large  private  account  with  the  defend- 
ant. Upon  this  state  of  facts.  Lord 
Tenterden  held,  the  action  as  brought 
clearly  maintainable.  But  the  jury 
found  a  verdict  for  the  defendants,  the 
collusion  of  Downes  not  lieing  estab- 
lished with  sufficient  certainty 

Tiie  rule  respecting  the  liability  of 
I)artners  for  each  other's  torts  is,  as  we 


have  seen,  confined  to  such  torts  as  a 
partner  commits  in  that  character,  and 
in  the  course  of  the  partnership  busi- 
ness. Hence,  where  three  partners 
were  sued  in  an  action  of  trespass,  on 
account  of  the  wrongful  ejectment  by 
one  partner  of  the  tenant  of  a  canteen, 
it  was  ruled  that  one  partner  could  not 
involve  his  copartners  in  such  a  wrong  ; 
though  there  might  be  exceptions  to 
the  rule,  as  where  the  trespass  was  in 
the  nature  of  a  taking  which  was  avail- 
able to  the  partnership,  and  they  after- 
wards concurred  in  it  and  received  tlie 
benefit  of  it ;  or  where,  before  the  tres- 
pass, they  all  joined  in  ordering  it. 
Petrie  v.  Lament,  1  Car.  &  M.  93. 
[Mere  subsequent  approval  of  a  part- 
ner's tort,  not  done  in  the  interests  of 
the  partnership,  will  not  render  the 
partnership  liable.  Wilson  v.  Turnman, 
6  M.  &  G.  236 ;  Grund  v.  Van  Vlack, 
69  111.  478.]  In  Pierce  v.  Jackson,  6 
Mass.  245,  Parsons,  C.  J.,  says:  "A 
fraud  committed  by  one  of  the  part- 
ners shall  not  charge  the  partnership." 
And  in  Sherwood  v.  Marwick,  5  Greenl. 
295,  it  seem  to  have  been  held,  that 
one  partner  cannot  be  made  liable  for 
the  fraud  of  another,  without  proof  of 
actual  participation.  But  in  Locke  v. 
Stearns,  1  Mete.  564,  where  all  the 
partners  were  held  liable  for  the  deceit 
of  one,  Shaw,  C.  J.,  cites  and  explains 
both  the  above  cases.  He  considers 
them  to  have  been  decided  on  their 
special  facts,  and  to  be  not  inconsist- 
ent with  the  general  i)rinciple  of  law 
under  discussion.  See  Atkinson  v. 
Mackreth,  Law  Hep.  2  Eq.  570,  and 
Linton  v.  Hurley,  14  Gray,  191. 

(r)  Compare  Manuf.  &  Mecli.  Bank 
V.  Gore  &  Grafton,  15  Mass.  75,  with 


166 


THE   LAW    OF   PARTNERSHIP. 


[CH.  VI. 


If  a  partner  steals  money,  and  deposits  it  to  partnership  ac- 
count, innocent  partners  would  not  be  liable  for  the  tort,  although 
assumpsit  for  money  had  and  received  might  lie.  (c?) 


Boanlman  i'.  Gore,  id.  331.  [The  firm 
is  liable  for  frauds  or  torts  practised 
by  one  of  the  partners  in  the  part- 
nership business,  though  the  act  was 
unknown  to  the  other  partners.  Ches- 
ter V.  Dickerson,  52  Barb.  (N.  Y.) 
349;  Stewart  v.  Levy,  30  Cal.  159; 
Wolf  r.  Mills,  56  111.  360;  Chambers 
V.  Clearwater,  1  Abb.  (N.  Y.)  App. 
Dec.  341 ;  Jackson  v.  Todd,  Sup.  Ct. 
Ind.,  5  Cent.  L.  J.  316.  But,  in  an 
action  to  recover  damages  for  the 
deceit,  the  injured  party,  not  knowing 
the  other  parties,  need  not  join  them. 
Leslie  v.  Wiley,  47  N.  Y.  649.  See 
also  Dart  v.  Walker,  3  Daly  (N.  Y. 
C.  P.),  136.  The  firm  is  not  liable 
for  a  tort  by  one  partner,  when  the 
act  is  known,  by  the  party  injured,  to  be 
in  violation  of  law.  Leslie  v.  Wiley, 
47  N.  Y.  649.  See  also  Dart  v.  Walker, 
3  Daly  (N.  Y.  C.  P.),  136  ;  nor  for  a 
deceit  practised  by  one  of  the  partners 
upon  a  third  person,  by  the  sale  to 
him  of  such  partner's  interest  in  the 
firm,  Schunbacker  v.  Kiddle,  Sup. 
Ct.  111.,  5  Cent.  L.  J.  271.] 

{(I)  Rapp  V.  Latham,  2  B.  &  Aid. 
795.  Latham  &  Parry  were  in  part- 
nership as  wine  merchants.  Parry, 
being  the  managing  partner,  in  Janu- 
ary, 1812,  wrote  to  the  plaintiff  that 
he  had  an  opportunity  of  purchasing 
sixty-one  pipes  of  port,  at  05/.  per 
pipe,  and  he  desired  the  plaintiff  to 
remit  the  money  to  pay  the  price  of 
such  wine  and  the  duties  thereon. 
The  plaintiff  accordingly  remitted  the 
money,  and  Parry  represented  that  he 
made  the  purchase,  and  afterward, 
in  the  name  of  the  firm,  transmitted 
an  account  to  the  plaintiff,  stating  that 
thirty  of  these  sixty-one  pipes  had 
been  resold  at  the  price  of  84/.  per 
pipe,  and  paid  the  proceeds  of  such 
pretended  sale  to  the  plaintiff.  Other 
similar  transactions  took  ])lace,  run- 
ning through  a  period  of  about  one 
vear.      Each   transaction   formed   the 


subject  of  a  separate  account,  an<l  all 
the  purchases  were  described  as  being 
made  at  a  certain  specified  rate  per 
pipe.  The  plaintiff  conceived  that 
Parry  was  in  fact  laying  out  his  money 
in  bond  Jiile  purchases  of  wine,  and 
that  he  actually  resold  part  of  such 
wine  as  he  represented.  But,  the 
defendants  failing,  it  appeared  that 
the  transactions  were  wholly  fictitious, 
though  the  defendant,  Latham,  did  not 
know  that  they  were  so.  Upon  the 
whole  account,  the  plaintiff  had  re- 
ceived from  the  supposed  resales 
more  money  than  he  iiad  advanced; 
but  he  contended  that  he  had  a  right 
to  take  each  transaction  separately, 
and  to  charge  the  defendants  with  the 
amount  of  the  money  advanced  to 
them  for  the  purchase  of  every  pipe 
of  wine  not  accounted  for.  It  was 
held,  that  the  plaintiff  had  such  right ; 
that  Latham  could  not  say  that  those 
transactions  were  fictitious  wliich 
Parry  had  represented  to  be  real ;  and 
that,  beside  retaining  all  the  money 
that  had  been  paid  to  him  on  account 
of  those  fictitious  transactions,  the 
plaintiff"  was  also  entitled  to  recover 
back  the  sums  advanced  for  the  other 
supposed  purchases,  as  money  ad- 
vanced by  him  upon  a  consideration 
not  performed,  and  as,  therefore,  had 
and  received  by  the  defendant  to  his 
use.  In  Kilby  v.  Wilson,  Ryan  &  M. 
178,  it  was  Iield,  that  no  property  could 
be  vested  in  a  partnership  by  the 
fraud  of  one  partner  to  which  the  rest 
were  not  privy.  There  the  action  was 
trover  for  divers  bales  of  cotton,  under 
the  following  circumstances :  The 
plaintiffs,  who  were  brokers,  being 
employed  by  T.  &  Co.  to  purcliase 
cotton,  bought  it  of  R.,  for  the  use  of 
T.  &  Co.  The  plaintiffs  paid  R.  for 
the  goods,  delivered  East  India  Com- 
pany warrants  for  them  to  T.  &  Co., 
and  received,  in  return,  their  check  for 
the  cost  of  the  cotton  and  the  charges. 


CH.   VI.]  WHO    ARE    PARTNERS    AS    TO    THIRD    PARTIES. 


167 


*  But  if  it  was  the  business  of  a  firm  to  receive  property  *  153 
on  deposit  and  for  safe-keeping,  and  one  of  the  partners 
stole  and  sold  something  so  deposited,  and  spent  the  money, 
the  partnership  would  be  liable.  This  rule,  or  rather  the  prin- 
ciple on  which  it  rests,  has  been  applied  to  trustees,  one  of 
whom  forged  the  names  of  his  cotrustees,  to  a  power  author- 
izing his  copartners  to  sell,  (e) 


T.  immediately  pledged  the  warrants 
to  tlie  defendant,  to  cover  liis  accept- 
ances for  two  bills  given  to  T.  &  Co. 
But  the  check  taken  by  the  plaintiffs 
for  the  cotton  was  dishonored  ;  it  after- 
wards appearing  that  the  only  object 
of  T.,  in  the  transaction,  was  to  raise 
money,  and  abscond,  which  he  accord- 
ingly did  on  the  same  day  that  he 
received  and  pledged  the  warrants. 
Payne,  T.'s  partner,  who  drew  the 
check,  was  altogether  unconcerned  in 
the  frauds  of  the  latter.  The  defend- 
ant's acceptanc'es  were  subsequently 
recovered  from  T.,  and  were  delivered 
to  the  defendant  by  the  assignees  of  T. 
&  Co.,  which  firm  had  been  declared 
bankrupt.  Abbott,  Ld.  C.  J.,  left  it  to 
the  jury  to  say  whether  or  not  T.  ob- 
tained the  goods  from  the  plaintiffs 
with  a  preconceived  design  to  raise 
money  upon  them  and  then  abscond, 
without  ever  paying  the  plaintiffs ;  if 
he  did,  they  should  find  for  the  plain- 
tiffs ;  otherwise,  if  T.  conceived  the 
plan  of  defrauding  the  plaintiffs  after 
he  had  obtained  possession  of  the 
cotton.  See  Snaith  v.  Burridge,  4 
Taunt.  684.  See  cases  cited  in  last 
note.  [Where  one  member  of  a  firm 
uses  trust  funds  in  speculation  in 
stocks,  contrary  to  the  copartnership 
article,  and  without  the  knowledge 
of  the  other,  the  latter  is  not  liable. 
Guillou  V.  Peterson,  9  Phila.  2'25.  If 
a  partner,  wlio  has  knowingly  received 
stolen  goods,  after  discovery  pays  for 
them  out  of  the  funds  of  the  firm,  to 
avoid  prosecution,  the  money  so  paid 
cannot  be  recovered  back  in  a  suit  in 
the  name  of  the  firm,  even  if  the  otlier 
partner  is  innocent,  and  the  goods  did 
not  go  to  the  use  of  the  firm.  Johnson 
V.  Byerly,  3  Head  (Tcnn.),  104.] 


(e)  Stone  v.  Marsh.  G  B.  &  C.  551. 
The  plaintiffs,  Fauntleroy  and  others, 
held  stock  as  trustees  ;  and  the  defend- 
ants, of  whom  Fauntleroy  was  also 
one,  were  in  partnership  as  bankers. 
Fauntleroj'  executed  a  letter  of  attor- 
ney, authorizing  his  copartners  to  sell 
the  said  stock,  and  forged  thereto  the 
names  of  his  cotrustees.  The  stock 
was  accordingly  sold  and  transferred 
by  the  fiartners  of  Fauntleroy  to  the 
credit  of  the  purchasers  in  the  books 
of  the  Bank  of  England.  The  con- 
sideration-money thereof  was  paid  into 
the  bank  of  tlie  defendants'  agents,  to 
the  credit  of  the  defendants,  according 
to  the  usual  practice  on  the  sale  of 
stock  for  the  defendants.  Fauntleroy 
was  permitted  by  his  partners  to  con- 
duct the  greater  part  of  the  business 
of  the  house  without  their  interference, 
and  drew  upon  the  account  at  Martin, 
Stone,  &  Co.'s,  in  the  partnership 
name  (as  he  thought  fit),  without  the 
knowledge  and  in  fraud  of  his  part- 
ners, more  than  the  amount  of  the 
said  sums  so  paid  in.  The  defendants 
became  bankrupt.  Fauntleroy  was 
tried  for  forging  a  similar  instrument, 
convicted,  and  executed.  The  plain- 
tiffs then  presented  a  petition  in  bank- 
ruptcy, to  be  allowed  to  prove  the 
amount  of  stock  sold,  against  the  joint 
estate  of  the  bankrupts.  Thereupon 
the  Lord  Chancellor  directed  an  issue 
to  try  whether  the  defendants  and 
Fauntleroy  were,  at  the  date,  &c.,  in- 
debted to  the  plaintiffs  and  Fauntleroy 
in  any  and  what  sum  of  money,  it 
being  also  ordered  that  no  objection 
should  be  taken  on  the  ground  that 
Fauntleroy  was  interested  as  a  trustee 
jointly  with  the  plaintiffs,  and  also  as 
a   partner   with   the   defeiulants.      Ex 


1G8 


THE    LAW    OP   PARTNERSHIP. 


[CH.  VI. 


*  154        *If  one  of  a  firm,  being  also  a  trustee,  applies  the 
trust    funds    to   the   use  of  the  partnersliip,  with  the 


parte  Bolland,  Mont.  &  M.  315;  Stone 
v.  Marsh,  Kyan  &  M.  3G4.     Tlie  Court 
of  Kinji's  Bench  held,  that  the  money 
received  by  the  banking-liouse  of  tlie 
defendants  constituted  a  debt  due  from 
them    to   tlie   trustees.     Lord    Tenter- 
den  :  "  Upon  this  state  of  facts,  it  can- 
not be  doubted  that  it  was  the  duty  of 
the  liouse  to  place  the  money  to  the 
credit  of  the  trustees,  and  retain  it  for 
their  use,  and  subject  to  tlieir  order ; 
and  that  no  ignorance  on  tlie  part  of 
any  of   them,  even  supposing  all  but 
one  to  have  been  ignorant  of  the  facts 
(which,  however,  cannot  have  been), 
nor    any   neglect   on    the   part  of  the 
house,  arising  from  a  misplaced  confi- 
dence reposed  by  them  in  one  of  them- 
selves,   or    otherwise,    to    which    the 
plaintiffs    were    no    parties,    can    de- 
prive the   plaintiffs   of  their   right   to 
their     money."     The    plaintiffs    were 
accordingly    admitted  to  prove.      For 
the    defendants,     it    was    argued    at 
the   trial    at    7i>si   prius    (Ryan   &    M. 
368)  :    First,    that    no  debt   could   be 
founded  on  and  arise  out  of  a  felony  ; 
and  that  it  was  against  the  policy  of 
the  criminal  law  that  the  party  whose 
name  had  been   forged  should  be  al- 
lowed to  adopt  tlie  felony,  or  in  any 
way  to  sanction  it,  or  turn  it  to  his 
advantage.      Second,    that,    inasmuch 
as  the  transfer  under  a  forged  power 
worked  no  alteration  of  property,  the 
plaintiflTa    had    not    lost    their    prop- 
erty, but  still  remained  owners  of  the 
stock,  and  might  call  upon  the  Bank 
of  England   to   account  for   both   the 
principal   and  dividends.     Tiiird,  that 
even  if   the  defendants  were  fixed  by 
the   payment    of  the   money    to  their 
agents,  Martin  &  Co.,  still  they   were 
discharged  by  the  repayment  of  it  to 
Fauntlcroy,  one  of  the  parties,  whose 
property  it  was,  and  into  whose  hands 
and  use  it  appeared  by  the  evidence  to 
have  come.     In  answer  to  the  first  ob- 
jection, it  was   held,  in   the    Court  of 
King's  Bench  (6  B.  &  C.  564),  and  by 
Lord  Lvndhurst  (Mont.   &  Mac.  397), 


that  it  was  undoubtedly  a  principle  of 
law  that  a  man  should  not  be  allowed 
to  make  a  felony  the  foundation  of  a 
civil  action.     But  that  this  rule  of  law 
was  one  founded  on  public  policy,  which 
requires     that    offenders    against    the 
law   shall   be  brought  to  justice,  and 
ceases  to  operate  when  the  reason  for 
it  fails  ;    and    that   no  such   policy   or 
rule   was    applicable    to   the    present 
case,     the     offender    having     already 
suffered   the   extreme   penalty   of   the 
law   for   a   similar   offence.      Further, 
that  the   assertion   that   the   plaintiffs 
were  seeking  to  ratify  a  felonious  act, 
and  were  making  that  act  the  ground 
of  their  demand,  was  incorrect.     That 
the  ground   of   their  demand  was  the 
actual  receipt  of  the  money  produced 
by  the  sale  and  transfer  of  their  an- 
nuities.     That    the    sale    was    not    a 
felonious  act,  nor  the  transfer,  nor  the 
receipt  of  the  money.     That  the  felo- 
nious act  was  antecedent  to  all  these, 
and    complete    without    them.      (See 
a  similar  opinion  of  the  court  in  Board- 
man   V.   Gore,  15  Mass.   331,  cited  in 
note  ('().  supi-a.)     In  reply  to  the  sec- 
ond objection,  it  was  held,   in  the  same 
courts,  that  whether  or  not  the  plain- 
tiffs had  a  remedy  against  the  Bank  of 
England,  it  was  unnecessary  to  decide, 
since  their  remedy  against  the  defend- 
ants was  clear,  and,  generally  speaking, 
when   an  injured   party  has   different 
remedies  against  different  persons,  he 
may  elect  which  he  will  pursue.    Upon 
the   third   objection.   Lord   Tenterden 
said,  in  Ryan  &  M.   369:   "But  they 
say,  also,  that  Fauntleroy  was  one  of 
the  persons  entitled,  and  that  he  has 
drawn  the  money  out,  and,  therefore, 
they  are  not  answerable.     Now,  if  two 
persons  give  a  power  of  attorney  to 
bankers   to  sell  out  their  joint  stock, 
the  bankers  ought  to   place   the   pro- 
ceeds to  their  joint  account,  and  both 
ought  to  draw.     If  it  is  meant  that  the 
money  should  be  paid  to  one,  an  au- 
thority to  that  effect  ought  to  be  given 
to  the  bankers;    that,   in   my   experi- 


CH.  VI.]         WHO    ARE    PARTNERS    AS   TO   THIRD   PARTIES. 


169 


knowledge  of  tlie  other  partners,*  the  firm  will  be  *  155 
chargeable  with  the  amount,  and  held  as  debtors  to 
the  trust  therefor,  (y)  It  is  said  in  some  cases  that  the  firm 
will  not  be  liable  in  such  case,  unless  the  other  partners  have 
knowledge  of  the  trust  and  of  this  ajjplication  of  the  trust 
funds,  {z)    But  it  has  also  been  held,  that  if  a  member  of  a  firm 


ence,  has  been  tlie  ordinarj'^  practice. 
If  you  are  of  opinion  that  tliis  is  tlie 
visual  mode  of  dealing,  the^),  as  against 
the  otiier  two,  it  is  no  defence  that  the 
payment  has  been  made  to  one  only  of 
several  who  are  jointly  entitled  to  re- 
ceive it."  See,  to  the  same  point,  Ex 
parte  Bolland,  1  Mont.  &  A.  570; 
Keating  r.  Jlarsh,  id.  582;  Marsh  v. 
Keating,  id.  592,  s.  c.  2  CI.  &  Fin. 
250.  In  Hume  v.  Bolland,  1  C.  &  M. 
130,  s.  c.  2  Tyr.  575,  a  case  arising 
out  of  the  same  bankruptcy,  Marsh  & 
Co.,  the  banking  firm  of  which  Faunt- 
leroy  was  a  member,  had  been  em- 
ploj'ed  by  the  trustees  of  stock,  stand- 
ing in  their  names  on  the  books  of  the 
Bank  of  England,  to  receive  the  divi» 
dends  thereon.  In  the  books  of  Marsh 
&  Co.,  accordingly,  tlie  amount  of  the 
dividends  was  regularly  carried  to  the 
creilit  of  their  employers,  and  was  by 
them  drawn  for  and  received.  But  it  af- 
terwards appeared  that  none  of  the 
above  dividends  had  in  point  of  fact  been 
received  by  Marsh  &  Co. ;  Fauntleroy 
having  transferred  and  sold  the  stock 
by  means  of  forged  powers  of  attorney, 
and  having  caused  the  above  entries 
to  be  made  in  the  books  of  the  firm  in 
fraud  of  his  copartners,  the  money 
never  having  been  received  by  them. 
Upon  the  issuing  of  commissions 
against  Marsh  &  Co.,  a  case  being 
sent  to  the  Exchequer  to  try  the 
question  whether  the  bankrupts  were 
indebted  to  the  trustees,  and  if  so  in 
how  much,  it  was  held,  that,  at  the  date 
of  the  commissions,  the  bankrupts 
were  not  indebted  to  the  trustees  for 
tlie  balance  of  the  dividends  appearing 
by  the  books  to  have  been  received. 
But  see  Hume  v.  Bolland,  Ryan  &  M. 
371  ;  also,  Keating  v.  Marsh,  supra, 
subsequently  decided  in  the  House  of 
Lords,  in  Sadler  v.  Lee,  6  Beav.  324. 


(y)  Ex  parte  Watson,  2  Ves.  &  B. 
414  ;  Smith  v.  Jameson,  6  T.  R.  601 ; 
Boardnian  v.  Mosman,  1  Bro.  C.  C. . 
68 ;  Jaques  (;.  Marquand,  6  Cow.  497 ; 
Hutchinson  v.  Smith,  7  Paige,  26; 
Richardson  v.  French,  4  Mete.  577. 

(s)  Ex  parte  Heaton,  Buck,  386 ;  Ex 
parte  Apsey,  3  Bro.  C.  C.  265  ;  [Guillou 
V.  Peterson,  9  Phila.  225  ;  Bounce  v. 
Parsons,  45  N.  Y.  180.]  But  see  Rich- 
ardson i\  French,  4  Mete.  577  ;  Wliit- 
aker  i\  Brown,  16  Wend.  509  ;  Freeman 
I'.  Fairlie,  3  Meri.  44.  In  this  last  case, 
it  seems  to  be  held,  that,  if  the  other 
partners  merely  permit  one  partner  to 
mix  his  accounts  as  executor  with 
those  of  the  firm,  the  partners  may, 
without  proof  of  further  knowledge  on 
their  part,  be  compelled  to  produce 
those  accounts  to  the  cestui  que  trust. 
And,  in  the  following  case,  the  fact, 
that,  during  the  continuation  in  a  firm 
of  trust  funds  by  a  breach  of  trust  on 
the  part  of  some  of  the  partners,  other 
partners  entered  and  retired  from  the 
firm,  seems  to  have  exempted  the  lat- 
ter from  liability  for  the  breach  of 
trust  of  their  copartners  to  which  they 
were  privy.  A.,  a  partner  in  a  house 
of  agency  in  India,  died,  having  by  his 
will  directed  his  estate  to  be  called  in, 
and  invested  on  certain  trusts,  and 
appointed  two  of  his  copartners  his 
executors.  They,  however,  suffered 
his  share  in  the  partnership  to  remain 
in  the  house.  After  A."s  death,  B. 
and  C.  were  admitted  as  partners,  and 
they  knew  that  A.'s  share  was  remain- 
ing in  the  house,  and  that  it  was  sub- 
ject to  the  trusts  of  his  will.  They 
afterwards  retired,  and  other  partners 
were  admitted.  The  house  ultimately 
failed.  Held,  that  B.  and  C.  were  not 
responsible  for  the  breach  of  trust 
committed  by  their  copartners,  the 
executors.     Twyford  v.  Trail,  7  Sim. 


170 


THE   LAW    OF   PARTNERSHIP. 


[CH.  VI. 


holding  funds  as  an  agent  of  a  third  party,  puts  that  money 
into  the  business  of  the  firm,  the  firm  is  liable  whether  the 
other  partners  knew  that  the  money  was  so  held  or  not.  (zz) 
How  far  the  knowledge  and  consent  of  the  other  partners  is 
necessary  to  make  them  liable  is  not  distinctly  settled  on  the 
authorities. 

A  partnership  to  whom  goods  were  consigned  for  sale 
*  156  was  held  *  liable  for  the  pledge  thereof  by  a  fraudulent 
partner ;  («)  so  was  a  firm  of  common  carriers,  one  of 
whom  lost  property  intrusted  to  them  ;  (6)  and  partners  in  a 
publishing  house,  one  of  whom  published  a  libel ;  (c)  and  part- 
ners in  the  stage-coach  business,  one  of  whom  caused  an  injury 
by  negligent  driving.  (cZ) 

So  all  the  partners  are  liable  for  the  tort  of  an  agent,  although 
that  agent  were  appointed  by  one  partner  only,  provided  he  had 
authority  to  make  the  appointment,  (e)  So  it  would  be  in  case 
of  a  breach  of  the  revenue  laws.  (/)    And  a  demand  upon  and 


92.  Where  trust  money  is  put  into  trade 
without  authorit}^  the  cestui  que  trust 
may  generally  elect  to  take  from  the 
trustees  either  a  share  of  the  profits, 
for  the  period  of  the  breach,  or  interest 
for  that  time.  There  may,  however, 
be  circumstances  in  which  the  cestui 
que  trust  will  have  a  right  to  divide  the 
period,  and  to  claim  interest  for  one 
part  and  a  share  of  the  profits  for  an- 
other. Heatlicote  v.  Hulme,  1  Jac.  & 
W.  722 ;  Docker  v.  Somes.  2  Mylne  & 
K.  656.  See  Clayton's  Case,  1  Meri. 
572;  Hankey  v.  Garrett,  1  Ves.  2-36. 

{zz)  Floyd  r.  Wallace,  31  Ga.  688. 
And  see  Harper  v.  Lamping,  33  Cal. 
641. 

(rt)  Nicoll  r.  Gleniiie,  1  M.  &  S. 
588. 

(b)  Mitchell  V.  Tarbutt,  5  T.  R. 
649. 

(c)  Rex  V.  Almon,  5  Burr.  268G  ;  Rex 
V.  Pearce,  Peake,  75;  Rex  v.  Topham, 
4  T.  R.  126 ;  Rex  ;;.  Marsh,  2  B.  &  C. 
723,  per  Littledale,  J. 

((/)  Moreton  v.  Hardern.  4  B.  &  C.  223. 

(e)  As  where  several  persons  are 
proprietors  of,  and  partners  in,  a  line 
of  stage  coaches,  but  each  stocks,  and 


employs  drivers  for  his  own  particular 
portion  of  the  road  ;  all  the  partners 
are  liable  for  injuries  caused  by  the 
misconduct  and  negligence  of  a  person 
employed  on  any  portion  of  the  line, 
tliough  such  wrong-doer  is  hired  and 
paid  by  only  one  partner.  Weylan 
V.  Elkins,  Holt,  N.  P.  227  ;  1  Stark. 
272;  Bostwick  t'.  Champion.  11  Wend. 
571,  18  id.  175  ;  Bayley,  J.,  in 
Laugher  v.  Pointer,  5  B.  &  C.  570. 
See  also  Dwight  v.  Brewster,  1  Pick. 
50  ;  Cobb  v.  Abbott,  14  id.  289  ;  Stock- 
ton V.  Prey,  4  Gill,  406;  Hadfield 
i\  Jameson,  2  Munf .  53 ;  Locke  v. 
Stearns,  1  Mete.  560 ;  Roberts  v.  Tot- 
ten,  8  Ark.  609;  National  Exch.  Co. 
r.  Drew,  2  Macq.  (Sc.  Ap.  Cas.)  103, 
32  Eng.  L.  &  Eq.  1  ;  Cotton  v.  Bettner, 
1  Bosw.  430.  [And  the  action  may  be 
brought  against  one  or  more  or  all  the 
partners.  Roberts  v.  Joluison,  58  N. 
Y.  613.] 

{/)  Attorney-General !'.  Strongforth, 
Bunb.  97  ;  Attorney-General  v.  Burges, 
id.  223  ;  Attorney-General  v.  Siddon,  1 
Cromp.  &  J.  220;  [United  States  v. 
Thomason,  4  Biss.  C.  Ct.  U.  S.  99; 
a7tte,  p.  *  151,  note.] 


CH.  VI.]  WHO    ARE   PARTNERS    AS   TO    THIRD   PARTIES. 


171 


a  refusal  by  one  partner  is  a  conversion  by  the  firm,  which  will 
sustain  trover,  (g') 

But  even  if  the  tort  were  committed  by  a  partner  in  the  per- 
formance of  the  partnership  business,  it  might,  from  its  nature 
or  attendant  circumstances,  be  shown  to  be  only  a  several  act. 
As  if  two  physicians  were  in  partnership,  and  one  intentionally 
maltreated  a  patient.  So  if  two  were  partners  as  bankers  and 
bill-brokers,  and  one  of  them  discounted  a  note  usuriously,  this 
would  be  his  own  act  only,  or  the  act  of  the  partnership,  ac- 
cording to  his  authority,  or  the  usage  of  the  firm,  or  other 
circumstances.  (Ji) 

*  It  is  to  be  observed  that,  although  all  the  partners  *  157 
may  be  liable  for  a  tort,  and  all  may  be  sued  jointly, 
they  may  also  be  sued  severally  ;  for,  in  law,  all  torts,  however 
joint,  and  whether  constructive  or  actual,  are  several.  It  is, 
therefore,  no  answer  for  a  defendant  sued  in  tort  to  say  that 
others  were  guilty  with  him.  (/) 


(g)  Nisbet  v.  Patton,  4  Kawle,  120; 
Hoibrook  v.  Wight,  24  Wend.  169; 
Mitcliell  V.  Williams,  4  Hill,  18.  The 
managing  partner,  who  conducted  the 
business  of  a  mine,  refused  to  deliver 
up  ore  belonging  to  the  former  tenants 
of  the  mine,  on  the  ground  that  it  was 
partnership  property,  and  there  was 
subsequently  a  notice,  by  the  attorney 
for  tlie  defendants,  offering  to  deliver 
up  tools  that  were  in  the  same  building 
with  the  ore  ;  but  the  notice  was  silent 
as  to  the  ore.  Held,  evidence  of  con- 
version by  all  the  partners.  Lloyd  v. 
Bellis,  37  Eng.  L.  &  Eq.  545.  See 
Com.  Dig.  tit.  Trespass,  ch.  1 ;  NicoU 
V.  Glennie,  1  M.  &  S.  588;  Uore  v.  Wil- 
kinson, 2  Stark.  287. 

(/i)  When  one  partner,  without  the 
knowledge  of  the  other,  borrows  money 
at  usurious  interest,  and  executes  a 
note  in  the  name  of  the  firm  ;  and  after- 
wards pays  the  usurious  interest,  and 
the  other  partner,  ignorant  of  the  pay- 
ment of  the  usury,  executes  his  own 
note  in  lieu  of  the  other,  —  he  cannot, 
when  sued  upon  it,  set  up  as  a  defence 
the  payment  of  usury  by  his  partner. 
Jones  V.  Jackson,  14  Ala.  186.  See 
Hutchins  v.  Turner,  8  Humph.  415. 


((')  If  an  attorney  is  in  partnership 
with  another,  and  they  carr}-  on  their 
business  together,  and  their  joint  names 
are  put  on  their  papers  in  causes  in 
their  office,  either  of  them  is  liable  to 
the  penalties  of  the  act  -37  Geo.  .3 
for  practising  as  an  attorney  without 
entering  his  certificate,  though  it  does 
not  appear  that  one  of  them  had  any 
profit  or  advantage  from  the  suit  for 
suing  in  wliich  the  action  in  qui  tarn  is 
brought.  1  Wms.  Saund.  291,  d;  Eich 
V.  Pilkinton,  Carth.  171  ;  Sutton  v. 
Clark,  6  Taunt.  29  ;  Edmondson  v. 
Davis,  4  Esp.  14 ;  Attorney-General 
V.  Surges,  Bunb.  223 ;  ]\Iitchell  r.  Tar- 
butt,  5  T.  R.  649  ;  Stockton  v.  Frey,  4 
Gill,  406.  As  all  the  partners  may  be 
affected  by  tiie  tort  of  one,  so  a  release 
to  one  of  all  liability  in  respect  of  the 
tort  will  operate  as  a  release  and  dis- 
charge of  ail.  Co.  Litt.  232,  a;  Bac. 
Abridg.  Release  (G)  ;  Com.  Dig.  Re- 
lease, B.  4  ;  id.  Pleader,  3  M.  12 ; 
Kiffin  V.  Willis,  4  Mod.  379  ;  William- 
son V.  McGinnis,  11  B.  ^Mon.  74.  Case 
is  the  proper  action  against  partners 
for  injuries  caused  bj'  the  negligence 
of  their  servant ;  and,  if  the  damage 
be  effected  by  laches  simply,  it  will  lie 


172 


THE   LAW   OF   PARTNERSHIP. 


[CH.  VI. 


Partners  arc  not  only  liable  in  actions  ex  contractu  and  ex 
delicto,  bnt  also  in  actions  quasi  ex  contractu,  which,  though  in 
form  founded  in  tort,  are  in  fact  actions  of  contract.  (^') 
*  158  To  *  the  general  rule,  however,  that  actions  quasi  ex 
contractu  are  to  be  regarded  as  actions  of  contract,  and 
that  the  form  of  the  action  will  not  vary  the  right  of  defence, 
an  exception  has  been  made  in  the  case  of  common  carriers. 
Actions  against  them  seem  now,  though  not  formei'ly,  to  be 
regarded  as  resting  in  tort,  unless  a  special  contract  is  ex- 
plicitly stated  in  the  declaration,  (/c) 


against  them,  even  though  one  partner 
were  present,  personally,  and  acted  in 
tliat  which  occasioned  the  damage. 
So,  where  one  partner  is  a  wilful 
wrong-doer,  if  under  the  circumstances 
any  action  is  sustainable  against  his 
copartners,  case  is  still  the  proper  rem- 
edy. But,  as  against  the  malicious 
partners  solely,  trespass  is  tiie  proper 
form  of  action.  Mitchell  v.  Tarbutt,  5 
T.  R.  649 ;  Morley  v.  Gaisford,  '2  H.  Bl. 
442 ;  Huggett  v.  Montgomery,  5  B.  & 
P.  440  ;  Leame  v.  Bray,  3  East,  593  ; 
Ogle  V.  Barnes,  8  T.  R.  188 ;  Rogers  v. 
Imbleton,  5  B.  &  P.  117;  Moreton  v. 
Hardern,  4  B.  &  C.  223  ;  Whiteman 
V.  Smith,  12  Rich.  Law  (S.  C),  595. 

(j  )  In  Govett  v.  Radinge,  3  East, 
62,  where  the  action  was  brought 
against  three  for  negligently  loading  a 
hogshead,  to  two  of  whom  a  certain 
reward  was  to  be  paid,  and  to  the 
third  a  certain  other  reward,  the  action 
was  held  to  be  founded  in  tort,  and 
not  in  contract,  and  to  be  attended  with 
the  consequences  of  tort ;  so  tliat  one 
of  the  codefendants  could  be  found 
guilty,  and  the  rest  acquitted.  But 
this  case  appears  to  be  no  longer  law. 
See  Powell  v.  Layton,  5  B.  &  P.  364  ; 
Max  V.  Roberts,  id.  454  ;  Weal  v.  King, 
12  East,  452;  Walcott  v.  Canfield,  3 
Conn.  198.  The  general  conclusion  to 
be  deduced  from  the  authorities  is  thus 
expressed  by  Mr.  Collyer  :  "  It  might 
perhaps  be  a  question,  whether,  if  an 


action  on  the  case  were  brought  against 
several  defendants,  in  a  matter  where 
there  is  no  action  by  the  custom  of  the 
realm,  and  no  express  or  particular 
contract  were  stated  on  tlie  declara- 
tion ;  such  action  would  be  considered 
as  laid  in  tort  or  in  contract ;  but,  upon 
the  whole,  it  is  conceived  that  the  court 
would  look  to  the  real  nature  of  the 
case,  without  reference  to  the  form  of 
the  declaration  ;  and  would  liold  tlie 
action  to  be  attended  with  the  conse- 
quences of  tort  or  contract,  according 
as  tort  or  contract  was  the  essence  of 
the  actual  transaction  between  the 
parties."  Collyer  on  Part.  (Am.  ed.) 
§  738.  See  Jennings  v.  Randall,  8  T.  R. 
335;  Green  v.  Greenbank,  2  Marsh. 
485;  Marzetti  v.  Williams,  1  B.  &  Ad. 
415 ;  Barnett  v.  Lynch,  5  B.  &  C.  589; 
Newberry  v.  Colvin,  7  Bing.  190. 

(k)  Boson  V.  Sandford,  1  Show.  101, 
2  Show.  478  ;  Powell  v.  Layton,  5  B.  & 
P.  370 ;  Max  v.  Roberts,  id.  454,  s.  c. 
12  East,  89;  Tuttle  v.  Cooper,  10  Pick. 
283-287,  6  M.  &  S.  385 ;  Bretherton 
V.  Wood,  6  Moore,  141,  3  Brod.  &  B. 
52 ;  Pozzi  v.  Sliipton,  8  A.  &  E.  963. 
The  reason  for  this  exception  with 
reference  to  a  common  carrier  seems 
to  be,  that  he  is  regarded  as  a  public 
servant,  against  whom  an  ancient  ac- 
tion lies,  founded  on  the  custom  of 
the  realm,  for  the  breach  of  his  public 
duty.     See  Gould  PI.  205. 


CH.  VII.]  RIGHTS    OF    PARTNERS    BETWEEN    THEMSELVES.  173 


CHAPTER  YII. 

OF  THE  RIGHTS  AND  DUTIES  OF  PARTNERS  BETWEEN  THEMSELVES. 
SECTION    I. 

OF    THE    RIGHT   OF   CHOICE   AS    TO    A   PARTNER. 

No  one  among  the  rights  of  partners  is  more  certain,  or  leads 
to  more  important  consequences,  than  that  to  which  we  have 
already  referred  as  implied  l)y  the  phrase  dilectus  personarum. 
Every  partnership  must  be,  in  its  beginning,  voluntary,  and  the 
result  of  the  choice  and  wish  of  those  who  become  partners. 
Precisely  so  as  to  admission  of  new  partners,  it  must  continue 
to  be.  (a)  Hence,  whatever  rights  a  partner  may  have  of 
assigning  or  otherwise  disposing  of  his  share  of  the  stock  or 
profits  (a  subject  to  be  presently  considered),  his  character 
or  relation   of   partner   cannot   be    assigned.  (6)     And   if  he 


(a)  The  civilians  pushed  the  princi- 
ple of  dilectus  personarum  to  a  great, 
and,  as  Pothier  thinks,  to  an  unreason- 
able extent;  for  with  them,  even  a 
stipulation  between  partners,  that  lieirs 
or  executors  should  succeed  to  the  re- 
lation of  partner,  was  deemed  to  be 
void.  Domat,  lib.  i.  tit.  8,  §  2 ;  Pothier, 
Trait€  du  conlrat  de  socie'te,  ch.  8,  §  3  ; 
Crawshay  v.  Maule,  1  Swanst.  509, 
note.  The  doctrine  of  the  English  and 
American  Law  is  otherwise,  and  stipu- 
lations for  the  admission  of  such  per- 
sons into  a  firm  upon  the  decease  of  a 
partner  are  frequent,  and  are  always, 
as  far  as  possible,  enforced  by  the 
courts.  See  Wrexham  v.  Hudleston,  1 
Swanst.  514,  &c.  ;  Balmain  v.  Shore, 
9  Ves.  50O ;  Warner  v.  Cunningham,  3 
Dow,  76;  Gratz  v.  Bayard,  11  S.  &  11. 
41 ;  Scholefield  v.  Eichelberger,  7  Pet. 
680;  Downs  v.   Collins,  6  Hare,  418; 


Page   V.   Co.x,  10   Hare,  163,  17  Eng. 
L.  &  Eq.  672.     See  Reynolds  v.  Hicks, 

19  Ind.    113;    Buckingham  v.   Hanna, 

20  Ind.  110. 

(b)  Raymond's  Case,  2  Rose,  255  ; 
Kingman  v.  Spurr,  7  Pick.  235 ;  Gil- 
more  V.  Black,  2  Fairf.  488 ;  Modde- 
well  V.  Keever,  8  W.  &  S.  63;  Cowles 
V.  Garrett,  30  Ala.  341 ;  Ketcham  v. 
Clark,  6  Johns.  144 ;  Murrajf  v.  Bogert, 
14  id.  318.  In  Marquand  v.  New  York 
Manuf.  Co.,  17  Johns.  625,  Fitch  as- 
signed his  interest  in  a  partnership,  by 
the  articles  of  which  it  was  provided 
that  it  should  continue  until  two  of 
the  partners  should  demand  a  dissolu- 
tion. The  other  partners  desired  the 
partnership  to  go  on  notwithstanding 
the  assignment.  But,  per  Woodworth, 
J.  :  "  It  is  well  settled  in  England,  that 
an  act  of  bankruptcy  is  a  dissolution  of 
partnership  ;   this   is  by  reason  of  the 


174 


THE   LAW    OP    PARTNERSHIP. 


[CH.  VII. 


*  160  does  assign  it,  and  the  *  other  partners  receive  the  as- 
signee among  them  and  into  the  partnership,  the  new 
partner  becomes  one,  altogetlier  by  tlieir  reception  and  his 
agreement  with  them,  and  in  no  degree  by  the  assignment  or 
transfer  by  him  who  has  ceased  to  be  a  partner,  (f)  In  an 
Englisii  case,  a  person  entering  into  bnsiness  was  guaran- 
teed to  the  firm  up  to  a  certain  amount  by  his  father,  and  in 
consideration  thereof  contracted  to  pay  to  his  father  a  certain 


assignment,  which  severs  tlie  interest 
of  the  banltrupt,  by  operation  of  law. 
An  assignment  made  by  tlie  i)arty  liim- 
self,  under  circumstances  like  the  pres- 
ent, produces  the  same  result :  in  both 
cases,  they  give  rise  to  a  state  of  things 
altogether  incompatible  with  the  prose- 
cution of  a  partnership  concern,  com- 
menced and  previously  conducted  by 
the  bankrupt  and  his  former  copart- 
ners. It  is  perfectly  clear  that  a  new 
partner  cannot  be  admitted  without 
consent.  This,  ex  vi  termini,  implies 
that  even  consent  would  be  nugatory, 
unless  the  assignee  elected  to  become 
a  partner;  when  he  does  not  so  elect, 
but  (as  in  the  present  case)  insists  on 
a  division  of  the  property,  the  demand, 
according  to  acknowledged  general 
principles,  cannot  be  denied."  Ma- 
thewson  v.  Clark,  6  How.  S.  C.  122 ; 
Putnam  v.  Wise,  1  Hill,  238;  Channel 
V.  Fassitt,  1(5  Ohio,  166  ;  Mason  v.  Con- 
nell,  1  Whart.  381  ;  Horton's  Appeal, 
13  Penn.  St.  67  ;  Bray  jv.  Fromont, 
6  Madd.  5.  In  Goddard  c.  Hodges,  1  C. 
&  M.  33,  the  plaintiti'  was  the  solicitor 
of  a  bridge  company,  and  on  that  ac- 
count not  desiring  to  appear  as  the 
owner  of  ^shares  in  a  company,  had 
procured  one  Fall  to  be  the  nominal 
stockholder  of  a  certain  number  of 
shares,  the  plaintiff,  however,  being 
the  real  owner,  making  the  deposits, 
and  paying  all  other  expense  on  the 
shares.  In  an  action  to  recover  com- 
pensation for  professional  services,  the 
plaintiff  cited  Bray  v.  Fromont,  supra; 
and  contended  that,  as  between  him- 
self and  the  bridge  company,  he  was 
not  a  partner,  since  there  was  no  con- 
sent nor  agreement  of  the  company  to 


receive  him  as  such.  But  the  court  held 
otherwise,  and  a  nonsuit  was  entered. 
See  Bradley  v.  Harkness,  26  Cal.  76. 

{<;)  The  effect  of  an  assignment  l)y 
a  partner  of  his  interest  in  a  copartner- 
ship is  to  give  the  assignee  a  right  to 
insist  upon  an  account  of  the  joint 
concern,  and  to  claim  whatever  his 
assignor  would  be  entitled  to  upon  a 
settlement  of  accounts,  upon  satis- 
faction of  the  claims  of  the  otlier 
partners.  NicoU  v.  Mumford,  4  Johns. 
Ch.  622 ;  Rodriguez  v.  Heffernan, 
6  id.  417 ;  Marquand  v.  New  York 
Manuf.  Co.,  17  Johns.  525;  Kingman 
V.  Spurr,  7  Pick.  235 ;  Bray  v.  Fromont, 
6  Madd.  5 ;  Mathewson  v.  Clark,  6 
How.  S.  C.  122;  Moddewell  v.  Keever, 
8  Watts  &  S.  63.  In  this  last  case  it 
was  held,  that  an  acquittance  of  a  part- 
nership debt,  given  by  the  assignee  of 
one  partner's  share,  could  not  have  the 
effect  of  relieving  the  debtor  from  lia- 
bility to  the  firm  for  the  same  debt. 
Ex  parte  Barrow,  2  Rose,  252 ;  Brown 
V.  De  Tastet,  Jac.  284  ;  2  Bell  Comm. 
636.  See  Newland  v.  Tale,  3  Ired.  Eq. 
226;  Cowles  v.  Garrett,  30  Ala.  341. 
The  transferee  of  a  portion  of  a  co- 
partner's interest  has  a  debt  which  lie 
may  prove  against  the  transferrer's 
estate.  Ex  parte  Dodgson,  Mont.  & 
M'A.  445.  But  the  assignee  of  a  part- 
ner's interest  cannot  witlidraw  his 
share  of  the  joint  effects.  They  must 
remain  in  the  possession  of  the  con- 
tinuing partner,  for  the  purpose  of  wind- 
ing up  the  affairs  of  the  partnership, 
which  has  been  dissolved  by  the  as- 
signment. Horton's  Appeal,  13  Penn. 
St.  67 ;  Mealier  v.  Cox,  1  Sel.  Cases 
Ala.  150. 


CH.  VII.]         RIGHTS    OP    PARTNERS    BETWEEN   THEMSELVES.         175 

sum  out  of  the  profits.  Afterwards  marrying,  he  made  a  mar- 
riage settlement,  by  which  lie  transferred  all  the  profits  and 
earnings  of  the  business  to  his  father  and  another,  in  trust,  first 
to  secure  the  father's  annuity,  and  then  on  other  trusts.  It  was 
held  by  the  Court  of  Common  Pleas  that  the  father  became  a 
partner  in  the  business  and  liable  for  the  debts.  (<?<?)  But  the 
judgment  was  reversed  in  the  Exchequer  Chamber,  (ccr) 

So  if  a  partner  bequeaths  his  interest  in  a  firm  to  some  one, 
this  will  not  make  the  legatee  a  partner ;  ((f)  nor  will 
the  bequest  *  have  this  effect  although  the  legacy  is  ex-  *  161 
pressly  for  the  purpose  of  making  him  a  partner,  and  is 
said  to  be  a  legacy  of  all  the  rights,  &c.,  of  a  partner ;  for  this 
character  of  partner  is  not  transferable.  But  one  who  repre- 
sents the  interest  of  a  former  partner,  if  received  by  the  other 
partners  and  treated  as  a  partner,  becomes  a  partner  under  the 
original  articles,  {del)  Nor  is  the  dilectus  personarum  a  right  of 
the  old  partners  only.  It  belongs  just  as  much  to  the  new  partner. 
No  act  of  any  others  can,  of  itself,  make  him  a  partner.  He  must 
himself  give  his  consent,  and  enter  into  the  firm  by  his  own 
act.  If  a  transfer  of  a  partner's  interests  and  rights  were  made 
with  an  intent  on  the  part  of  the  transferrer  that  the  transferee 
should  thereby  be  made  a  partner,  he  would  not  become  one  as 
to  the  others,  without  their  and  his  acquiescence,  (t?)  There 
may  be  reasons  for  saying  that  he  would  become  one  as  to  third 
parties  by  his  own  consent  and  acquiescence  alone ;  but  we  do 
not  think  that  he  could  be  made  liable  as  a  partner,  on  his  own 
consent  and  acquiescence  alone,  unless  these  were  manifested 
in  some  way  which  amounted  to  his  holding  himself  out  as  a 
partner.  That  is,  we  think  his  consent  and  acquiescence  alone 
would  not  make  him  liable  as  a  partner,  on  the  ground  that  he 

(cc)  Bullen  i'.  Sharp,  18  C.  B.  n.  s.  son    v     Greenwood,    1    Swanst.    482; 

614.  Fox  V.   Hanbury,   Cowp.  445 ;  Hague 

{ccc)  Same  v.  Same,  Law  Rep.  1  C.  v.    KoUeston,   4   Burr.  2177;  Ex  parte 

P.  86.     From  this  reversal,  Shee,  J.,  &  Williams,  11  Ves.  5;  Griswokl  i'.  Wad- 

Pigott,  B.,  dissented.  dington,    15  Johns.    82;  Marquand   v. 

{d)  Nor  are  the  executors  of  a  de-  New   York   Manuf.    Co.,   17   id.   535  ; 

ceased  partner,  nor  the  assignees  of  a  Kingman  v.  Spurr,  7  Pick.  238. 

bankrupt  one,  partners  with  tlie  other  (del)  Mealier  v.  Cox,  37  Ala.  201. 

member   of  tlie   original   firm.      They  (e)  See    Marquand    v.    New    York 

are    simply   entitled    to    an    account.  Manuf.   Co.,    17   Johns.  529,  535,  and 

Pearce  v.  Chamberlin,  2  Ves.  33;  Wil-  other  cases  cited  in  preceding  notes. 


176 


THE   LAW    OF   PARTNERSHIP. 


[CH.  vir. 


actually  became  one ;  because  he  is  no  partner  until  the  other 
partners  receive  him. 

It  is,  perhaps,  possible  that  the  consent  of  the  former  partners 
may  be  given  beforehand,  and  the  consent  of  the  transferee 
implied  by  the  reception  of  the  things  transferred.  If,  for  ex- 
ample, a  joint-stock  company,  which  is  a  kind  of  partnership, 
provided  by  its  rules  that  the  shares  should  be  regarded  and 
treated  as  transferable,  and  as  a  kind  of  scrip  ;  that  each  share 
was  such  an  aliquot  part  of  the  whole,  or  represented  a  certain 
amount  of  money,  and  one  man  might  hold  a  number  of  them; 
and  if  it  was  farther  provided  that  a  sale  of  a  share,  acknowl- 
edged before  the  clerk,  and  recorded,  with  a  delivery  of  the 
former  certificate  and  the  issue  of  a  new  one,  would  make  the 
holder  of  the  new  certificate  one  of  the  company ;  in  such  case 
we  should  say  that  the  transferee  became  at  once  a  stockholder, 
which,  in  this  case,  would  mean  a  partner,  by  the  completion 
of  the  transfer  according  to  the  rules  of  the  com- 
*  162    pany.  (/)     And  it  is  possible,  also,  *  that  the  articles 


( /")  This  would  seem  to  be  a  legiti- 
mate conclusion  from  tiie  opinion  of 
the  court  in  Fox  v.  Clifton,  9  Bing. 
115,  6  id.  776.  There  several  jiersuns 
were  sued  as  partners  in  a  distillery 
company.  It  was  in  evidence  that, 
such  a  company  being  in  process  of 
formation,  upon  payment  of  a  deposit, 
scrip  receipts  were  issued  to  the  sub- 
scribers, which  were  to  be  surrendered 
for  certificates  of  shares,  when  the 
partnership  deed  was  prepared  and 
signed  ;  that  tlie  scrip  of  the  company 
was  openly  sold  in  the  market ;  tiie 
persons  producing  that  scrip,  and  pay- 
ing the  instalments  due,  were,  without 
further  inquiry,  permitted  to  sign  the 
company's  deed  as  partners  ;  and  that 
Levi,  one  of  the  defendants,  had,  be- 
fore the  contract  was  made  upon  which 
the  present  suit  was  brought,  sold  his 
scrip.  C.  J.  Tindal :  "  The  present  case 
appears  not  to  be  governed  by  refer- 
ence to  the  rules  which  restrain  part- 
ners from  parting  with  tlieir  shares  in 
ordinary  cases,  without  eacli  otiier's 
consent ;  for,  in  this  case,  the  power 
of  transferring  the   scrip   to  any  one 


cannot  but  have  formed  a  part  of  the 
known  original  design."  After  adding 
that  at  the  time  the  contract  was  en- 
tered into  with  the  plaintiff,  Levi  was 
not  and  could  not  be  a  partner :  "  On 
the  other  hand,  the  man  who  had  pur- 
chased his  scrip,  if  he  was  willing  to 
pay  up  the  second  instalment,  would 
have  been  entitled  and  allowed  to  re- 
ceive a  certificate  of  his  share,  and  to 
execute  the  deed  without  difficulty." 
But  where,  as  supposed  in  the  text, 
the  articles  of  an  association  prescribe 
a  particular  method  of  transferring 
shares,  that  mode  must  be  strictly  fol- 
lowed ;  for  the  formalities  of  transfer 
are  the  terms  or  conditions  upon  wliich 
the  members  of  the  company  give  their 
consent  to  the  admission  of  a  new  part- 
ner. Ness  V.  Angas,  3  Ex.  Ch.  805, 
814;  Dodgson  v.  Bell,  5  id.  967,  3  Eng. 
L.  &  Eq.  542  ;  Kingman  v.  Spurr,  7 
Pick.  235 ;  Cochran  v.  Perry,  8  Watts 
&  S.  262.  In  Ex  parte  Wood,  Keene's 
Executors'  Case,  De  Gex,  Mac.  &  G. 
272,  17  Eng.  L.  &  Eq.  236,  a  joint- 
stock  companj'  may,  by  long  acquies- 
cence in  the  neglect  of  its  directors  to 


CIT.  VII.]        RIGHTS   OF   PARTNERS   BETWEEN   THEMSELVES.  177 

of  a  private'  partnership  might  contain  similar  provisions, 
with  a  system  of  transfer  to  carry  them  into  effect.  But  it 
remains  true,  that  the  consent  and  acquiescence  of  all  the 
members  of  a  partnership  are  necessary  to  its  becoming  a 
partnership,  however  or  whenever  this  consent  and  acquies- 
cence take  place,  or  may  be  proved,  implied,  or  inferred. 


SECTION    II. 


OF    THE    RIGHT    OF    ASSIGNING   OR   TRANSFERRING   PROPERTY. 

The  right  of  every  partner  to  sell,  assign,  or  transfer,  any 
part  or  the  whole  of  the  partnership  property,  in  the 
way  of  the  *  regular  business  of  the  partnership,  is  abso-  *  163 
lute  and  unquestioned.  (^)  There  is  an  exception  to 
this  rule  in  reference  to  the  real  estate  of  a  partnership,  (^) 
but  none  as  to  the  personal  property.  Suppose  a  partnership 
dealt  in  buying  and  selling  cotton,  and  all  their  stock  consisted 
in  five  hundred  bales  stored  in  New  York ;  there  is  no  more 
doubt  that  either  one  of  the  partners  might  sell,  and  give  good 
title  to  the  whole,  than  that  he  could  do  so  with  a  single 
bale.  (^)     This,  however,  must  be  done  in  the  regular  course 

carry  out  one  or  more  of  its  regula-  out  such  certificate  will,  nevertheless, 

tions  respecting  the  transfer  of  shares,  transfer  the  property.   Alvord  v.  Smith, 

and  the  admission  of  new  shareholders,  5  Pick.  2'o2. 

be  precluded  from   taking  advantage  {ff)  For  an  interesting  case  on  the 

of  such  informality  in  the  transfer  of  question,  If  one   acting  as   a   partner 

shares  ;  and,  further,  that  a  shareholder,  sells,  without  the  consent  of  his  copart- 

thus  irregularly  introduced  into  a  com-  ner,  what  amoimts  to  a  ratification  of 

pany,  if  he  has  become  (/e/«rfo  a  share-  the  sale?   see  Cheeseman  v.  Sturges,  9 

holder,   is   debarred    from    raising  an  Bosw.  246. 

objection  of  form  against  tlie  company,  {/g)  See  post,  p.  *  37G. 

so  as  to  relieve  himself  from  tlie  obliga-  (f/)  The  absolute  jus  disjmnendi  of 

tions   of    a    shareholder.      Bargate    v.  each  partner  over  the  effects  of  tlie  part- 

Shortridge,  5  House  of  Lords'  Cases,  nership  is  very  early  asserted  in  Lam- 

2'J7,  31  Eng.  L.  &  Eq.  44.    And  though,  bert's  Case,  1  Godb.  244.    See  Barton  v. 

by  articles   of  copartnership,  it  is  pro-  Williams,  5  B.  &  Aid.  405,  per  Best,  J. ; 

vided  that  any  partner  may  assign  his  Lyles  v.  Styles,  2  Wash.   C.  C.  224; 

share  of  the  stock  by  a  certificate  in  Pearpoint  v.  Graham,  4  id.   234;  Law 

writing,  which,  when  lodged  with  the  v.   Ford,   2    Paige,   310 ;    Winship    v. 

clerk  of  the  company,  shall  entitle  the  Bank  of  the  United  States,  6  Pet.  561 ; 

assignee  to  all  the  privileges,  and  sub-  Lamb  v.  Durant,  12  Mass.  64 ;  Pierson 

ject   him  to   all   the   liabilities,  of  an  v.  Hooker,  3  Johns.  70,  per  Kent,  C.  J. ; 

original  partner,  an  assignment  with-  M'Cullough  v.  Somraerville,  8  Leigli, 

12 


178 


THE   LAW   OF   PARTNERSHIP. 


[CH. 


VII. 


of  the  business  of  the  firm  ;  for,  outside  of  this  he  has  no 
such  power.  (7i)  If  he  does  this  in  fraud  of  the  other 
*  lG-4  partners,  —  *  that  is,  if  he  sells  the  whole,  or  any  part, 
intending  to  run  off  with  the  proceeds,  and  does  run  off 
with  them,  —  this  has  no  effect  on  the  title  of  the  purchaser, 
unless  he  has  some  knowledge  of  the  fraud,  or  would  have  had 
some  knowledge  of  it  but  for  a  negligence  so  gross  as  would 
tend  to  imply  fraud,  (i) 


430;  Tapley  v.  Biitterfield,  1  Mete. 
518;  Wliitton  v.  Hulbert,  Freeman,  Ch. 
231 ;  Forkner  v.  Stuart,  6  Gratt.  197 ; 
Fromme  r.  Jones,  13  Iowa,  474.  In  An- 
derson V.  Tompkins,  1  Brock.  456,  Chief 
Justice  IMarshall  affirms  this  power  in 
the  most  positive  terms.  Boswell  v. 
Green,  1  Dutch.  890.  [See  also  Mc- 
Gregor V.  Ellis,  2  Dis.  (Supr.  Ct.  Gin.) 
286. J  As  examples  of  assignments  by 
one  partner,  see  Young  v.  Keighly,  15 
Ves.  557  ;  Harrison  v.  Sterry,  5  Cranch, 
289;  Anderson  v.  Tompkins,  1  Brock. 
456 ;  Dana  v.  Lull,  17  Vt.  390 ;  post,  p. 
*  169,  and  notes,  where  the  cases  are 
collected.  A  partner's  jus  disponendi 
extends  to  choses  in  action  as  well  as 
those  in  possession.  See  Swan  v. 
Steele,  7  East,  210 ;  Harrison  v.  Sterry, 
5  Cranch  S.  C.  289,  300;  Quiner  v. 
Marblehead  Social  Ins.  Co.,  10  Mass. 
482;  Mills  v.  Barber,  4  Day,  428 ;  Hal- 
stead  V.  Shepard,  23  Ala.  558,  573. 
One  partner  may  bind  his  lirm  by 
assenting  to  the  transfer  of  a  debt  on 
account,  due  from  the  firm,  from  one 
banker  to  another.  Beale  v.  Caddick, 
2  H.  &  N.  826.  This  right  is  in  no 
way  affected  by  a  secret  act  of  bank- 
ruptcy previously  committed  by  an- 
other partner.  Fox  v.  Hanbury,  Cowp. 
445.  Mor  by  the  fact  that  the  proceeds 
arising  from  a  transfer  of  partnership 
effects  have  not  come  to  the  use  nor 
to  the  advantage  of  the  firm.  Arnold 
V.  Brown,  24  Pick.  89.  Nor,  in  point 
of  principle,  is  there  any  difference 
between  so-called  general  partnerships 
and  those  for  a  special  adventure,  as 
to  the  power  possessed  by  each  part- 
ner of  disposing  of  the  joint  jjroperty. 
Livingston  v.  Roosevelt,  4  Johns.  251, 
265,  277.  See  the  language  of  Best, 
J.,  in  Barton  v.  AVilliams,  5  B.  &  Aid. 


405.  But  this  power  of  one  partner  to 
dispose  of  the  partnership  effects  does 
not  extend  to  the  real  estate  of  the 
firm.  Anderson  v.  Tompkins,  1  Brock. 
456  ;  Tapley  v.  Butterfield,  1  Mete.  518, 
519;  Coles  v.  Coles,  15  Johns.  159; 
Piatt  V.  Williams,  3  McLean,  27.  And 
there  must  be  a  special  authority,  dele- 
gated to  one  partner,  to  give  validity 
even  to  an  executory  contract  for  the 
sale  of  land  employed  in  the  partner- 
ship business.  Lavvi-ence  v.  Taylor,  5 
Hill,  107. 

As  with  sales  so  with  purchases :  a 
purchase  by  one  partner,  in  the  course 
and  within  the  scope  of  the  regular 
business  of  the  firm,  binds  the  part- 
nership. The  principle  is  laid  down  in 
a  case  as  early  as  1696,  Hyat  v.  Hare, 
Comb.  383.  See  Bond  v.  Gibson,  1 
Camp.  185;  Dyke  v.  Brewer,  2  C.  & 
K.  828 ;  per  Brainerd,  J.,  in  Mills  v. 
Barber,  4  Day,  430 ;  Dougal  v.  Cowles, 
5  id.  515 ;  per  Spencer,  J.,  in  Walden 
V.  Sherburne,  15  Johns.  422;  Braches 
V.  Anderson,  14  Mo.  441 ;  Dubois's 
Appeal,  38  Penn.  231. 

(A)  2  Chan.  Cases,  temp.  Car.  2,  32, 
38.  Anon.,  16  Vin.  Abr.  242.  See 
Livingston  v.  Roosevelt,  4  Johns.  2G6, 
267,  278 ;  Walden  v.  Sherburne,  15  id. 
422.  See  the  remarks  of  Marshall,  C. 
J.,  in  Anderson  v.  Tompkins,  1  Brock. 
460;  Rogers  v.  Batchelor,  12  Pet.  221. 
See  farther,  as  to  this  point,  section 
3d,  subsection  2d,  of  this  chapter,  on 
the  general  extent  of  the  power  of  a 
partner ;  and  see  Wells  v.  ISIarch,  30 
N.  Y.  344,  and  Coope  v.  Bowles,  42 
Barb.  87,  and  Palmer  v.  Myers,  43 
Barb.  509. 

[i)  So  it  was  said  by  Marshall,  C. 
J.,  in  Anderson  v.  Tompkins,  1  Brock. 
460.    An  assignment  by  one  partner 


CH.  VII.]        RIGHTS   OP   PARTNERS   BETWEEN   THEMSELVES.  179 


If,  however,  a  partner  undertakes  not  to  sell  the  goods  or 
property  of  the  partnership,  but  to  assign  them,  by  way  of 
pledge  or  mortgage  to  secnre  the  debts  of  the  firm,  or  in  any 
iinusiial  way,  he  has  not  necessarily  any  power  to  do  this. 
Neither  do  we  consider  it  certain  that  he  has  no  power  to  do 
it.  On  the  one  hand,  such  a  transaction  seldom  or  never 
belongs  to  the  regular  business  of  a  firm,  {j )     If  it  does,  of 


of  partnersliip  assets  to  another,  to  be 
applied  to  tlie  individual  purposes  of 
the  latter,  is  a  breach  of  trust  in  both 
assignor  and  assignee,  and  void  as  to 
the  firm.  Wood  v.  Shepherd,  2  Patt. 
&  Heath,  442;  Rodriguez  v.  Ileffer- 
nan,  5  Johns.  Ch.  417;  Halstead  v. 
Shepard,  23  Ala.  558 ;  Clayton  v. 
Hardy,  27  Mo.  536 ;  Croughton  v.  For- 
rest, 17  Mo.  131.  In  this  last  case, 
where  one  i)artner  fraudulently  dis- 
posed of  all  the  partnership  stock  and 
effects,  the  vendees,  who  had  received 
the  property  with  knowledge  of  the 
fraud  or  without  consideration,  were 
held  to  be  trustees  thereof  for  the  bene- 
fit of  the  firm.  See  Kirkpatrick  v. 
TurnbuU,  Addison,  259 ;  Rogers  v. 
Batclielor,  12  Pet.  221.  A  purchase  by 
one  partner  is  governed  by  the  same 
principle  as  a  sale,  and  binds  the  co- 
partnership, if  made  boiidjide  and  with- 
out gross  negligence  on  the  part  of  the 
vendor.  Bond  t\  Gibson,  1  Camp.  185; 
Dixon  V.  Alexander,  7  Ired.  4.  See 
Walden  v.  Sherburne,  15  Johns.  422, 
423;  also,  ante,  ch.  6,  §  3,  as  to  the 
effect  of  stipulations  between  partners 
which  are  known  to  those  who  deal 
with  them.  And  see  Salomons  v.  Nis- 
sen,  2  T.  R.  674;  Tread  well  v.  Wil- 
liams, 9  Bosworth,  649;  Morrison  v. 
Atwell,  id.  503. 

{j  )  In  Metcalf  v.  Royal  Exch.  Ass. 
Co.,  Barnard.  343,  it  seems  to  be  im- 
plied, that  a  pledge  of  partnership 
effects,  in  the  exercise  of  a  power 
which  belongs  to  the  general  course 
of  business  of  a  trading  partnership, 
is  valid.  See  the  remarks  of  Shaw,  C. 
J.,  in  Tapley  v.  Buttcrfield,  1  Mete. 
515,  where  a  mortgage  by  one  partner 
of  the  whole  stock  in  trade  of  a  part- 
nership, to  secure  a  creditor,  was  held 


valid.  Anderson  17.  Tompkins,  1  Brock. 
456 ;  Deckard  v.  Case,  5  Watts,  22. 
See  also  Milton  v.  Mosher,  7  Mete.  244  ; 
Brownrigg  v.  Rae,  5  Exch.  489  ;  Sweet- 
zer  V.  Mead,  5  Mich.  107.  In  Ex  parte 
Lloyd,  1  Mont.  &  A.  494,  it  seems  to 
have  been  considered  that  the  peculiar 
circumstances  of  that  case  authorized 
one  partner  to  bind  his  firm  by  an 
equitable  mortgage.  There,  W.,  being 
the  sole  owner  of  certain  freehold  prem- 
ises, entered  into  partnership  with  O., 
and  W.  &  0.  thenceforth  occupied  the 
premises  as  cotton  spinners,  and 
erected  a  steam-engine,  &c.,  for  the 
purposes  of  their  joint  trade.  The 
firm  being  indebted  to  their  bankers, 
O.,  in  June,  1822,  deposited  with  them 
the  leases  of  certain  leasehold  premises, 
with  a  memorandum  setting  out  a  list 
of  the  title-deeds  deposited,  and  con- 
cluding thus :  "  These  papers  are 
placed  in  the  hands  of  Messrs.  Jones, 
Lloyd,  &  Co.,  as  security  for  what  they 
may  think  fit  to  advance  to  O.  &  W." 
In  August,  1822,  W.  also  deposited 
with  them  a  lease  of  a  freehold  piece 
of  land,  on  which  was  situated  a  mill 
and  other  buildings,  with  the  follow- 
ing memorandum  :  "  These  deeds  of, 
&c.,  are  placed  in  the  hands  of  Messrs. 
Lloyd  &  Co.,  as  security  for  what  they 
may  think  proper  to  advance  to  0.  & 
W.,  by  W.  The  buildings  alone  are 
insured  for  upwards  of  2,000/. ;  ma- 
chinery, &c.,  2,000/.  more."  O.  &  W. 
having  become  bankrupt,  and  the 
bankers  petitioning  to  be  declared 
equitable  mortgagees  of  the  premises, 
the  court  thought  that,  under  the  cir- 
cumstances, there  was  no  dillicully  in 
finding  that  the  one  partner  had  au- 
thority to  pledge  the  property,  in  order 
to   obtain   an   advance   of  money   for 


ISO  THE   LAW   OF   PARTNERSHIP.  [CH.  VII. 

*  165  course  lie  has  this  power.  If  it  *  does  not,  it  may  still 
be  so  far  connected  with,  or  so  naturally  arise  out  of  or 
promote,  their  regular  business,  that  if  the  transaction  be  an 
honest  one,  without  bad  faith  on  the  part  of  any  party,  we 
should  say  it  was  a  valid  transaction,  which  the  law  would 
enforce.  Perhaps  a  consideration  of  the  authorities  and  of  the 
reason  of  the  cfffee  would  lead  to  this  difference  between  the 
selling  and  the  assigning  in  pledge  of  partnership  property  by 
one  partner.  If  the  sale  take  place  in  the  course  of  business,  it 
would  bind  the  other  partners,  as  we  have  seen,  though  fraudu- 
lent as  to  them  ;  but  an  assignment  in  pledge  or  mortgage,  not 
being  in  the  way  of  business,  would  bind  the  other  partners,  if 
it  were  done  in  good  faith  for  the  advantage  of  the  firm,  and 
was  reasonable  in  itself,  but  not  otherwise.  (A;) 

Whether  one  partner  may  assign  all  the  property  in  trust  to 
pay  creditors,  the  firm  being  insolvent,  has  been  much  doubted. 
That  he  may,  in  good  faith,  assign  a  part  of  the  property  to 
pay  or  secure  an  existing  debt,  or  a  debt  to  be  contracted, 
is    not   doubted ;  (?)    and  we    think  the  weight   of  authority 

partnersliip    purposes ;    and    that   W.  It  appears,  from   tlie  above  cases, 

might  fairly  be  taken  as  mortgaging,  that   there   is   no   distinction  between 

for  liimsclf,  his  own  freehoUl  interest  general  partnerships   and   those  for  a 

in  the  land  and  buiklings,  and  as  agent  particular  adventure,  as  to  tiie  power 

for  the  firm,  mortgaging  the  leaseliold  in  each  partner  to   pledge,  mortgage, 

interest  and   the  property  of  the  firm  &c.,  the  partnership  effects. 

in  the  machinery.  (/)  See   McClelland  v.  Rcmsen,   14 

(k)  In    the    three   following   cases.  Abb.    Prac.    332 ;    Young   v.    Keighly, 

where  partnership  property  was  pledged  15  Ves.  557  ;  Mills  v.  Barber,  4  Day, 

without  any  fraud  or  collusion,  or  any  428  ;    Fox    v.    Hanbury,    Cowp.    445  ; 

knowledge  on  the  part  of  the  pledgee  of  Harrison  v.  Sterry,  Cranch  S.  C.  289  ; 

the  interest  of  the  firm  in  the  pledge,  Dana  v.  Lull,  17  Vt.  390.     In  Deming 

the  contract  was  held  to  bind  the  co-  v.  Colt,  8   Sandf.  290,  Oakley,    C.   J., 

partnership.     Raba    v.    Ryland,    Gow,  speaking  of  the  law  of  New  York,  says 

132 ;  Tupper  v.  Haythorne,  id.  135,  n.  ;  that  it  is  settled  in  that  State,  "  that 

Eeid  V.  Hollinshead,    4  B.  &    C.   867,  one  partner  may,  from   time  to  time, 

8.  c.   7  D.  &  R.   444.      On   the  other  without  the   assent   of  his   copartner, 

hand,  in  Ex  parte  Copeland,  2  Mont.  &  assign  and  deliver  specific  portions  of 

A.  177,  s.  c.  3  I)ea.  &  Ch.  199,  two  of  partnership  property   to  a  creditor  of 

the  judges  strongly  intimate  their  opin-  the  firm,  in  payment  of  a  debt;  that, 

ion  that,  if  at  the  time  of  a  pledge  by  inasmuch  as  it  is  in  the  power  of  one 

one  partner  the  pledgee  is  conusant  of  member  of  a  firm  to  pay  off  a  debt, 

the  joint  interest  of  the  other  partners,  he  may   pay   it  in   a   specific   chattel 

such  pledge  will  not  be  valid  as  against  actually    delivered    to     the    creditor, 

the  other  partners.  See  Ex  parte  GeWar,  as    well    as    in     money."       Anderson 

1   Rose,   297 ;    Snaith   v.    Burridge,    4  v.   Tompkins,   1   Brock.   461 ;    Hodges 

Taunt.  684.  v.  Harris,  6  Pick.  360 ;  Tapley  v.  But- 


CH.  VII.]        RIGHTS    OP   PARTNERS   BETWEEN   THEMSELVES.  181 


sanctions  his  *  assigning  the  whole  property  in  trust  for    *  166 
all  the  ci'editors,  (jni)  especially  if  this  be  done  without 
preference  of  any  kind ;  (ji)  although  this  has  been  questioned 
on  the  ground  that  such  a  transfer  of  itself  operates  a 
dissolution  ;  (o)  but  so,  in  fact,  would  *  the  previous  and    *  167 


terfield,  1  Mete.  518 ;  Havens  v.  Hussey, 
5  Paige,  31,  32;  Evcret  v.  Strong, 
5  Hill,  163,  s.  c.  7  id.  585 ;  Kirby  v. 
Ingersoll,  1  Hare  (jMicli.),  172,  s.  c.  1 
Doug.  (Mich.)  477  ;  Cullum  v.  Blood- 
good,  15  Ala.  34 ;  Boswell  v.  Green,  1 
Dutch.  .390.  See  McNutt  v.  Stray- 
horn,  39  Penn.  209. 

(m)  It  has  been  objected  to  the 
power  of  one  partner  to  make  a  gen- 
eral assignment  to  trustees,  for  the 
benefit  of  creditors,  of  all  the  partner- 
ship effects,  that  such  an  act  is  beyond 
his  implied  power.  See  Hitchcock  v. 
St.  John,  1  HofE.  Ch.  511;  Deming  v. 
Colt,  3  Sandf.  284;  Hayes  v.  Heyer, 
id.  293 ;  Havens  v.  Hussey,  5  Paige, 
30;  Kirby  v.  Ingersoll,  1  Doug.  (Mich.) 
488  ;  Dana  v.  Lull,  17  Vt.  394  ;  Fisher 
V.  Murray,  1  E.  D.  Smith,  341.  See 
Mabbett  v.  White,  2  Kern.  442  ;  Wet- 
ter V.  Schlieper,  4  E.  D.  Smith,  707. 
The  principal  objections  urged  in  some 
of  the  cases  above  cited  seem  to  be 
sufficiently  met  by  Chief  Justice 
Marshall,  in  Anderson  v.  Tompkins, 
1  Brock.  401.  [One  partner  cannot  as- 
sign all  property  for  benefit  of  creditors, 
without  the  consent  of  the  other,  unless 
the  other  is  so  circumstanced  that  he 
cannot  be  consulted.  Stein  r.  La  Dow, 
13  Minn.  412;  Holland  v.  Drake,  29 
Ohio  St.  441.] 

(;?)  Kirby  v.  Ingersoll,  1  Doug. 
(Mich.)  499;  M'CuUough  v.  Sonmier- 
ville,  8  Leigh,  415,  430,  430.  See 
Einer  v.  Deynoodt,  32  Mo.  240,  and  39 
Mo.  69 ;  Hook  v.  Stone,  34  Mo.  329 ; 
Stein  V.  La  Dow,  13  Minn.  412. 

(o)  Per  Washington,  J.,  in  Pear- 
point  r.  Graham,  4  Wash.  C.  C.  232; 
per  Walworth,  Ch.,  in  Havens  v.  Hus- 
sey, 5  Paige,  30  ;  Kirby  i'.  Ingersoll,  1 
Doug.  (Mich.)  477;  Hughes  v.  Ellison, 
5  Mo.  463;  Hitchcock  v.  St.  John, 
Hoff.  Cli.  511;  Dana  v.  Lull,  17  Vt. 
390;  per  Denio,  J.,  in  Mabbett  v. 
White,   2   Kern.  459,  462.     See   Sim- 


mons V.  Curtis,  41  Me.  373.  But  to 
this  objection,  also,  it  is  not  perceived 
why  Chief  Justice  Marshall  has  not 
furnished  a  satisfactory  reply,  in  An- 
derson V.  Tompkins,  supra,  pp.  461,  462. 
As  to  what  is  actually  established 
by  the  cases,  it  seems  to  be  pretty 
generally  admitted  and  laid  down  that 
one  partner  may  make  a  valid  general 
assignment  of  all  the  partnership  prop- 
erty to  trustees  for  creditors,  if  such 
an  act  is  justified  by  the  situation  of 
the  firm  at  the  time,  and  if  the  other 
partners  are  absent  from  the  country, 
or  have  made  the  assignor  sole  man- 
aging partner,  or  if  in  any  other  way, 
expressly  or  by  implication,  they  may 
be  supposed  to  have  conferred  upon 
the  assigning  partner  sufficiently  ex- 
tensive authority.  Anderson  v.  Tomp- 
kins, 1  Brock.  456;  Robinson  v.  Crowd- 
er,  4  McCord,  519;  Deckard  v.  Case, 
5  Watts,  22;  Harrison  v.  Sterry,  5 
Cranch,  300;  i)er  Felch,  J.,  in  Kirby 
V.  Ingersoll,  1  Doug.  (Mich.)  489,  490; 
per  Oakley,  C.  J.,  in  Deming  v.  Colt, 
3  Sandf.  291 ;  M'CuUough  v.  Sommer- 
ville,  8  Leigh,  415,  433,  430  ;  Fisher  v. 
Murray,  1  E.  D.  Smith,  341;  Robin- 
son V.  Mcintosh,  3  id.  221 ;  Kemp  v. 
Camley,  3  Duer,  1.  In  Dickinson  v. 
Legare,  1  Desaus.  537,  the  earliest 
case  upon  the  subject,  a  contrary  deci- 
sion was  made.  But,  in  that  instance, 
"  the  assignment,  being  made  by  a 
citizen  of  one  of  the  United  States 
during  the  existence  of  a  war,  to  an 
alien  enemy  and  in  an  enemy's  coun- 
try, was  probably  void  by  the  laws  of 
war,  so  far  at  least  as  to  prevent  its 
being  carried  into  effect  by  any  of  the 
courts  of  this  country."  Per  Chan- 
cellor Walworth,  in  Egberts  v.  Wood, 
3  Paige,  524.  And  in  effect  the  case  is 
overruled  by  the  subsequent  case  of 
Robinson  v.  Crowder,  sn]>ra.  See 
Kimball  v.  Hamilton  Fire  Ins.  Co.,  8 
Bosworth,  495. 


182 


THE   LAW   OF   PARTNERSHIP. 


[CH.  vir. 


actual  insolvency,  in  effect,  thoiigli  not  technically.  The 
almost  universal  establisliment  of  insolvency  systems  in  our 
States  lessens  the  importance  of  this  question. 

If  a  partner  die,  the  surviving  partners  may  undoubtedly 
apply  the  effects  of  the  partnership  to  the  payment  of  its 
debts,  without  consulting  at  all  the  representatives  of  the 
deceased.  (^) 

The  power  of  each  partner  over  his  own  share  or  interest  in 
the  partnership  property  stands  upon  an  entirely  different  foot- 
ing from  his  power  over  the  partnership  property  generally.  It 
is  certain  that  no  partner  has  any  exclusive  rigiit  to  any  one 
or  more  things  of  the  partnership.  (5-)      If,  in  the  case  sup- 


(/))  Egberts  v.  Wood,  3  Paige,  517  ; 
Wilson  V.  Soper,  13  B.  Mon.  411 ; 
though,  Avhere  there  is  more  than  one 
survivor,  one  of  them  cannot  assign 
the  whole  interest  in  the  partnership 
effects  to  trustees,  for  the  benefit  of 
preferred  creditors,  without  the  con- 
currence of  the  other.  Egberts  v. 
Wood,  supra.  The  remaining  partners 
have  the  same  rights  as  against  an 
assignee  of  all  one  partner's  interest. 
Clark  V.  Wilson,  19  Penn.  St.  414. 
As  to  whether,  when  one  of  the  part- 
ners is  dormant,  a  deed  of  assignment 
of  all  the  i^artnership  propert}',  by  the 
other  jjartner  or  partners,  for  the  bene- 
fit of  creditors,  is  valid  without  being 
executed  by  him,  see  Egberts  v.  Wood, 
supra;  Drake  v.  Eogers,  6  Mo.  317. 
Whether  the  general  partners  in  a 
limited  partnership  may  make  a  gen- 
eral assignment  of  the  joint  funds, 
without  the  consent  of  the  special 
partner,  was  doubted  in  Mills  v.  Ar- 
gall,  6  Paige,  577. 

(q)  Hence  no  general  principle  of 
the  law  of  partnership  is  better  set- 
tled than  that  nothing  is  to  be  con- 
sidered the  share  of  any  one  partner 
but  his  proportion  of  the  residue  on 
the  balancing  of  the  partnership  ac- 
counts. Accordingly,  where  a  member 
of  a  copartnership  sold  and  assigned 
to  another  "  all  his  interest  in  and  to 
the  property,  goods,  wares,  and  mer- 
chandise, and  debts  belonging  to  the 
firm,"  heldj  that  a  debt  owing  by  him- 


self to  the  firm  did  not  pass  by  the 
assignment ;  the  interest  of  the  as- 
signor being  only  what  remained  over 
and  above  the  amount  of  his  indebted- 
ness to  the  firm.  Van  Scoter  v.  Lef- 
ferts,  11  Barb.  140.  See  further  Fox 
V.  Hanbury,  Cowp.  445 ;  Smith  i".  De 
Silva,  id.  469;  West  v.  Skip,  1  Ves. 
239;  Ex  parte  Ruffin,  6  id.  119;  Ex 
;M)-<e  Williams,  Hid.  5;  Taylor  r. Fields, 

4  id.  396,  559,  15  id.  note  ;  Holdernen 
V.  Shackles,  8  B.  &  C.  612 ;  Eddie  v. 
Davidson,  3  Doug.  650  ;  Pierce  v.  Jack- 
son, 6  Mass.  243;  Fisk  u.  Herrick,  id. 
271;  Doner  v.  StauflTer,  1  Barr,  198; 
Church  V.  Knox,  2  Conn.  514,  518; 
Conwell  V.  Sandidge,  8  Dana,  278 ; 
Hodges  V.  Holeman,  1  id.  53  ;  Pierce 
V.  Tiernan,  16  Gill  &  J.  253 ;  Commer- 
cial Bank  v.  Wilkins,  9  Greenl.  28; 
Murray  v.  Murray,  5  Johns.  Ch.  70 ; 
NicoU  V.  Mumford,  4  id.  522;  Rod- 
riguez V.  Heffernan,  5  id.  428  ;  Greene 
V.  Greene,  1  Oiiio,  251 ;  Sumner  v. 
Hampson,  8  Oliio,  330  ;  Dyer  v.  Clark, 

5  Mete.  575 ;  Lingen  v.  Simpson,  1 
Simons  &  S.  603.  We  shall  be  obliged 
to  consider  this  question  of  the  interest 
of  one  partner  in  partnership  property 
more  in  detail,  when  we  treat  of  the 
remedies  of  third  persons  against  part- 
ners, and  of  partners  inter  se.  See 
post,  ch.  8  and  10.  In  Lovejoy  v. 
Bowers,  11  N.  H.  404,  it  was  held  that 
one  partner  cannot  sell  or  mortgage 
an  undivided  interest  in  a  specifie 
part;  the  property  belonging   to   the 


CII.  VII.]        RIGHTS    OF    PARTNERS   BETWEEN   THEMSELVES.  183 

posed  *  before,  the  partnership  owning  the  cotton  agreed  *  1G8 
not  to  sell  it,  no  one  partner  could  separate  ten  bales, 
and  say  to  a  customer.  The  firm  will  sell  nothing ;  but  I  will  take 
these  as  my  own,  and  will  sell  them  to  you.  Such  a  sale  would 
pass  no  title  whatever,  (r)  The  property  sold  would  be  avail- 
able for  the  debts  of  the  partnership  ;  and  so,  perhaps,  would 
any  property  into  which  it  was  converted,  so  long  as  that  could 
be  distinctly  traced  and  identified,  (s) 

Any  partnership  would  probably  consent  that  a  partner 
might  take  a  part  of  their  goods  on  his  own  account,  and  would 
charge  the  same  to  him.  But  without  such  consent,  express 
or  implied,  it  is  quite  clear  that  he  can  appropriate  nothing  to 
himself.  Every  partner  owns  the  whole  partnership  property, 
subject  to  the  equal  ownership  of  every  other  partner  ;  and  no 
one  partner  can  make  his  own  ownership  of  any  part  absolute, 
and  relieve  it  from  the  encumbrance  of  the  ownership  of  the 
others  without  their  consent.  Because  each  partner  owns  the 
property  of  the  firm,  it  has  been  held  that  one  of  two  partners 
cannot  be  guilty  of  burglary  or  larceny  as  to  a  house  or  prop- 
erty owned  by  the  firm,  (s.s) 

But  although  no  partner  owns  absolutely  any  part  of  the 
property,  he  has  his  own  interest  in  the  whole  ;  which  interest 

partnership.    The  property  constitutes  As   in    Bucknal   v.   Roiston,   Pre.   Ch. 

a    fund    or   capital    to   carr}'   on   the  285,  where  a  lien  was  held  to  be  on 

business  of  the  partnership,  and  to  pay  those  goods  which  were  the  produce 

partnership  creditors;  and  the  separate  of  tlie  original  goods.     So  in  Brown  y. 

interest  of  each  partner  is  an  interest  Heathcote,  Michael.  T.  1749,  held,  that 

in  the  surplus.     Morrison  v.  Blodgett,  it  continued  on  what  was  the  produce 

8  N.  H.  231.  b}^  way  of  barter  and  sale  ;  and  that 

(r)  See  Rogers  v.  Batchelor,  12  Pet.  holds  much  more  strongly  in  the  case 

221.  of  a  partnership  trade   which   cannot 

(s)  Croft  V.  Pyke,  3  P.  Wms.  180.  otherwise   be  continued."      The  cases 

In  West   V.    Skip,    1   Ves.    239,   Lord  of  Skip  v.   Harwood,  2   Swanst.    586, 

Chancellor    Hardwicke    asserted    the  and  of  Ridgley   v.   Carey,   4   Har.   & 

general  principle,  that  the  "  partner's  M'H.    167,    come    yet    nearer   to   tlie 

hen"  (which  is  nothing  but  the  right  proposition   of  the   text.      Of   course, 

of  the  partnership  to  its  own  property)  however,  this  doctrine  is  not  j)ushed  to 

is    not    appropriated   to    the    original  the  extent  of  saying,  that  what  at  any 

stock  alone,  but  attaches  to  whatever  time  during  the  partnersliip  has  been 

is   substituted   in  its  place.      He  said  part  of  the  partnersliip  effects  shall  in 

that  a  partnersliip  lien   "  is   not   con-  all  future  time  remain  part  of  the  part- 

sidered  as   appropriated  to  the  stock  nership  effects,  notwitiistanding  a  bond 

brought  in,  but  to  every  thing  coming  Jide  transmutation.      Ex  parle  Rufiin, 

in  lieu  during  the  continuance  or  after  6  Ves.  119. 
the  determination  of  the  partnership.  (ss)  Alfele  v.  Wright,  17  Ohio,  238. 


184  THE   LAW   OF   PARTNERSHIP.  [CH.  VII. 

we  have  defined  as  an  ownership  of  the  whole,  suhject  to  the 
ownership  of  the  other  partners.  And  the  question  has  re- 
peatedly arisen,  whether  he  can  sell  and  transfer  this  interest. 
The  answer,  in  general,  is  in  the  affirmative,  (i)  But  a  court 
of  equity  will  not  foreclose  a  mortgage  made  by  a  partner  of 
his  interest  in  the  partnership  property  to  secure  his  individual 
debt,  if  the  property  of  the  partnership  will  not  more  than 
pay  the  debts  of  the  partnership,  (tt) 

It  may  be  added,  that  while  partners  may  own  the  part- 
nership property  in  whatever  proportions  they  choose,  they 
are   presumed,  in   the   absence   of  evidence,  to   have    equal 

interests,  (ttf) 
*  1G9        *  This  power  of  sale  must,  however,  be  subject  to 

many  qualifications.  It  is  plain,  from  what  was  said  in 
the  preceding  section,  that  he  cannot  make  his  transferee  a 
partner  in  his  place,  without  the  consent  of  the  others.  But,  if 
he  can  transfer  his  interest  at  all,  he  must  be  able  to  give  to  the 
transferee  some  of  his  powers  as  partner,  in  order  to  make  the 
transfer  available.  Tims,  he  must  give  to  him  the  power  of 
requiring  an  account  and  settlement  of  the  concern,  or,  at  least, 
some  just  and  adequate  ascertainment  and  setting  off  in  sev- 
eralty of  his  share,  (u) 

For  this  purpose,  the  transferee  must  go  into  equity  ;  for  it  is 
not  easy  to  see  how  he  could,  by  means  of  trover  or  replevin  or 
case  or  assumpsit,  find  a  full  and  sufficient  remedy.  But,  if  he 
goes  into  equity,  he  must  be  prepared  to  do  equity,  and  to  sub- 
mit to  the  application  of  the  principles  of  equity  to  his  case. 
If,  therefore,  the  articles  expressly  forbid  such  transfer ;  or  if 
they  provide  for  a  continuance  for  a  time  certain,  or  by  any 
other  provisions  indirectly  negative  the  right  of  transfer,  or 
affix  to  it,  as  in  the  case  of  joint-stock  companies,  certain  con- 
ditions and  requirements,  which  have  been  disregarded ;  or  if 

{t)  See  Eaymond's    Case,    2   Rose,  Bovvden,    8   Rich.    9 ;    Armstrong    v. 

255 ;  Kingman  v.  Spurr,  7  Pick.  255 ;  Fahnestock,  19  Md.  59 ;  Norris  v.  Ver- 

Gilmore  i;.  Black,  2  Fairf.  488;   Mod-  non,  id.  13. 

dewell   V.   Keever,  8  Watts  &  S.  63 ;  (tt)  Jones  u.  Parsons,  25  Cal.  100. 

Ketciiam     v.    Clark,     6    Joluis.    144;  (ttt)  Moore  y.  Bare,  11  Iowa,  198. 

Marquand  v.  N.  Y.  Manuf.  Co.,  17  id.  (u)  See  preceding  notes,  and  NicoU 

625 ;  IMathewson  v.  Clark,  6  How.  122 ;  v.   Mumford,  4  Johns.   Ch.  522 ;   Rod- 

Horton's    Appeal,    13    Penn.    St.    67;  riguez   v.    Heffernan,    5    id.   417;    Ex 

Bray  v.  Fromunt,  C  Mod.  5;  Wilson  i'.  parte  Barrow,  2  Rose,  252. 


CH.  vil]      rights  op  partners  between  themselves.        185 

the  nature  of  the  business,  the  especial  purpose  of  the  partner- 
ship, the  method  of  transfer,  or  any  of  the  circumstances  at- 
tending it,  make  it  impossible  for  the  transfer  to  be  enforced, 
—  a  court  of  equity  would  probably  either  refuse  to  sanction  the 
transfer  at  all,  or  would  attach  to  their  enforcement  of  it  con- 
ditions and  provisions  which  would  prevent  it  from  working 
a  mischief.  Subject  to  these  qualifications,  we  should  say  that 
every  partner  lias,  at  common  law,  an  unquestionable  right  of 
divesting  himself,  in  good  faith,  of  his  interest  in  the  partner- 
ship, in  favor  of  a  tliird  party.  But,  taking  them  into  consid- 
eration, we  think  it  an  accurate  expression  of  the  rule  to  say 
that  no  partner  has  a  right  to  transfer  the  whole  of  his  interest 
in  the  partnership  stock  to  a  stranger,  unless  he  has  a  right  to 
dissolve  the  partnership.  Indeed,  as  we  shall  see  in  a  subse- 
quent chapter,  such  a  transfer  works  a  dissolution. 

SECTION    III. 

OF  THE  FOUNDATION  AND  GENERAI.  EXTENT  OF  THE  POWER  OF  A 

PARTNER. 

1.    Of  the  Foundation  of  this  Poiver. 

It  is  not  unfrequently  said  that  each  partner  is  the  agent  of 
all  the  rest,  and  acts  for  them  by  possessing  their  authority,  (v) 

(f)  Such  is  almost  universally  the  imagined  virtually  present  at  and 
doctrine  of  the  authorities  upon  the  sanctioning  the  proceedings  they  sin- 
subject.  Watson,  the  earliest  writer  up-  gly  enter  into  in  the  course  of  trade; 
on  the  Law  of  Partnership,  in  stating  or  as  each  vested  with  a  power  en- 
the  principle  upon  which  one  part-  abling  them  to  act  at  once  as  prin- 
ner's  acts  bind  the  rest,  made  use  cipals  and  as  the  authorized  agents  of 
of  language  which  has  been  quoted  their  copartners."  Watson  on  Part, 
with  approbation  by  all  subsequent  p.  167.  So  in  Plawken  v.  Bourne,  8 
text-writers  upon  the  same  branch  M.  &  W.  703,  Parke,  B.,  says  :  "  One 
of  law:  "It  may  be  laid  down  that  partner,  by  virtue  of  that  relation,  is 
partners  are  bound  by  what  is  constituted  a  general  agent  for  another, 
done  by  one  another  in  the  course  as  to  all  matters  within  the  scope  of 
of  the  partnership  business.  Tiieir  the  partnership  dealings,  and  lias  com- 
liability  under  contracts  is  commen-  municated  to  him,  by  virtue  of  that 
surate  and  coextensive  with  their  relation,  all  authorities  necessary  for 
rights.  Although  the  general  rule  of  carr3'ing  on  the  partnership,  and  all 
law  is,  that  no  one  is  liable  upon  any  such  as  are  usually  exercised  by  jiart- 
contract  except  such  as  are  privy  to  ners  in  that  business  in  wliicli  they  are 
it,  yet  this  is  not  contravened  by  the  engaged."  Fox  v.  Clifton,  G  Bing. 
liability  of  partners,  as  they  may  be  792,  per  Tindal,    C.    J.;    Walden    v. 


186  THE   LAW    OF   PARTNERSHIP.  [CH.  VII. 

We  prefer  to  say  that  the  authority  of  each  partner  rests  on 
property  quite  as  much  as  on  agency,  and  arises  from 
*  171  the  nature  and  *  purpose  of  the  relation  of  partners,  and 
must  be  found  and  illustrated  only  in  and  by  the  law  of 
partnership.  This  distinction  is  material ;  for  some  confusion 
and  error  have  arisen  from  deriving  the  definition  and  extent 
of  the  power  too  exclusively  from  the  law  of  agency.  We  take 
the  true  theory  to  be,  that  as  the  common  law  recognizes  cor- 
porations, as  peculiar  persons,  governed  by  a  peculiar  but  very 
complete  system  of  law,  so  the  law-merchant,  which  is  now  a 
part  of  the  common  law,  recognizes  partnerships  as  quasi  cor- 
porations. They  are  something  between  individuals  and 
corporations,  and  are  not  governed  altogether  by  the  laws 
applicable  to  either,  but  by  their  own  law.  They  are  like 
individuals,  in  that  the  names  of  the  persons  composing  them 
are  to  be  used  in  court,  whether  they  be  plaintiffs  or  defendants. 
But  even  the  usual  addition,  "  copartners  under  the  firm 
and  style  of,"  &c.,  indicates  the  point  wherein  a  partnership 
resembles  a  corporation,  in  being  an  aggregated  body  with  an 
appellation  which  is  proper  to  it,  which  is  indeed  its  mercantile 
name,  under  which  it  does  all  mercantile  business  and  signs  all 
mercantile  papers.  We  do  not  say  that  a  partnership  is  a  per- 
son in  the  sense  in  which  the  common  law  says  that  a  corpora- 
tion is  one.  But  we  say  it  is,  or  it  has,  a  peculiar  kind  of 
personality,  which  must  be  understood  and  recognized  if  we 

Slierburne,  15  Johns.  422 ;  Van  Keuren  of  power  to  the  acting  members  of  the 

V.  Parmelee,  2   Comst.   525  ;  Western  company  to  transact  its  business  in  the 

Stage    Company  v.  Walker,  2  CLarke  usual  way.     If  that  business  be  to  buy 

(la.),  512.     In  Winship  v.  Bank  of  tlie  and  sell,  then  the  individual  buys  and 

United    States,  5  Pet.  561,  Chief  Jus-  sells  for  the  compan}',  and  every  per- 

tice  Marshall  thus  declares  his  opinion  son  with  whom  he  trades  in  tlie  way 

of  the  basis  upon  which  the  power  of  of  its  business  has  a  right  to  consider 

one   partner  rests :    "  A  partner,    cer-  him   as   the   company,    whoever   may 

tainly  the  acting  partner,  has  power  to  compose   it.      It  is   usual  to  buy  and 

transact    the   whole   business    of    the  sell   on   credit ;   and,  if  it   be   so,   the 

firm,    whatever    that    may    be,    and  partner   who   purchases   on  credit,   in 

consequently  to  bind  his   partners  in  the  name  of  the  firm,  must  bind  the 

such  transactions  as  entirely  as  him-  firm.     This  is  a  general  authority  held 

self.     This  is  a  general  power,  essen-  out  to  the  world,  to  which  the  world 

tial  to  the  well-conducting  of  business,  has  a  right  to  trust."     But  in  Greeley 

which  is  implied  in  the  existence  of  a  v.  Wyeth,  10  N.  H.  16,  Parker,  C.  J., 

partnership.     When,   then,   a  partner-  says :  "  The  authority  of  a  partner  is 

ship  is  formed  for  a  particular  purpose,  much   more  extensive  than  that  of  a 

it  is  understood  to  be  in  itself  a  grant  mere  agent." 


CH.  VII.]        RIGHTS   OP   PARTNERS   BETWEEN   THEMSELVES.  187 

would  understand  and  apply  aright  the  law  of  partnership. 
And  we  consider  the  individual  partner,  when  conducting  the 
affairs  of  the  partnership,  not  so  much  as  acting  for  himself 
because  of  his  own  interest,  and  then  for  the  rest  by  their 
authority,  but  as  acting  for  and  representing  this  commercial 
personality.  For  it  is  one  of  the  principal  rules  of  the  law 
which  creates,  defines,  and  governs  this  personality,  that  every 
one  of  those  members  who  together  constitute  it  has  full  power 
to  represent  it  and  act  for  it  in  all  mercantile  transactions" 
within  the  scofe  of  its  business.  And  this  power  in  each  mem- 
ber is  coequal  with  the  power  of  every  other  member,  excepting 
only  such  modification  as  may  be  derived  from  the  articles  of 
agreement  which  gave  existence  and  form  to  this  personality, 
or  some  subsequent  modification  of  them. 

2.    Of  the  General  Extent  of  this  Poiver. 

While  the  power  of  one  partner  is  the  same  with  the 
power  of  *  every  other,  unless  qualified  by  the  articles,  *  172 
the  power  of  every  partner  —  all  being  alike  —  may  be 
qualified  not  only  by  the  articles,  but  by  the  nature  and  limita- 
tions of  their  transactions,  or  the  general  usage  of  merchants, 
or  the  especial  usage  of  persons  engaged  in  that  business,  or 
even  of  that  very  firm.  For  out  of  all  these  sources  may  arise 
what  might  be  called  implied  stipulations  with  each  other. 

Hence,  this  power  of  each  partner  to  bind  the  firm  is  not 
confined  to  mere  selling  and  buying,  but  extends  over  all  con- 
tracts or  obligations  or  acts  fairly  within  the  business  of  the 
firm.  Numerous  and  various  are  the  questions  which  have 
arisen  as  to  the  application  of  this  principle,  as  well  as  the  cases 
whicli  answer  these  questions  ;  and  we  endeavor  to  ex- 
hibit them  in  the  note.  Qiv)    *  This  principle  is  generally    *  173 

(h-)  Anon.,  12  Mod.  446;  Smith  v.  529,   561,   5   Mason,   176;    Tapley   v. 

Baily,  11  id.  401 ; i;.  Layfield,  1  Butterfield,    1    Mete.    515;    Brown   v. 

Salk.  202,  Holt,  434  ;  De  Tastet  v.  Lawrence,  5  Conn.  397  ;  Beck  v.  Mar- 
Carroll,  1  Stark.  88 ;  Swan  r.  Steele,  7  tin,  2  McMnllan,  260;  Ilawken  v. 
East,  210  ;  Sadler  v.  Lee,  0  Beav.  324  ;  Bourne,  8  M.  &  W.  703  ;  IIIU  v.  Voor- 
Blair  v.  Bromley,  2  Phillips,  354  ;  Lacy  hies,  22  Penn.  St.  68.  And,  if  a  part- 
V.  ]\['Xoile,  4  Dow.  &  R.  7 ;  Winship  nership  engages  in  any  transaction 
V.  Bank  of  the  United  States,  5  Pet.  outside  of  its  regular  business,  the  acts 


188 


THE   LAW    OF    PARTNERSHIP. 


[CH. 


VII. 


subject  to  the  further  limitations  of  usage,  although  the 
*  174    general  usage  of  merchants  would  impose  *  very  little 


and  declarations  of  one  partner,  with 
respect  to  tliat  transaction,  bind  the 
firm,  as  much  as  thougli  tliey  were 
made  with  respect  to  some  matter  in 
tlie  course  of  its  ordinary  and  custom- 
ary business.  Sandilands  v.  Marsh,  2 
B.  &  Aid.  673.  See  Ex  parte  Gardom, 
15  Ves.  286.  So  where  the  proprietors 
of  several  mail-coaches  advertised  that 
they  would  not  be  accountable  for  any 
parcels  above  tlie  value  of  5/.,  except 
upon  certain  conditions,  and  A.,  one  of 
the  co-proprietors,  who  kept  the  coach- 
oiBce,  made  a  special  agreement  with 
the  plaintiff,  with  respect  to  one  coach, 
by  which  those  conditions  were  dis- 
pensed with,  it  was  held,  that  all  the 
owners  of  the  coaches  in  which  A.  was 
a  partner,  and  by  which  the  plaintiflTs 
goods  were  sent,  were  bound  by  this 
special  contract.  Helsby  v.  Mears,  5 
B.  &  C.  504,  8  Dow.  &  R.  289.  See 
Dwight  V.  Brewster,  1  Pick.  50. 

The  general  principle  being,  then, 
that  one  partner  may  act  for  his  co- 
partnership in  all  transactions  fairly 
within  the  business  of  the  firm,  we  will 
cite  the  authorities  which  appear  to 
determine  what  acts  one  partner  in  a 
mercantile  house  may  ordinarily  do. 
We  have  already  shown  that  one  part- 
ner may  buy  and  sell,  and  may  assign 
and  transfer,  by  way  of  either  pledge 
or  mortgage,  and  in  trust  or  otherwise, 
in  the  name  of  the  partnership.  See 
ante,  ch.  7,  §  2.  He  may  also  bind  the 
firm  by  borrowing  money,  Rothwell  v. 
Humphreys,  1  Esp.  406 ;  Thicknesse 
V.  Bromilow,  2  Cromp.  &  J.  425,  430, 
431 ;  Etheridge  v.  Binney,  9  Pick.  272 ; 
Whitaker  v.  Bi-own,  16  Wend.  505; 
Church  V.  Sparrow,  5  id.  223 ;  Onon- 
daga Co.  Bank  i-.  De  Puy,  17  id.  47; 
Winship  v.  Bank  of  the  United  States, 
5  Pet.  529,  5  Mason,  176 ;  Lloyd  v. 
Freshfield,  2  C.  &  P.  325;  Miller  v. 
Manice,  6  Hill,  119;  Steel  v.  Jennings, 
Cheves,  188 ;  Emerson  i'.  Harmon,  14 
Me.  271  ;  Bascom  v.  Young,  7  ]Mo.  4; 
Hunt  v.  Hall,  8  Ind.  215 ;  Hutchins  v. 
Hudson,  8  Humph.  426 ;  Hogan  v.  Rey- 


nolds, 8  Ala.  59  ;  Saltmarsh  v.  Bower, 

22  id.  221  ;  and  by  lending  it,  Alex- 
ander V.  Barker,  2  Cromp.  &  J.  133. 
[See  also  ante,  p.  *  103  and  note.]  He 
may  also  make  payment  for  the  firm, 
of  the  joint  debts.  Innes  y.  Stephenson, 
1  Moody  &  R.  145 ;  Tyson  i'.  Pollock, 
1  Barr,  375;  Cheap  v.  Cramond,  4  B. 
&  Aid.  603  ;  Averell  v.  Lyman,  18  Pick. 
351.  See  Campbell  v.  Mathews,  6  Wend. 
551.  He  may  compound  them.  Dore- 
mus  V.  McCormick,  7  Gill,  49,  65.  See 
Ex  parte  Slater,  6  Ves.  146.  Or  he  may 
take  a  release  of  them,  which,  though 
made  to  himself  personally,  and  even 
though  providing  that  those  bound  with 
him  shall  not  be  released  (see  Everard 
V.  Heme,  Litt.  191  ;  Cocks  v.  Nash,  9 
Bing.  341),  will  yet  be  a  complete  dis- 
charge of  the  whole  firm.  Hammon 
V.  Roll,  March,  202 ;  Nedham's  Case,  8 
Rep.  136  ;  Bower  v.  Twadlin,  1  Atk. 
294,  Co.  Litt.  232,  a ;  Collins  v.  Prosser, 
1  B.  &  C.  682  ;  Tuckerman  v.  Newhall, 
17  Mass.  581  ;  American  Bank  v.  Doo- 
little,  14  Pick.  126  ;  Wiggin  v.  Tudor, 

23  id.  444  ;  United  States  v.  Thompson, 
Gilpin,  614  ;  Barson  v.  Kincaid,  3  Penn. 
St.  57  ;  Willings  v.  Consequa,  Pet.  C.  C. 
301,  307  ;  Brown  v.  Marsh,  7  Vt.  327 ; 
Gray  v.  Brown,  22  Ala.  262.  But  a 
release  to  one  partner,  made  with  ref- 
erence to  a  joint  debt,  to  have  the 
effect  of  discharging  the  firm  must  be 
a  technical  one  under  seal.  Shotwell 
V.  Miller,  Coxe,  181 ;  Shaw  v.  Pratt, 
22  Pick.  305  ;  Walker  v.  McCulloch,  4 
Greenl.421 ;  Harrison  v.  Clare,  2  Johns. 
449  ;  Rowley  v.  Stoddard,  7  id.  207  ;  De 
Zeng  V.  Bailey,  9  Wend.  836  ;  Catskill 
Bank  v.  Messenger,  9  Cow.  37  ;  Lunt 
V.  Stevens,  24  Me.  534.  Hence  a  cov- 
enant with  one  partner  not  to  sue  him 
will  not  discharge  his  copartners,  since 
such  an  agreement  of  itself  evinces  an 
intention  on  the  part  of  the  partnership 
creditor  to  avoid  the  elTects  of  a  tech- 
nical release  to  one  of  the  firm.  Hut- 
ton  V.  Eyre,  6  Taunt.  289;  Bank  of 
Chenango  v.  Osgood,  4  Wend.  607 ; 
Dran  v.  Newhall,  8  T.  R.  168 ;  Couch 


CH.  VII.]        RIGHTS   OF   PARTNERS   BETWEEN   THEMSELVES. 


189 


other  restriction  than  that  already  implied  by  the  *  re-    *  175 
quirement  that  these  acts  should  always  be  within  the 


V.  Mills,  21  Wend.  424  ;  Chandler  v. 
Ilerrick,  19  Johns.  129;  Goodnow  v. 
Smith,  18  Pick.  416;  Shed  v.  Pierce, 
17  Mass.  623 ;  McLellan  v.  Cumber- 
land Bank,  24  Me.  5B6  ;  Mason  v. 
Jouett,  2  Dana,  107  ;  Hosack  v.  Rogers, 
8  Paige,  229.  And  even  a  release 
under  seal  to  one  partner,  may,  it  seems, 
be  accompanied  with  such  provisos  and 
conditions  as  to  confine  its  operation  to 
that  one  partner  alone,  and  prevent  it 
from  discharging  the  firm.  Solly  v. 
Forbes,  4  Moore,  448  ;  2  Brod.  &  B. 
38.  See  the  language  of  Shaw,  C.  J., 
in  Wiggin  v.  Tudor,  23  Pick.  444,  445. 

Upon  the  same  principle,  if  two  are 
arrested  on  a  joint  ca.  sa.  for  the  amount 
of  the  damages  obtained  against  them 
in  an  action  of  trespass,  and  the  plain- 
tiff' discharges  one  of  them  upon  his 
giving  him  his  promissory  note,  this 
discharge  of  one  operates  as  a  release 
of    both    the   defendants.      Ballam   v. 
Price,  2  J.  B.  Moore,  235.     See  Foster 
V.  Jackson,  Hob.  59.     In  like  manner, 
if  one  of  two  joint  debtors,  who  is  in 
execution,  obtains  his  discharge  from 
the  creditor,  the  debt  is  thereby  satis- 
fied as  to  the  other  debtor  also.     Clark 
V.  Clement,  G  T.  R.  52-5,  4  X.  H.  175 ; 
Abel  V.   Forgue,   1  Root,   502.      The 
partner  maj-  also  receive  pa^'ment  of  the 
debts  due  to  the  partnership.     Anon., 
12  Mod.  447 ;   Duff  v.  The  East  India 
Company,  15  Ves.  198 ;  Tomlin  v.  Law- 
rence, 3  Moore  &  P.   555 ;   M'Kee   v. 
Stroup,  Rose,  291  ;    Gregg   v.  James, 
Breese,   107 ;    Yandes    v.   Lefavour,   2 
Blackf.   371 ;    Allen   v.   Farrington,   2 
Sneed,  526  :  Porter  v.  Taylor,  6  Moore 
&  S.  156  ;   King  r.   Smith,  4  Car.  &  P. 
108  ;  Brasier  v.  Hudson,  9  Sim.  1.     See 
Henderson    v.   Wild,    2    Camp.    561  ; 
Pritchard  v.  Draper,  1  Rus.  &  M.  191 ; 
Jacaud   v.   French,  12  East,  317.     He 
may    compromise    them.     Pierson    v. 
Hooker,  3  Johns.  70 ;  Cunningham  v. 
Littlefield,  1  Edw.  Ch.  104 ;  Doremus 
V.  McCormick,  7   Gill,  49,  65.   Or  he 
may   release  them,  and  this  even  by 
deed.     But  though  a  partner  may  re- 


lease a  joint  debt  in  his  own  name 
only,  a  covenant  by  him  personally,  not 
to   sue   a   debtor   of  the   partnership, 
does  not  amount  to  a  release  of  the 
debt,  nor  prevent  the  firm  from  bring- 
ing an  action  for  it  in  the  names  of  all 
the  partners.    In  such  case,  the  remedy 
of  the  partnership  debtor  is  against  the 
covenanting  partner,  for  the  breach  of" 
covenant.     Walmsley  v.  Cooper,  3  Per. 
&  D.  149.     One  partner  has  power  to 
represent  and  to  act   for  the  firm  in 
legal  proceedings.      Thus,  one  partner 
may,  for  himself  and  his  copartner,  sign 
a  note  for  the  weekly  payment  under 
the  Lords'  Act.     Meux  v.  Humphrey,  8 
T.  R.  25 ;  Burton  v.  Issitt,  5  B.  &  Aid. 
267.     So,  if  two  partners  commence  an 
action,   one  may  release   the  subject- 
matter  of  it,  which  release  will  be  bind- 
ing upon  his  copartner,  and  operate  as 
a  bar  to  the  action.     Barker  v.  Rich- 
ardson, 1  Younge  &  J.  362;   Arton  v. 
Booth,  4  J.  B.  Moore,  192  ;  Fumival  v. 
Weston,  7  id.  356 ;  Jones  v.  Herbert,  7 
Taunt.  421 ;  Wilson  i;.  Mower,  5  Mass. 
411.     So,  if  a  bill  is  drawn  by  a  firm, 
and  one  of  the  partners  agrees  with  the 
acceptor  to  provide  for  it  when  due, 
this  operates  as  a  release  to  the  ac- 
ceptor of  any  action  that  might  have 
been  brought  upon   the  bill,  notwith- 
standing any  fraud  on  the  part  of  the 
single   partner   as   against  his  copart- 
ners. Richmond  v.  Heapy,  1  Stark.  202; 
Johnson  v.  Peck,  3  id.  66;  Sparrow  v. 
Chisraan,  9  B.  &   C.  241.     Upon   the 
same  principle,  one  partner  may  sus- 
pend proceedings  in  an  action  by  the 
firm.     Harwood  v.  Edwards,  cited   in 
Gow    on    Part.    65.       See   Loring  v. 
Brackett,  3  Pick.  403.     Hence,  if  for  a 
previous  debt  one  partner  draw  a  bill 
upon  a  debtor  of  the  firm,  which  is  ac- 
cepted by  him,  and  is  taken  by  the 
partner  in  payment,  this  is  giving  time 
to  the  debtor,  though  the  bill  was  drawn 
in  that  one  partner's  name  alone  ;  and 
the   debtor    cannot   be    sued    for  the 
amount  of  the  debt   till  the   bill  has 
arrived  at  maturity  and  been  dishon- 


190 


THE   LAW   OF   PARTNERSHIP. 


[CH.  VII. 


regular  business  of  the  firm,  (.i)     And  if  a  contract  be  made 
by  one  partner  in  the  name  of  the  firm  with  a  stranger,  if  the 


ored.  Tomlin  }•.  Lawrence,  3  Moore 
&  P.  585.  So,  in  an  action  against  the 
firm,  one  partner  may  enter  an  ap- 
pearance for  tlie  rest.  U.  arguendo, 
Harrison  v.  Jackson,  7  T.  R.  208  ; 
Bennett  v.  Stickney,  17  Vt.  531 ;  Tay- 
lor V.  Coryell,  12  S.  &  R.  243,  250. 
See,  however,  contra,  Haslet  v.  Street, 
2  McCord,  310;  Loomis  v.  Pierson, 
Harp.  470;  Hills  v.  Ross,  3  Dallas,  331, 
note ;  Bright  v.  Sampson,  20  Tex.  21. 
[See  also  Hall  v.  Lanning,  91  U.  S. 
160.]  It  seems,  that  service  of  pro- 
cess should  be  made  on  each  partner 
personally.  Moredon  v.  Wyer,  6  M. 
&  G.  278,  and  note ;  Demoss  v.  Brew- 
ster, 4  S.  &  M.  661.  See  Bennett  v. 
Stickney,  snpra ;  Phelps  v.  Brewer,  9 
Cush.  390.  In  equity,  however,  wliere 
one  of  two  partners  was  abroad,  ser- 
vice of  subpoena  upon  the  other  part- 
ner has  been  held  good  service  upon 
both.  Carrington  v.  Cantillon,  Bunb. 
107;  Coles  v.  Gurney,  1  Madd.  187. 
And  in  Lansing  r.  M'Killup,  7  Cow. 
416,  service  of  declaration  upon  one  of 


(x)  Anon.,  2  Ca.  Ch.  38,  16  Vin.  Ab. 
242;  Ex  parte  Agace,  2  Cox,  312;  Liv- 
ingston V.  Roosevelt,  4  Johns.  251  ; 
Lawrence  v.  Dale,  3  Johns.  Ch.  23,  17 
Johns.  427  ;  Rogers  v.  Batchelor,  12 
Pet.  221 ;  Eastman  v.  Cooper,  15  Pick. 
276  ;  Marsh  r.  Gold,  2  id.  285  ;  Nichols 
V.  Hughes,  2  Bailey,  109 ;  Thomas  v. 
Harding,  8  Greenl.  417 ;  "Walcott  v. 
Canfield,3  Conn.  198;  Wagnon  i-.  Clay, 
1  A.  K.  Marsh.  257 ;  Goode  i:  Linecurn, 
1  How.  (Miss.)  281 ;  Goodman  y.  White, 
25  Miss.  163.  The  giving  of  guaran- 
tees for  the  debts  of  third  parties  is  not 
a  part  of  the  regular  course  of  business 
of  an  ordinary  mercantile  house,  and 
is  not,  tlierefore,  within  the  power  of 
one  partner.  See  post,  §  4.  Nor  is  the 
receiving  of  notes  for  other  persons,  and 
undertaking  to  collect  them.  Hogan  v. 
Reynolds,  8  Ala.  59.  And,  though 
every  partner  has  an  implied  authority 
to  borrow  money  generally,  he  is  not 


a  firm  of  attorneys,  whose  name  did 
not  appear  on  the  record  as  attorney 
for  the  defendant,  the  business  of  the 
firm  being  done  in  the  name  of  the 
other  partner,  was  yet  held  good  and 
regular  service.  [Alexander  v.  Stern, 
41  Tex.  193.]  See  contra,  Young  v. 
Goodson,  2  Russ.  255.  The  power  of 
one  partner  to  act  for  the  firm  in  the 
matters  incident  to  a  suit  finds  an  ex- 
ception (founded,  for  the  most  part, 
upon  a  purely  technical  reason)  in  this, 
that  one  partner  cannot,  by  virtue  of 
his  implied  authority,  confess  judg- 
ment in  the  name  of  the  firm,  nor  con- 
sent to  an  order  for  that  purpose.  [But 
it  was  recently  held  in  Pennsylvania 
that,  where  a  firm  note  was  given 
with  a  warrant  to  confess  judgment 
by  one  of  the  partners,  execution  might 
be  had  on  the  partnership  property. 
Ross  V.  Howell,  Sup.  Ct.  Penn.,  3  L.  & 
Eq.  Reptr.  694.]  See  next  note.  As 
in  legal  proceedings  generally,  so  in 
those  under  the  Bankrupt  Laws,  the 
act   of  one  partner  is   the  act  of  his 


thereby  necessarily  empowered  to  bind 
the  firm  by  a  loan  of  money  for  the 
purpose  of  increasing  the  fixed  capital 
of  the  concern.  Eisher  v.  Tayler,  2  Hare, 
218.  See  Greenslade  v.  Dower,  7  B.  & 
C.  635.  [A  partner  cannot  bind  his 
copartners,  by  a  banking  account 
opened  by  him  in  his  own  name  in 
behalf  of  the  firm.  Alliance  Bank  v. 
Keasley,  L.  R.  6  C.  P.  433.]  So,  not- 
withstanding the  power  of  disposal 
which  each  partner  possesses  with  re- 
spect to  the  joint  property,  he  cannot 
give  it  away.  Daniel  v.  Daniel,  9  B. 
Mon.  195.  Finally,  the  manner  in 
M'hich  a  particular  firm  has  been  in 
the  habit  of  managing  its  business 
may  greatly  vary  and  enlarge  the 
power  which,  under  ordinary  circum- 
stances, that  particular  trade  would 
confer  upon  one  partner.  See  Wood- 
ward V.  Winship,  12  Pick.  430. 


CH.  VII.]        RIGHTS   OF   PARTNERS   BETWEEN   THEMSELVES.  191 


transaction  is  foreign  to  tlie  usual  course  of  dealing  with  the 
firm,  this  circumstance   lays   on  the    stranger  the   duty    and 


partnership.  Tlius,  to  sustain  a  fiat, 
one  partner  may  make  atMdavit  of 
debt,  and  execute  the  usual  bond.  Ex 
parte  Hodgkinson,  19  Ves.  291  ;  2  Kose, 
174;  Ex  parte  Feele,  Buck,  457.  He 
may  "  prove  a  debt,  vote  in  the  choice' 
of  assignees,  and  sign  the  certificate," 
in  beiialf  of  the  firm.  Per  Lord  Eldon 
in  Ex  parte  Hodgkinson,  19  Ves.  293; 
Ex  parte  Mitcliell,  14  id.  597 ;  Ex 
parte  Siiaw,  1  Glyn  &  J.  129;  Ex  parte 
Bank,  2  id.  363 ;  Ex  parte  Hall,  1  Hose, 
2;  Ex  parte  Bignold,  2  Mont.  &  A. 
655.  He  may,  by  power  of  attorney, 
authorize  some  tliird  jierson  to  vote  in 
the  ciioice  of  assignees,  and  to  sign  tlie 
certificate,  &c.,  for  the  partnersliip. 
Ex  parte  Mitchell,  sujn-a  ;  Ex  parte 
Shaw,  supra.  He  may  sign  a  petition 
presented  for  a  hearing.  See  Ex  parte 
^lorgan.  Buck,  109  ;  Ex  parte  Cox,  1 
Giyn  &  J.  355,  note ;  Ex  parte  Fife,  2 
Mont.  &  A.  577.  And  he  may  bind  th%^ 
firm  in  all  other  proceedings  in  bank- 
ruptcy, except  in  tiie  case  of  a  petition 
for  a  fiat,  in  which  all  the  partners 
must  join.  Buckland  v.  Newsame,  1 
Taunt.  477 ;  Ex  parte  Peele,  Buck, 
457  ;  Arch.  B.  L.  vol.  2,  p.  5.  S^e 
Pierce  v.  Stock  well,  11  Cush.  236. 
One  partner  may  also  bind  the  firm  by 
efiecting  insurances  upon  the  joint 
property.  But  a  part-owner  has  no 
such  implied  authority.  Hooper  v. 
Lusby,  4  Camp.  66.  See  Irving  i-. 
Excelsior  Fire  Ins.  Co.,  1  Bosw.  507 ; 
Graves  v.  Boston  JMarine  Ins.  Co.,  2 
Cranch,  419 ;  Foster  v.  United  States 
Ins.  Co.,  11  Pick.  85.  One  partner 
may  also,  in  the  course  of  the  joint 
business,  take  a  guaranty,  which,  if  so 
intended,  shall  inure  to  the  benefit  of 
the  firm.  Garrett  v.  Handley,  4  B.  & 
C.  604 ;  Walton  v.  Dodson,  3  Car.  &  P. 
162.  One  partner  lias  also  power  to 
appoint  an  agent  to  transact  the  joint 
business,  and  to  bind  the  partnersliip 
by  his  acts  relative  thereto.  Tillier  v. 
Whitehead,  1  Dallas,  269;  Lucas  r. 
Bank  of  Darien,  2  Stewart,  280,  297  ; 
Coons   V.   Kenick,    11   Tex.   134.     See 


Robinson  v.  Hofman,  4  Bing.  562. 
So,  also,  where  a  partnership  is  by 
name  empowered  to  act  for  a  third 
party,  one  partner  may  execute  the 
agency  so  as  to  bind  the  principal. 
Gordon  v.  Buchanan,  5  Yerger,  71, 
82  ;  Beck  v.  Martin,  2  McMullan,  260 ; 
Kennebec  Co.  v.  Augusta  Ins.  &  Bank 
Co.,  6  Gray,  204.  But  from  a  general " 
power  of  attorney  granted  to  one  of 
two  partners  the  other  can  derive  no 
authority.  Edmiston  v.  Wright,  1 
Camp.  88.  These  powers  of  a  partner 
exist,  though  some  of  the  partners  be 
secret  or  dormant.  Winship  v.  Bank 
of  the  United  States,  5  Pet.  529;  Swan 
V.  Steele,  7  East,  210;  Wintle  v. 
Crowther,  1  Cromp.  &  J.  316.  Though 
it  has  been  held,  that,  if  there  be  actual 
fraud  in  tlie  original  formation  of  the 
partnership,  a  dormant  partner  who  has 
received  none  of  the  funds  will  not  be 
liable  to  creditors  upon  contracts  made 
by  the  ostensible  partners.  Mason  v. 
Connell,  1  Whart.  381 ;  Wood  v.  Con- 
nell,  2  id.  542.  Nor  does  it  affect  the 
power  of  each  partner,  that  the  part- 
ners are  trustees,  and  that  the  joint 
business  is  carried  on  for  tiie  benefit 
of  their  cestui  que  trusts.  Thicknesse 
V.  Bromilow,  2  Cromp.  &  J.  425.  As 
to  the  effect  of  fraud,  see  Dickson  v. 
Alexander,  7  Ired.  4 ;  Emerson  v.  Har- 
mon, 14  Me:  271 ;  Bascom  v.  Young,  7 
Mo.  1,  4;  Steel  v.  Jennings,  Cheves, 
183 ;  M'Kee  v.  Stroup,  Rice,  291.  See 
Halls  v.  Coe,  4  McCord,  136 ;  Hender- 
son V.  Wild,  2  Camp.  561 ;  Jones  v. 
Herbert,  7  Taunt.  421 ;  Arton  v.  Booth, 
4  J.  B.  Moore,  192 ;  Furnival  v.  Wes- 
ton, 7  id.  356 ;  Bignold  v.  Waterhouse, 
1  Maule  &  S.  255;  Farrar  v.  Hutch- 
inson, 9  A.  &  E.  641;  Loyd  v. 
Freshfield,  2  C.  &  P.  325 ;  Barker  v. 
Richardson,  1  Younge  &  J.  362; 
Mountstephen  v.  Brooke,  1  Cliitty, 
391.  In  Eastman  v.  Wright,  6  Pick. 
323,  Morton,  J.,  said  :  "  In  England, 
when  a  nominal  plaintiff,  or  one  of 
several  plaintiffs,  releases  an  action  in 
fraud   of    the    party    in    interest,   the 


192 


THE   LAW   OF   PARTNERSHIP. 


[CH.  VII. 


responsibility  of  inquiring  and  ascertaining  whether  the  partner 
has  the  authority  of  the  firm,  (a;a;) 


3.    Of  the  Power  to  Submit  to  Arbitration. 

*  176        *  A  seeming  exception  exists  in  relation  to  arbitration  ; 

for,  while  a  copartner  may  create  a  debt,  or  pay  a  debt, 
or  compromise  a  debt,  or,  in  good  faith,  deal  with  it  in  any 
other  way,  the  one  thing  which  it  is  said  he  cannot  so  do  as  to 

bind  his  copartners  is  to  submit  the  debt  to  arbitra- 

*  177    tion.  (?/)     Of  the  reasons  given    for  *  this,  one,  that 


court  directly  interfere,  and  set  aside 
the  release.  But  in  this  State  the 
courts  have  never  exercised  that  power. 
The  release  may  be  avoided,  if  fraudu- 
lent ;  but  the  question  of  fraud  can 
only  be  tried  by  jury."  The  effect  of 
stipulations  between  partners  upon  the 
power  of  any  one  or  more  of  them, 
when  those  stipulations  are  known  to 
third  parties,  we  have  already  con- 
sidered. See  aiite,  ch.  6,  §  3.  For 
tlieir  effect  when  unknown,  see  post, 
ch.  7,  §  7. 

(xx)  Calwallader  v.  Kroesen,  22  Md. 
204. 

(y)  And  this  continues  true,  whetlier 
the  submission  be  under  seal  or  not. 
Stead  V.  Salt,  3  Bing.  101.  But  see 
Hallack  v.  March,  25  III.  48,  and  cases 
there  cited.  A  firm  of  five  members 
declared  against  the  defendant  for 
work,  labor,  materials,  &c.  The  de- 
fendant pleaded  the  general  issue,  and 
put  in  an  award  upon  the  matter 
touching  which  the  action  had  been 
brought.  The  articles  containing  the 
submission,  however,  were  signed  by 
only  three  of  the  partners.  Held,  that 
the  submission  was  insufficient,  and 
could  not  bind  the  firm.  Hambidge  v. 
De  La  Croue'e,  3  C.  B.  744,  745.  In 
Adams  v.  Bankart,  1  Cromp.,  M.  &  II. 
685,  Lord  Abinger,  C.  B.,  said :  "  I 
think  we  have  sufficient  authority  for 
saying,  that  one  partner  cannot  bind 
another  by  a  submission  to  arbitration, 
without  the  assent  of  the  latter." 
Kartliuas  i-.  Ferrer,  1  Pet.  228;  [Hall  v. 


Lanning,  91  U.  S.  160;  Martin  v. 
Thrasher,  40  Vt.  460  ;]  Gibson,  C.  J.,  in 
Harper  v.  Fox,  7  Watts  &  S.  143; 
Buchanan  v.  Curry,  19  Johns.  137; 
Harrington  v.  Higham,  13  Barb.  660; 
Buchoz  V.  Grand  jean,  1  Mann.  (Mich.) 
367 ;  Wood  v.  Shepherd,  2  Patton  &  H. 
442  ;  Jones  v.  Bailey,  5  Cal.  345.  See 
Boyd  V.  Emmerson,  2  A.  &  E.  184; 
Skillings  v.  Coolidge,  14  Mass.  43,  45; 
Martin  v.  Thraslier,  20  Vt.  460.  Re- 
specting the  mode  of  showing  the 
authority  of  one  partner  to  bind  his 
firm  by  a  submission.  Lord  Abinger, 
C.  B.,  said,  in  Adams  v.  Bankart, 
supra :  "  I  do  not  mean  to  say  that  such 
assent  must  be  given  in  any  particular 
form  of  words,  or  that  it  requires  to  be 
under  the  hand  of  the  copartner :  all 
tliat  is  necessary  is,  that  there  should 
be  some  evidence  of  an  actual  authority 
conferred."  And  Parke,  B.,  in  the 
same  case  :  "  I  am  entirely  of  the  same 
opinion.  The  authority  to  bind  a 
partner  to  submit  to  arbitration  does 
not  flow  from  the  relation  of  partner- 
ship ;  and,  where  it  is  relied  upon,  it 
must,  like  every  authority,  be  proved 
either  by  express  evidence,  or  by  such 
circumstances  as  lead  to  the  presump- 
tion of  such  an  authority  iiaving  been 
conferred." 

When  a  submission  is  made  of  all 
matters  of  difference  between  an  indi- 
vidual and  a  partnership,  it  includes 
only  such  matters  as  are  in  dispute 
between  that  individual  and  the  part- 
nership   jointly,    and    not    those    in 


CH.  VII.]       RIGHTS    OF   PARTNERS   BETWEEN   THEMSELVES.  193 

submission  to  arbitration  is  no  mercantile  transaction,  and 
could  not  have  entered  into  the  minds  of  the  partners  when 
entering  into  partnership,  seems  to  us  to  beg  the  question, 
and  to  be  a  very  feeble  reason  ;  (2)  and  another,  that  it  may 
compel  the  partners,  by  force  of  the  award,  to  do  things 
never  contemplated  by  them,  and  in  no  sense  mercantile,  seems 
to  have  little  more  force,  (a)  The  true  reason  is,  that  the  law, 
wdiile  it  favors  arbitration  in  many  respects  and  ways,  on  the 
other  hand  is  jealous  of  it.  The  courts  are,  or  until  a  very 
recent  period  (6)  have  been,  unwilling  to  enforce  or  sanction 
an  agreement  by  which  parties  are  compellable  to  renounce  the 
perfectly  impartial  and  well-constituted  tribunal  which  is  open 
to  all  the  public,  for  one  which  the  parties  construct  themselves, 
and  which  is  open  to  very  many  possibilities  of  error,  (c) 

Hence  both  law  and  equity  have  refused  to  permit  a  partner 
so  to  bind  himself  and  his  copartners  by  an  agreement  to  sub- 
mit a  question  as  to  oust  them  of  their  jurisdiction.  But  if  a 
partner  made  such  a  submission,  and  it  was  followed  by  an 
award,  and  the  award  and  submission  were  honest  and  reason- 
able, and  the  partner  thereon  agreed  that  his  firm  should  do 
the  thing  awarded,  we  think  this  would  now  be  held,  in  equity 
at  least,  as  obligatory  on  the  partnership.  (cZ) 

Indeed,  if  all  the  partners  agreed  to  submit  a  question  to 
referees,  and  then  refused  to  perform  their  promise,  this  prom- 
dispute  between  that  individual  and  Eq.  327,  8  Exch.  497,  20  Eng.  L.  &  Eq. 
one  or  more  of  the  partners  severally.  834,  5  H.  L.  Cas.  811,  36  Eng.  L.  & 
Garland  v.  Noble,  1  J.  B.  Moore,  187.        Eq.  1,  13  ;  Livingstone  v.  Ralli,  5  Ellis 

{z)  Stead  v.  Salt,  3  Bing.  103  ;  &  B.  132,  30  Eng.  L.  &  Eq.  279 ;  Hor- 
Adams  v.  Bankart,  1  Cromp.,  M.  &  R.  ton  v.  Soyer,  4  H.  &  N.  643 ;  Kussell 
681.  V.  Pellegrini,  6  Ellis  &  B.  1020,  38  Eng. 

(a)  In  Boyd  v.  Emerson,  2  A.  &  L.  &  Eq.  99.  See  also  Cobb  v.  New 
E.  184,  one  question  raised  was,  England  Mat.  M.  Ins.  Co.,  6  Gray, 
whetheir  one  partner  could  bind  his  192,  204.  An  English  statute,  17  &  18 
copartners  by  a  parol  submission  to'  Vict.  c.  125,  §  11,  provides,  that  when 
arbitration.  The  court  did  not  think  it  there  is  such  an  agreement,  and  an 
necessary  to  decide  the  point.  The  action  is  brought  in  violation  of  it,  the 
argument  of  counsel,  however,  in  favor  court  may  grant  a  rule  to  stay  pro- 
of tliis  power  in  one  partner  is  worthy  ceedings,  at  the  request  of  the  defend- 
of  attention.  ants.     See  post,  p.  *  247. 

(h)  See  for  cases  questioning,  and  (c)  Harrington  v.  Iligham,  13  Barb, 

to  some  extent  overruling,  the  ancient     6G0. 

principle,  that  the  courts   will  not  en-  (d)  Buchanan   v.  Curry,  19   Johns, 

force  an  agreement  to  refer,  Scott  v.     137. 
Avery,  8  Exch.  487,  20  Eng.  Law  & 

13 


194  THE   LAW   OF   PARTNERSHIP.  [CH.  VII. 

ise,  made  by  the  whole,  might  not  only  be  enforced  by  decree 
for  specific  performance,  but  it  would  be  a  good  contract  at  law, 

as  all  such  agreements  to  refer  are,  and  the  party  refus- 
*  178    ing  might  be  *  sued  for  his  breach  of  promise,  (e)    And 

in  some  of  our  States,  the  power  of  a  partner  to  bind 
the  partnership,  by  his  unsealed  agreement  to  refer  a  question 
in  which  the  partnership  was  interested,  has  been  held  as  mat- 
ter of  law.  (/)  And  we  have  some  doubt  whether  any  of  our 
courts  might  not  now  be  expected  to  sustain  such  a  submission, 
if  it  were  in  itself  unobjectionable. 

4.    Of  the  Power'  to  Affix  a  Seal. 

The  contracts  of  a  firm  should  be  unsealed ;  for,  on  this 
point,  the  common  law  certainly  controls  the  law  of  partner- 
ship. No  partnership  has  a  seal,  and  no  partner  can  affix  the 
seals  of  his  copartners,  or  of  any  of  them,  without  their  ex- 
press authority.  While  this  seems  to  be  a  settled  rule,  there 
has  been  a  great  extent  and  some  variety  of  adjudication  in 
regard  to  it,  as  we  show  in  the  note.  (^)     Perhaps  the  old 

(e)  So,  if  one  member  of  a  firm  been  held,  in  one  nisi  prius  case,  Mears 
enter  into  a  submission  in  behalf  of  v.  Serocolcl,  cited  by  Dampier,  arguendo, 
himself  and  his  partners,  and  under-  in  Harrison  v.  Jackson,  7  T.  R.  208. 
take  that  the  copartnership  shall  per-  But  for  authorities  against  the  power 
form  the  award,  the  acting  partner  is  of  a  partner  to  bind  his  firm  by  a  seal, 
bound,  though  the  firm  is  not ;  and  a  see  Thomason  v.  Frere,  10  East,  418 ; 
refusal  by  his  copartners  to  be  bound  Metcalfe  v.  Rycroft,  6  Maule  &  S.  75 ; 
by  the  arbitration  will  be  a  breach  of  Hall  v.  Bainbridge,  1  Man.  &  G.  42 ; 
that  partner's  promise,  for  which  he  McKee  v.  Bank  of  Mt.  Pleasant,  7 
may  be  held  liable  in  damages.  Thus,  Ohio,  175  ;  McNaughten  v.  Partridge, 
inCom.Dig.'- Arbitrament  "(D. 2),  itis  11  id.  223  ;  Trimble  v.  Coons,  2  A.  K. 
said:  '"If  there  be  a  controversy  be-  Marsh.  375;  Southard  v.  Steele,  3  T. 
tween  A.  of  the  one  part,  and  B.  and  B  Mon.  435;  Gerard  v.  Basse,  1  Dall. 
C.  of  the  other,  and  B.  submits  for  119;  Hart  i*.  Withers,  1  Penn.  St.  285; 
himself  and  C,  and  there  be  an  award  Green  v.  Beals,  2  Gaines,  254  ;  Clem- 
that  B.  shall  pay;  this  is  good,  though  ent  v.  Brush,  3  Johns.  Cas.  180;  Skin- 
C.  be  a  stranger."  Strangford  v.  ner  v.  Dayton,  19  Johns.  513;  Mills  y. 
Green,  2  Mod.  228;  McBride  v.  Hagan,  Barber,  4  Day,  428  ;  Garland  v.  David- 
1  Wend.  326,  33G ;  Buchanan  v.  Curry,  son,  3  Munf.  189;  Tuttle  v.  Eskridge, 
19  Johns.  137,  143  ;  Armstrong  v.  Rob-  2  id.  330 ;  Shelton  v.  Pollock,  1  Hen.  & 
inson,  5  Gill  &  J.  412,  422;  Wood  v.  M.  422;  Posey  v.  Bullitt,  1  Blackf.  99; 
Shepherd,  2  Patton  &  H.  442 ;  Jones  v.  Fisher  v.  Tucker,  1  McCord  Cli.  169  ; 
Bailey,  5  Cal.  345.  Nunnely  v.  Doherty,  1  Yerg.  26  ;  Black- 

( /■)  Southard  v.  Steele,  3  B.  Mon.  burn  u.  McCaUister,  Peck,  371 ;  Anon., 

435";  Taylor  v.  Coryell,  12  S.  &  R.  243  ;  Taylor,  113  ;  Anon.,  2  Hayw.  99  ;  Per- 

Wilcox  V.  Singletary,  Wright,  420.  son  v.  Carter,  3  Murphy,  321 ;  Case  of 

(ff)  The    contrary    seems    to    have  James  Taylor,  1  Browne,  Penn.  App. 


CH.  VII.]       RIGHTS    OP   PARTNERS   BETWEEN   THEMSELVES.  195 


technical  rule,  that  the  *  authority  to  seal  must  be  by    *  179 
seal,  (Ji)  would  not  be  strictly  applied  ;  *  but,  generally,    *  180 


Ixxiii. ;  Cady  v.  Shepherd,  11  Pick. 
400;  Van  Deusen  v.  Blum,  18  id.  229; 
United  States  v.  Astley,  3  Wasii.  C  C. 
508;  Fleming  v.  Dunbar,  2  Hill  (S.  C), 
532 ;  SIoo  v.  State  Banlc  of  Illinois,  1 
Scam.  441 ;  Cummins  v.  Cassily,  5  B. 
Men.  75 ;  Montgomery  i'.  Boone,  2  id. 
244;  Button  v.  Hanipson,  Wright  (O.), 
93;  Ford  v.  Ilaft,  id.  118;  Lay  ton  v. 
Hastings,  2  Harr.  147  ;  Morris  v.  Jones, 
4  id.  428 ;  Albers  v.  Wilkinson,  6  Gill  & 
J.  358;  Lucas  v.  Sanders,  1  McMuUan, 
311 ;  Napier  v.  Catron,  2  Humph.  534; 
Smitli  V.  Tupper,  4  Smedes  &  M.  261 ; 
Snyder  v.  May,  19  Penn.  St.  235; 
County  V.  Gates,  26  Mo.  315.  Hence, 
custom-house  bonds,  signed  and  sealed 
by  one  partner,  though  in  the  name  of 
and  for  duties  on  goods  imported  by 
and  belonging  to  the  partnership,  are 
yet,  at  common  law,  not  binding  on 
the  firm,  but  only  on  tlie  executing 
member.  Tom  v.  Goodrich,  2  Johns. 
213;  Walden  v.  Sherburne,  15  id.  409, 
423 ;  United  States  v.  Astley,  3  Wash. 
C.  C.  508.  But  so  much  practical  in- 
convenience has  been  found  to  result 
from  this  application  of  the  doctrine 
that,  by  act  of  Congress  of  March  1, 
1823,  Stat.  2,  ch.  21,  §  2-5,  it  was  pro- 
vided that  any  bond  to  the  United 
States  entered  into  for  the  payment 
of  duties  by  a  merchant  belonging  to 
a  firm,  in  the  name  of  such  firm,  sliall 
equally  bind  the  partner  or  partners  in 
trade  of  the  person  or  persons  b}' 
whom  such  bond  shall  have  been  exe- 
cuted. 3  U.  S.  Statutes  at  Large  (ed. 
1846),  737.  [One  partner  cannot  bind 
the  others  by  a  specialty.  Walton  v. 
Tresten,  49  Miss.  569 ;  Gibson  v.  War- 
den, 14  Wall.  (U.  S.)  224.  And,  if  the 
contract  be  such  an  one  as  does  not 
require  a  seal,  it  is  nevertheless  in- 
valid. The  contract  under  seal  is  ultra 
vires,  and  there  is  no  other  contract. 


Schmertz  v.  Shreever,  62  Penn.  St.  457  ; 
Russell  V.  Annable,  109  Mass.  72, 
Wells,  J.,  dissenting.  If  one  partner 
authorizes  another  to  procure  an  in- 
dorser  on  a  note  to  be  offered  for  dis- 
count, he  authorizes  him  to  mortgage 
all  the  stock  in  trade  to  secure  the  in- 
dorser,  Patterson  v.  Maughan,  39  U.  C. 
Q.  B.  371 ;  and,  generally,  such  acts  as" 
may  be  reasonably  necessary  to  accom- 
plish the  authorized  act,  Halpenny  v. 
Pennock,  33  U.  C.  Q.  B.  229.] 

The  same  principles  of  the  common 
law  which  operate  to  disable  a  partner 
from  binding  his  copartners  by  spe- 
cialty, must,  it  should  seem,  still  more 
completely  incapacitate  him  to  bind 
them,  without  their  distinct  assent,  by 
a  voluntary  confession  of  judgment. 
A  fortiori,  he  cannot,  by  virtue  of  his 
implied  power,  authorize  another  to  do 
it,  even  though  the  authority  be  not 
under  seal.  Green  v.  Beals,  2  Caines, 
254;  Crane  v.  French,  1  Wend.  311; 
McBride  v.  Hagan,  id.  335;  Graze- 
brook  V.  M'Creedie,  9  id.  437 ;  Waring 
V.  Robinson,  1  Hoff.  Ch.  524 ;  Gerard 
V.  Basse,  1  Dall.  119;  McKee  v.  Bank 
of  Mt.  Pleasant,  7  Ohio,  175 ;  Remington 
V.  Cumraings,  5  Wis.  138  ;  Hull  v.  Gar- 
ner, 31  Miss.  145;  Lagow  v.  Patterson, 
1  Blackf.  252 ;  Barlow  v.  Reno,  id. ; 
Sloo  V.  The  State  Bank  of  Illinois,  1 
Scam.  428 ;  Waring  v.  Robinson,  1 
Hoff.  Ch.  525 ;  Harper  v.  Fox,  7  Watts 
&  S.  142;  Bitzer  r.  Shunk,  1  id.  340; 
Cash  V.  Tozer,  id.  519;  Overton  v. 
Tozer,  7  Watts,  331 ;  Bennett  v.  Mar- 
shall, 2  Mills,  436  ;  Grier  v.  Hood,  25 
Penn.  St.  430 ;  Morgan  v.  Richardson, 
16  Mo.  409;  Binney  v.  Le  Gal,  19 
Barb.  592;  per  Wilde,  C.  J.,  Ham- 
bidge  V.  De  La  Croue'e,  3  C.  B.  744. 
See  Brutton  v.  Barton,  1  Chitty,  707  ; 
Kinnersley  v.  ^Mussen,  5  Taunt.  264. 
[Hall  V.  Lanning,  91   U.  S.  160,  holds 


(h)  See  Steiglitz  v.  Egginton,  Holt, 
141 ;  Berkeley  v.  Hardy,  5  B.  &  C.  355; 
Trimble  v.  Coons,  2  A.  K.  Marsh.  375  ; 
Cummins  v.  Cassily,  5  B.  Mon.  74  ;  Hart 


V.  Withers,  1  Barr,  285 ;  Pickering  v. 
Holt,  6  Greenl.  160;  Blood  v.  Good- 
rich, 9  Wend.  75,  76,  12  id.  525. 


196 


THE   LAW   OP    PARTNERSHIP. 


[CH.  VII. 


181    at  least,  authority  there  must  be.  (i)    An  *  important  lim- 
itation to  the  operation  of  tlie  rule  occurs  in  proceedings 


that  one  partner  after  dissolution  has 
no  authority  to   enter  an  appearance 
for  the  firm,  in  a  suit  against  it ;  and 
a  judgment   founded  on  such  an  ap- 
pearance   is  void.     In  case  the  other 
members  resided  out  of  the  State.     A 
fortiori  sucli  a  judgment  vvoukl  be  void, 
if  the  other  partners  could  be  reached 
by  process.]     But  if  a  voluntary  judg- 
ment   be    confessed    by    one    partner 
against  his  firm,  the  judgment  is  bind- 
ing upon  tliat  partner,  and  will  not  be 
set  aside  upon  his   application.      Nor 
will  it  be  altoijether  set  aside  upon  the 
application  of  the  other  partners ;  but 
the  court  will  amend  the  judgment  by 
ordering  their  names  to  be  struck  out, 
and    otherwise    correcting   it   so    that 
they  shall  not  be  bound,  or  will  order 
execution  to  be  served  on  the  person 
and  estate  of  the  acting  partner  only, 
or   that   only    his    several    interest    in 
the  partnership  property  shall  be  sold. 
Motteux  V.  St.  Aubin,  2  W.  Bl.  1133; 
Green  v.  Beals,  2   Caines,  254 ;  Crane 
V.  French,  1    Wend.   311  ;  St.  John   v. 
Holmes,  20  id.  609  ;  Gerard  (;.  Basse,  1 
Dall.  119  ;  Bitzer  v.  Shunk,  1  Watts  & 
S.  340 ;  Harper  v.  Fox,  7  id.  142 ;  Mor- 
gan V.  Richardson,  16  Mo.  409.      See 
Grier  v.  Hood,  25  Penn.  St.  430 ;  Smith 
V.  Tupper,  4  Smedes  &  M.  261 ;  Over- 
ton V.  Tozer,  7  Watts,  331  ;    Cash  v. 
Tozer,  1  Watts  &  S.  519.     See  Sloo  v. 
State  Bank   of   Illinois,  1   Scam.   428. 
[A.,  a  member  of  a  firm,  confessed  judg- 
ment against  himself  for  a  firm  debt. 
Held,   that   tiie   partnership    property 
might  be  levied  on  to  satisfy  tliis  judg- 
ment.   Ross  V.  Howell,  4  W.  N.  25,  S.  C. 
3  L.  &  Eq.  Reptr.  694.]     Though  one 
partner,  by  the  execution  for  his  co- 
partners and  himself  of  a  sealed  instru- 
ment, cannot  bind  them,  yet  he  always 
binds   himself     This   rule   is   one   de- 
rived from  the  law  of  agency,  and  re- 
gards each  partner,  not  as  standing  for 
and  representing  the  partnersliip,  but 
as  the  agent  of  all  his  copartners,  and 
consequently  as  always   making  him- 
self  liable,  when,  from  want  of  suffi- 


cient authority,  he  fails  to  bind  those 
for  whom  he  attempts  to  act.  Elliot 
V.  Davis,  2  Bos.  &  P.  338 ;  Hawkshaw 
V.  Parkins,  2  Swanst.  543 ;  Trimble  v. 
Coons,  2  A.  K.  Marsh.  375;  Williams 
V.  Hodgson,  2  Harris  &  J.  474  ;  Layton 
V.  Hastings,  2  Harrison,  147  ;  Skinner 
V.  Dayton,  5  Johns.  Ch.  351,  19  Johns. 
513 ;  Clement  v.  Brush,  3  Johns.  Cas. 
180;  Gates  v.  Graham,  12  Wend.  53; 
Jackson  v.  Stanford,  19  Ga.  14.  See, 
however.  Sellers  v.  Streator,  5  Jones, 
261  ;  also,  supra,  note  (e).  Thus,  if 
one  only  of  three  partners  execute  a 
deed  of  assignment,  purporting  to  con- 
vey all  the  personal  property  of  the 
three  to  trustees,  for  the  benefit  of 
creditors,  such  a  deed  will  pass  the 
share  of  the  executing  partner.  Bow- 
ker  V.  Burdekin,  11  M.  &  W.  128.  See 
Dutton  V.  Morrison,  17  Ves.  193; 
Hughes  V.  Ellison,  5  Mo.  463.  But  if 
one  partner  executes  a  sealed  instru- 
ment for  himself  and  his  partners,  and 
suit  is  brougiit  against  all,  there  can 
be  no  recovery  in  that  suit  against  the 
executing  partner.  Hart  v.  Withers, 
1  Penn.  St.  285.  So,  if  a  partner  signs 
and  seals  a  deed  of  composition  in  the 
name  and  firm  of  himself  and  partner, 
he  alone  is  entitled  to  bring  covenant 
thereon.  Metcalf  v.  Rycroft,  6  Maule 
&  S.  75.  See  Gates  v.  Graham,  12 
Wend.  53.  By  contract  under  seal, 
purporting  to  bp  made  between  the 
plaintitis  and  the  firm  of  B.  &  T.,  the 
former  agreed  to  erect  a  certain  dam 
for  the  uses  of  the  partnership.  The 
contract  was  signed  with  the  name  of 
the  partnership  by  B.,  and  a  seal  af- 
fixed thereto.  Held,  that  B.,  not  hav- 
ing authority  thus  to  bind  his  copart- 
ners, the  firm  were  not  liable  on 
the  specialty,  but  were  liable  on  an 
implied  promise  for  tiie  work  done, 
and  the  materials  furnished  by  the 
plaintiflTs  to  their  benefit.  Van  Deusen 
V.  Blum,  18  Pick.  229.  See  Sellers  v. 
Streator,  5  Jones,  261 ;  Fox  v.  Norton, 
9  Mich.  207. 

((')  It  seems  to  be  established  in  Eng- 


CH.  VII.]       RIGHTS    OF    PARTNERS    BETWEEN   THEMSELVES.  197 


in   bankruptcy ;  (j")   and  in  the  case  of  a  release  to  a  joint 
debtor  of  a  partnership  claim  ;  in  both  of  which  instances  one 


land  (and  this  is  also  the  doctrine  of 
some  early  American  cases),  that,  to 
bind  liis  copartners  by  specialty,  a 
partner  must  have  a  special  authority 
under  seal.  The  requisite  authority  is 
not  conferred  hy  a  general  partnership 
agreement  under  seal.  Harrison  v. 
Jackson,  7  T.  R.  207  ;  Steiglitz  v.  Egg- 
inton.  Holt,  141  ;  Horsley  v.  Rush, 
cited,  arguendo,  7  T.  R.  209.  See  Wil- 
liams V.  Walsby,  4  Esp.  220 ;  Napier 
V.  Catron,  2  Humph.  534.  Nor  does 
the  doctrine,  which  is  universally  re- 
ceived as  well  in  this  country  as  in 
England,  that  one  partner  may  execute 
a  valid  deed  on  behalf  of  his  firm,  if 
his  copartners  are  present  and  consent 
thereto,  constitute  any  exception  to 
the  general  rule  ;  for,  in  this  case,  the 
act  of  the  executing  partner  is  con- 
sidered the  act  of  all.  Lovelace's  Case, 
W.  Jones,  268 ;  Shep.  Touch.  55  ;  Fitz. 
Abr.  tit.  "  Feoffment,"  pi.  105 ;  Com. 
Dig.  "Fait"  (A.  2);  Burn  v.  Burn,  3 
Ves.  578  ;  Ludlow  v.  Simond,  2  Caines 
Cas.  1,  42,  55  ;  MacKay  v.  Bloodgood,  9 
Johns.  285  ;  McWhorter  v.  McMahan, 
1  Clarke  Ch.  400 ;  Halsey  v.  Whitney, 
4  Mason,  232  ;  Darst  v.  Roth,  4  Wash. 
C.  C.  471  ;  Anthony  v.  Butler,  13  Pet. 
423,  433  ;  Hart  ;•.  Withers,  1  Penn.  St. 
285,  291 ;  Ficlithorn  v.  Boyer,  5  Watts, 
159;  Overton  i-.  Tozer,  7  id.  333;  Pot- 
ter V.  McCoy,  26  Penn.  St.  458 ;  Flood 
V.  Yandes,  1  Blackf.  102;  Modisett 
V.  Lindley,  2  id.  120 ;  Henderson  v. 
Barber,  6  id.  28 ;  M'Arthur  v.  Ladd,  5 
Ohio,  514,  517  ;  Pike  v.  Bason,  21  Me. 
287  ;  Fleming  v.  Dunbar,  2  Hill  (S.  C), 
533;  Freeman  v.  Carhart,  17  Ga.  348; 
Lee  V.  Onstott,  1  Pike,  206,  218 ;  Day 
V.  Laffertj-,  4  id.  450.  The  doctrine  is 
the  same  in  equity  as  at  law.  Burn 
V.  Burn,  supra  ;  1  Hov.  Supp.  410.  See 
Smith  V.  Winter,  4  M.  &  W.  454 ;  Pal- 
mer V.  Justice  Assurance  Co.,  6  Ellis  & 
B.  1015,  88  Eng.  L.  &  Eq.  83.  While, 
then,  in  England,  the  common-law  doc- 
trines in  reference  to  the  execution  of 


sealed  instruments  have,  as  far  as  part- 
ners are  concerned,  undergone  but  lit- 
tle, if  any,  modification,  the  American 
cases  have  made  great  and  decided 
innovations.  Thus,  in  most  of  the 
States,  it  is  well  established  that  a 
partnership  will  be  bound  by  a  deed 
executed  by  one  partner  on  its  behalf, 
provided  the  act  of  such  partner  have' 
from  his  copartners  either  a  previous 
parol  authority  or  a  subsequent  parol 
ratification.  The  grounds  of  this  quali- 
fication of  the  old  rule  of  the  common 
law  are  clearly  and  forcibly  stated  in 
the  opinion  of  Mr.  Chief  Justice  Jones, 
in  Gram  v.  Seton,  1  Hall,  262.  This 
opinion  includes  a  very  elaborate  re- 
view of  all  the  leading  authorities  upon 
the  subject.  For  cases  supporting  the 
doctrine  laid  down  in  Gram  v.  Seton, 
see  Skinner  v.  Dayton,  19  Johns.  513, 
5  Johns.  Ch.  351 ;  Smith  v.  Kerr,  3 
Comst.  144  ;  Cady  v.  Shepherd,  11 
Pick.  400 ;  Swan  v.  Stedman,  4  Mete. 
548 ;  McNaughten  v.  Partridge,  11  Ohio, 
223,  235;  Purviance  v.  Sutherland,  2 
Ohio  St.  478,  486  ;  Person  v.  Carter,  3 
Murph.  321  ;  Fleming  v.  Dunbar,  2  Hill 
(S.  C),  532;  Lucas  v.  Sanders,  1  Mc- 
Mullan,  311 ;  McCart  v.  Lewis,  2  B. 
Mon.  2G7;  Darst  v.  Roth,  4  Wash. 
C.  C.  471 ;  Bond  v  Aitkin,  6  Watts  & 
S.  165,  overruling  some  earlier  cases 
in  Pennsylvania ;  Jackson  v.  Porter,  2 
Mart.  (La.)  200;  Drumright  v.  Phil- 
pot,  16  Ga.  424  ;  Price  v.  Alexander,  2 
Greene  (La.),  427;  McDonald  v.  Eggle- 
ston,  26  Vt.  154  ;  Gwinn  v.  Rooker,  24 
Mo.  290 ;  Johns  v.  Battin,  30  Penn.  St. 
84;  Lowery  v.  Drew,  18  Tex.  786. 
See  also  Brutton  v.  Burton,  1  Chitty, 
707.  In  Worrall  v.  Munn,  1  Selden, 
221,  240,  Paige,  J.,  regards  the  true 
rule,  as  derived  from  the  cases,  to  be, 
that  a  prior  parol  authority,  or  a  sub- 
sequent parol  ratification,  will  make  a 
specialty,  executed  by  one  partner  in 
behalf  of  his  firm,  binding  upon  his 
copartners,  when  the   act  in  question 


(j  )  See  ante,  p.  *  178,  note  (j). 


198 


THE   LAW   OF   PARTNERSHIP. 


[CH.  VII. 


*  182    *  partner  may  bind  his  firm,  and  without  special  au- 
thority, (/c)    The  reason  for  the  general  rule  is  obvious. 


would  have  been  valid  if  no  seal  had 
been  used.  In  Illinois  and  Alabama,  it 
is  held  to  be  a  presumption  "  warranted 
by  common  sense,  by  justice,  and  sound 
reason,  as  well  as  by  the  principles  of 
law,  that  all  the  signers  of  an  instru- 
ment, indicating,  upon  its  face,  an  in- 
tention to  seal  it,  adopt  any  seal  or 
scrawl  that  may  be  annexed  to  the 
name  of  one "  Davis  v.  Burton,  3 
Scam.  41;  Witter  v.  McNiel,  id.  433; 
Hatch  I'.  Crawford,  2  Porter,  54  ;  Her- 
bert V.  Hanrick,  16  Ala.  581.  In  this 
last  case,  the  doctrine  of  Gram  v.  Seton 
is  asserted.  In  Tennessee,  the  tech- 
nical rule  of  the  common  law  is  strictly 
adhered  to,  and  no  partner  can  bind 
his  copartnership  by  affixing  a  seal, 
unless  he  be  specially  empowered, 
under  seal,  so  to  do.  Turbeville  v. 
Ryan,  1  Humph.  113  ;  Napier  v.  Cat- 
ron, 2  id.  534.  See  Lambden  v.  Sharp, 
9  id.  224.  As  for  the  evidence  of  prior 
authority,  or  subsequent  ratification 
from  which  a  jury  may  infer  the  power 
of  one  partner  to  bind  his  copartners 
by  deed,  it  has  been  held,  that  where, 
in  a  deed  of  dissolution  executed  by 
both  partners,  a  debt,  for  which  one 
partner  had  given  a  sealed  note  in  the 
name  of  his  firm,  was  put  down  as  a 
debt  "  owing  by  said  firm,"  this  was  an 
acknowledgment  of  the  legal  obligation 
upon  the  firm  of  the  specialty  from 
which  an  authority  to  execute  it  might 
be  inferred.  Fleming  v.  Dunbar,  2 
Hill  (S.  C),  532.  So  where  one  of 
two  partners  gave  a  bond  for  a  firm 
debt,  in  the  name  of  the  firm,  and  the 
other  partner  afterwards  gave  direc- 
tions for  its  payment,  by  an  order  in 
which  the  bond  was  described  as  the 
bond  of  the  partnership,  held,  that  this 
order  was  evidence  of  a  recognition  of, 
and  an  assent  to,  the  act  of  the  partner 
who  executed  the  bond,  from  which 
his  authority  so  to  act  might  fairly  be 
found  by  the  jury.  Person  v.  Carter, 
3  Murph.  321.  See  Price  v.  Alexander, 
2  Greene  (la.),  427  ;  Drumright  i-. 
Philpot,  16  Ga.  424 ;  Bond  v.  Aitkin,  6 


\Vatts  &  S.  165;  Tuttle  v.  Eskridge,  2 
Munf.  330  ;  Wilson  v.  Hunter,  14  Wis. 
683. 

(k)  The  rule  applicable  to  a  release 
by  one  partner  of  a  joint  claim  has 
been  generally  stated  thus  :  "  Though 
one  partner  cannot  by  deed  bring  any 
fresh  burden  upon  his  copartner,  he 
may  bar  Iiim  of  a  right  which  they 
possess  jointly."  One  reason  some- 
times given  for  this  apparent  exception 
to  the  general  doctrine  of  the  common 
law  is,  that,  inasmuch  as  a  debtor  may 
lawfully  pay  his  debt  to  one  partner, 
he  ought,  also,  to  be  able  to  obtain  a 
discharge  upon  due  payment.  Another 
reason,  of  a  similar  nature,  is  suggested 
by  the  above  rule  itself,  which  is,  that 
though  a  release  be  under  seal,  yet  its 
operation  is  not,  like  that  of  a  bond  or 
of  a  deed,  to  expose  the  separate  per- 
sons and  estates  (real  as  well  as  per- 
sonal) of  the  partners  to  special  and 
dangerous  liabilities.  But  probably 
the  true,  though  technical,  foundation 
of  the  rule  that  one  partner  may  bind 
his  firm  by  a  release,  under  seal,  of  a 
joint  claim,  is,  that  inasmuch  as  such  a 
release  is  certainly  binding  on  the  part- 
ner who  executes  it,  and  inasmuch  as 
he  is  a  necessary  coplaintifE  in  any 
action  by  the  firm  for  the  debt  released, 
his  release  necessarily  operates  as  a  bar 
to  any  joint  action  by  the  partners  for 
the  same  debt.  The  rule  is  the  same 
both  in  law  and  in  equity.  2  Kol.  Abr. 
410  (D.);  Tooker's  Case,  2  Co.  68; 
Ruddock's  Case,  6  id.  25  ;  Perry  v. 
Jackson,  4  T.  R.  519  ;  Stead  ;•.  Salt,  10 
J.  B.  Moore,  393,  3  Bing.  103  ;  D. 
arguendo,  Swan  v.  Steele,  7  East,  211 ; 
per  Parke,  B.,  in  Adams  v.  Bankart,  1 
Cromp.,  M.  &  R.  684,  and  in  Phillips  v. 
Clagett,  11  M.  &  W.  84,  94  ;  Pierson  v. 
Hooker,  3  Johns.  68  ;  Bulkley  v.  Day- 
ton, 14  id.  387;  Morse  v.  Bellows,  7 
N.  H.  507  ;  United  States  v.  Astley,  3 
Wash.  C.  C.  511 ;  McBride  v.  Hagan, 
1  Wend.  326,  337 ;  Napier  v.  McLeod, 
9  id.  120;  Salmon  v.  Davis,  4  Binney, 
375;  Curtwell  v.  Brown,  5  Jones,  263. 


CH.  VII.]       RIGHTS    OF    PARTNERS   BETWEEN   THEMSELVES.  199 


The  seal  belongs  to  common  law  and  not  to  the  law-merchant, 
and  partnership  belongs  to  the  law-merchant  and  not  to 
common  law.  (/)  But  as  there  are  very  *  few  mercantile  *  183 
transactions  in  which  seals  are  needed  or  used :  and,  if 
a  seal  were  used  when  the  instrument  was  equally  effective 
without  it,  the  courts  might  regard  the  seal  as  surplus- 
age only ;  (m)  and  as  a  subsequent  ratification  would   have 


Respecting  deeds  of  composition,  see 
Watson  on  Part.  p.  225 ;  Ellison  v. 
Dezeil,  1  Selw.  N.  P.  (Am.  ed.)  385. 
See  Hawksiiaw  v.  Parkins,  2  Swanst. 
539,  544  ;  Bruen  v.  Marquand,  17  Johns. 
58  ;  Halse}^  v.  Wliitney,  4  Mason,  206, 
232 ;  Smitli  v.  Stone,  4  Gill  &  J.  310. 
As  one  partner  may  himself  release  a 
partnership  claim,  so  he  may,  imder 
seal,  authorize  an  agent  to  bind  the 
firm  by  the  discharge  of  a  debt  due  to 
it.  Wells  V.  Evans,  20  Wend.  251,  22 
id.  324.  Where  one  partner  duly  signed 
and  sealed  a  release  of  all  actions, 
claims,  demands,  &c.,  but  the  release 
did  not  purport  on  its  face  to  apply 
particularly  either  to  the  separate  de- 
mands of  that  partner  or  to  those  of  his 
firm,  it  not  appearing  that  the  releasee 
was  separately  indebted  to  the  execut- 
ing partner,  the  release  was  held  to  be 
a  discharge  of  the  debts  due  the  part- 
nership. Emerson  i'.  Knower,  8  Pick. 
63.  And  if  one  partner  execute  a  deed 
purporting  to  release  all  the  joint  de- 
mands, parol  evidence  that  a  particular 
claim  was  not  intended  to  be  included 
is  inadmissible.  Pierson  v.  Hooker,  3 
Johns.  68. 

(/)  Lord  Kenyon  says,  in  Harrison 
V.  Jackson,  7  T.  R.  210,  that  it  would 
be  a  most  alarming  doctrine  to  hold 
out  to  the  mercantile  world  that  one 
partner  could  bind  the  others  by  deed  ; 
since  it  would  extend  to  the  case  of 
mortgages,  and  would  enable  a  partner 
to  give  to  a  favorite  creditor  a  real 
lien  on  the  estates  of  the  other  part- 
ners. But  the  reasoning  of  Jones, 
C.  J.,  on  this  point,  in  Gram  v.  Seton, 
1  Hall,  260,  seems  conclusive:  "Nego- 
tiable paper,  by  which  the  partner 
may  bind  the  firm,  equally  imports  a 
consideration  with  a  seal ;    and,  upon 


general  principles,  the  use  of  the  seal 
of  the  copartner,  equally  with  the  sig-- 
nature  of  the  copartnership,  would,  if 
permitted,  be  restricted  to  copartner- 
ship purposes  and  copartnership  opera- 
tions solely ;  and  the  joint  deed  of  the 
copartners  executed  by  the  present  for 
the  absent  members,  be  held  compe- 
tent to  convey  or  to  encumber  the 
copartnership  property  alone,  and  to 
have  no  operation  upon  the  private 
funds  or  separate  estate  of  the  copart- 
ners. With  these  restrictions  upon 
the  use  and  operation  of  the  seal,  is 
not  the  power  of  a  partner  to  bind  his 
copartner,  and  to  charge  and  encumber 
his  estate,  as  great  and  as  mischievous, 
without  the  authority  to  use  the  seal 
of  tlie  absent  partner,  as  it  would  be 
with  that  authority  ?  "  It  is  to  be 
remembered,  also,  that  the  distinction 
formerly  taken  between  debts  by  spe- 
cialty and  those  by  simple  contract  — 
by  which  the  former  were  held  to  be  a 
charge  upon  the  real  estate  of  the 
debtor,  while  the  latter  were  not  —  is 
now  for  the  most  part  done  away,  at 
least  in  this  country. 

(m)  This  doctrine  has  been  often- 
est  applied  where  one  partner  has 
transferred  an  interest,  absolute  or 
qualified,  in  the  partnership  property. 
Thus,  a  general  or  partial  assignment 
for  the  benefit  of  creditors,  Anderson 
V.  Tompkins,  1  Brock.  462  ;  Harrison 
I'.  Sterry,  5  Cranch,  289;  M'CulIough 
u.  Sommerville,  8  Leigh,  415;  Robin- 
son V.  Crowder,  4  McCord,  510;  Deck- 
ard  V.  Case,  5  Watts,  22 ;  Hennessy  v. 
Western  Bank,  6  Watts  &  S.  300,  310 ; 
a  mortgage  of  personal  property  be- 
longing to  the  firm,  Tapley  v.  Butter- 
field,  1  Mete.  515;  Milton  v.  Mosher, 
7  id.  244;  Swcetzer  v.  Mead,  5  Mich. 


200 


THE   LAW    OF   PARTNERSHIP. 


[CH.  vir. 


*  184  the  *  effect  of  previous  authority ;  and  as  courts  of 
equity,  and,  to  some  extent,  courts  of  law,  place  land, 
when  it  is  part  of  the  partnership  property  (and  it  is  in  rela- 
tion to  conveyances  of  land  that  the  seal  is  most  necessary,  and 
most  frequently  interferes  with  the  law  of  partnership),  on  the 


107 ;  an  assignment  of  a  chose  in 
action  clue  to  the  firm,  Everit  v. 
Strong,  5  Hill,  163 :  these  transactions 
have  all  been  held  valid,  notwithstand- 
ing that  the  partner,  purporting  to  act 
for  his  firm,  has  used  a  seal  therein. 
It  has  also  been  held,  that  a  delegation 
of  power  under  seal  by  one  partner  to 
do  acts  wliich  the  agent  would  have 
been  equally  competent  to  do,  if  au- 
thorized by  parol,  was  not  invalid  on 
account  of  the  unnecessary  solemnity 
of  the  instrument  making  the  delega- 
tion. Lucas  V.  Bank  of  Darien,  2 
Stewart,  280.  See  also  Price  r.  Alex- 
ander, 2  Greene  (La.),  427,  433;  Pur- 
viance  v.  Sutherland,  2  Oliio  St.  478 ; 
and  contra,  Cummins  v.  Cassily,  5  B. 
Mon.  74,  75.  Upon  the  same  principle, 
the  case  of  Brutton  v.  Burton,  1  Chitty, 
707,  seems  to  have  been  decided.  The 
doctrine  has  even  been  extended  to  ex- 
ecutory contracts.  Lawrence  v.  Tay- 
lor, 5  Hill,  107 ;  Worrall  r.  Munn,  1 
Selden,  220.  See  Pike  r.  Bacon,  21 
Me.  280;  McWhorter  v.  McMahon,  1 
Clarke  Ch.  400;  Ruffner  v.  McConnel, 
17  111.  212,  216.  See  remarks  of 
Rogers,  J.,  in  Hennessy  v.  Western 
Bank,  6  Watts  &  S.  310.  The  hmita- 
tion  to  the  doctrine,  that  a  transaction 
by  one  partner  which  would  be  bind- 
ing on  the  firm  without  seal  is  not 
vitiated  because  a  seal  is  used,  is  thus 
stated  in  Lucas  v.  Bank  of  Darien,  2 
Stew.  297  :  "  It  is  said  that  even  an 
act  which  would  be  valid  against  the 
firm  without  a  seal,  if  done  by  the 
partner  or  by  agent  under  a  parol 
appointment,  would  be  void  if  exe- 
cuted by  specialt}-.  On  this  point  I 
think  a  wise  discrimination  is  required. 
I  take  the  distinction  to  be  this :  that, 
if  the  bond  or  deed  constitutes  the 
contract,  it  must  be  made  the  evidence 
of  it,  and  determines  the  remedy.  Then 
the  principle  applies  ;  because  the  le- 
gal effect  of  the  contract,  the  form  of 


the  remedy,  and  the  rules  of  evidence, 
are  essentially  different,  the  security 
being  of  higher  dignity."  And  this  is 
in  accordance  with  the  language  of 
Marshall,  C.  J.,  in  Anderson  v.  Tomp- 
kins, 1  Brock.  462  :  "  No  action  can  be 
sustained  against  the  partner  who  has 
not  executed  the  instrument  on  the 
deed  of  his  copartner.  No  action  can 
be  sustained  against  the  partner,  which 
rests  on  the  validity  of  such  a  deed  as 
to  the  person  who  has  not  executed 
it."  Bewley  v.  Tams,  17  Penn.  St. 
485.  The  doctrine  of  the  court  in 
Purviance  v.  Sutherland,  2  Ohio  St. 
478,  is,  that  the  technical  rule  of  the 
common  law  is  satisfied  by  holding 
that  an  agreement  under  seal  in  the 
name  of  the  firm,  which  is  executed 
by  one  partner  only,  is  not  the  deed  of 
the  partnership.  But  such  an  agree- 
ment, though  the  deed  only  of  the 
partner  sealing  it,  may  yet  be  evidence 
of  a  partnership  liability  (Fagely  v. 
Bellas,  17  Penn.  St.  67) ;  and  perhaps 
the  form  of  the  agreement  may  raise  a 
presumption  that  a  seal  was  affixed  to 
the  contract  by  mistake.  In  Ken- 
tucky, by  statute,  promissory  notes 
have  all  the  legal  effect  and  dignity  of 
bonds  under  seal.  Nevertheless,  "  if  a 
partner,  in  executing  several  notes  for 
a  debt,  in  instalments,  should  happen 
to  affix  a  superfluous  scrawl  to  one  of 
them,  and  omit  it  as  to  the  others,  the 
first  might  be  binding  on  himself  alone, 
whilst  the  others  would  bind  all  the 
partners  ;  and  this  would  be  the  only 
legal  effect  of  the  scrawl,  without 
which  the  note  would  have  the  same 
effect  in  every  other  respect."  Per 
Robertson,  C.  J.,  in  Montgomery  v. 
Boone,  2  B.  Mon.  244.  See  Human 
V.  Cuniffe,  82  Mo.  316;  Dubois's  Ap- 
peal, 88  Penn.  231.  But  see  Schmertz 
V.  Shreeves,  62  Penn.  St.  457,  and  Rus- 
sell V.  Annable,  100  Mass.  72. 


CII.  VII.]       RIGHTS    OF   PARTNERS   BETWEEN    THEMSELVES.  201 

same  footing  with  personal  property,  —  the  rule  that  a  partner 
can  affix  no  seal  but  his  own  and  that  of  one  who  has  given 
him  authority  to  do  so,  may  perliaps  be  considered  as  having 
now  less  practical  importance  than  formerly. 

5.    Of  the  Rejjresentations  or  Admissions  of  a  Partner. 

As  a  partner  may  act  for  his  firm  by  his  general  authority, 
so,  as  we  have  already  seen,  his  representations,  acknowledg- 
ments, admissions,  part  payments,  notice  given  or  received,  and 
all  otlier  doings  on  which  rights  or  obligations  may  be  founded, 
are  binding  upon  the  partnership :  always,  however,  with  the 
qualification  that  these  things  belong  fairly  and  actually  to  the 
business  of  the  firm  ;  for  this  is  a  condition  which  universally 
limits  his  power.  Thus,  it  was  once  quite  uncertain  what  was 
the  effect  of  an  acknowledgment,  by  a  partner,  of  a  debt  barred 
by  the  statute  of  limitations.  It  was  held  to  bind  the  firm  as 
long  as  this  statute  was  regarded  as  founded  on  presumption  of 
payment.  Whether  there  had  been  such  payment  was  perfectly 
well  known  to  every  partner,  and  known  to  each  one  after  a 
dissolution  as  well  as  before.  Consequently,  if  a  partnership 
owed  a  debt,  and  was  dissolved,  and  the  debt  ran  on  more  than 
six  years,  and  then  one  of  the  former  partners  acknowledged 
the  debt,  this  removed  the  presumption  of  payment,  and 
all  tlie  partners  became  bound,  (n)      *  But  when  the    *  185 

(n)  The   different  views   taken    at  satisfactory  evidence  of  the  existence 

different  periods  by  the  courts  of  the  of  the  debt,  but  also  a  new  promise, 

statute  of  limitations  are  stated  in  all  But  if  the  continued  existence  of  the 

the  elementary  treatises  upon  the  sub-  debt  was  proved  by  the  acknowledg- 

ject.     See  3  Parsons  on  Contracts,  61,  ment  or  admission  of  the  debtor,  or  by 

67  ;  Angell  on  Limitations,  ch.  20  and  any  thing  amounting  thereto,  then  the 

23.     The  earliest  decisions  of  all  seem  plaintiff  was  not  required  to  go  further, 

to  indicate  that  the  statute  was  at  first  but  might  rest  his  case  upon  proof  of 

regarded  as  a  statute  of  repose.     But  the    acknowledgment    or    admission, 

this  view  soon  gave  way  to  another,  and   the   law  would   imply   therefrom 

which    construed   the   statute   as   one  the    necessary    promise.      While    the 

of  presumption  entirely  ;  rendering  it  statute  of  limitations  was  regarded  in 

probable  that  the  barred  debt  had  been  this  light,  the  effect  of  an  acknowledg- 

paid,  but  leaving  this  presumption  lia-  ment  by  one  of  several  joint  debtors, 

ble  to  rebuttal  by  any  thing  amount-  that  a  joint  debt  barred  by  the  statute 

ing  to  proof  that  the  debt  was  in  fact  was  still  unsatisfied,  came  before  Lord 

unsatisfied.    It  is  true,  that,  to  recover  Mansfield,  in  the  case  of  VVhitcomb  v. 

upon  a  claim  against  which  the  statute  Whiting,  3  Doug.  052.    Tiiere  the  docla- 

had  run,  there  was  required  not  only  ration,  in  the  common  form,  was  upon  a 


202 


THE   LAW    OP   PARTNERSHIP. 


[CH.  VII. 


statute  of  limitation  came  to  be  looked  upon,  as  it  now  is 
universally,  as  a  statute  of  repose   and  not  of  presumption, 


joint  and  several  promissory  note ; 
pleas,  the  general  issue,  and  non- 
assumpsit  infra  sex  annos ;  replication, 
assumpsit  infra  sex  annos.  At  tlie  trial, 
the  plaintiff  produced  a  joint  and  sev- 
eral note  executed  by  the  defendant 
and  three  others ;  and  having  proved 
payment,  b}'  one  of  the  others,  of  inter- 
est on  the  note,  and  part  of  the  prin- 
cipal within  six  years,  and  the  judge 
thinking  that  was  sufficient  to  take  the 
case  out  of  the  statute  as  against  the 
defendant,  a  verdict  was  found  for  the 
plaintiff.  A  rule  being  granted  to  show 
cause  why  there  should  not  be  a  new 
trial,  it  was  contended  that  the  plain- 
tiff, by  suing  the  defendant  separately, 
had  treated  this  note  exactly  as  if  it 
had  been  signed  only  by  the  defend- 
ant ;  and,  therefore,  whatever  miglit 
have  been  the  case  in  a  joint  action,  in 
this  case  the  acts  of  the  other  parties 
were  clearly  not  evidence  against  him. 
The  acknowledgment  of  a  party  him- 
self does  not  amount  to  a  new  promise, 
but  is  only  evidence  of  a  promise. 
Lord  Mansfield :  "  The  question  here 
is  only  whether  the  action  is  barred 
by  the  statute  of  limitations.  Pay- 
ment by  one  is  payment  for  all,  the 
one  acting,  virtually,  as  agent  for  the 
rest :  and,  in  the  same  manner,  an 
admission  by  one  is  an  admission  by 
all ;  and  the  law  raises  the  promise  to 
pay,  when  the  debt  is  admitted  to  be 
due."  Willes,  J. :  "  The  defendant 
has  had  the  advantage  of  the  partial 
payment,  and  tlierefore  must  be  bound 
by  it."  Ashhurst  and  Buller,  JJ.,  of 
the  same  opinion. 

In  the  first  place,  it  is  to  be  observed 
of  this  case  that  it  proceeds  upon  the 
then  prevailing  idea,  that  the  statute 
of  limitations  was  to  be  regarded  as 
one  of  presumption.  Per  Best,  C.  J., 
in  Perham  v.  Kaynal,  2  Bing.  306 ; 
Ricliardson,  C.  J.,  in  Exeter  Bank  v. 
Sullivan,  6  N.  H.  124.  Li  the  second 
place,  it  decides  that  joint  debtors  are, 
from  their  community  of  interest,  so 
far  agents  of  each  other  that  any  one 


of  them  can  bind  the  rest  by  an  ad- 
mission respecting  the  joint  debt,  even 
though  that  debt  be  barred  by  the 
statute  of  limitations.  It  does  not 
decide  that  one  of  several  joint  debt- 
ors can,  under  such  circumstances, 
bind  his  co-debtors  by  a  fresh  promise, 
or  by  making  them  liable  upon  a  new 
and  independent  cause  of  action.  It 
only  de(!lares  tliat  the  acknowledg- 
ment of  one  must  be  taken  as  the 
acknowledgment  of  all ;  tlien,  all  hav- 
ing admitted  their  joint  indebtedness, 
the  law  raises  the  new  promise. 

As  to  the  support  wliicli  the  case 
derives  from  other  adjudications,  it 
has  sometimes  been  supposed  to  be 
inconsistent  with  the  earlier  case  of 
Bland  v.  Haselrig,  2  Vent.  152.  See 
Atkins  V.  Tredgold,  2  B.  &  C.  28,  opin- 
ion of  Abbott,  C.  J.  But,  besides  the 
facts  that  the  latter  case  cannot  be 
regarded  as  of  much  authority,  and 
can  best  be  explained  in  a  manner 
which  leaves  it  in  no  way  contra- 
dictory (see  note  in  3  Doug.  653 ; 
remarks  of  Best,  C.  J.,  in  Perham  v. 
Raynal,  2  Bing.  309;  of  Parker,  C.  J., 
in  Wiiite  v.  Hall,  3  Pick.  293  ;  of  Story, 
J.,  in  Bell  v.  Morrison,  1  Pet.  367), 
Whitcomb  v.  Whiting  has  been  con- 
stantly acted  upon  as  sound  law  in  the 
English  courts  ;  not  always,  however, 
we  think,  upon  precisely  the  same 
grounds.  So  long  as  the  statute  of 
limitations  was  regarded  as  one  of 
presumption  merely,  Whitcomb  v. 
Whiting  might  be,  as  it  was,  literally 
followed.  Its  doctrine  was  pushed  to 
its  utmost  limits  in  Jackson  i\  Fair- 
bank,  2  II.  Bl.  340.  There,  one  of  two 
makers  of  a  joint  and  several  promis- 
sory note  having  become  bankrupt, 
the  payee  received  a  dividend  imder 
the  commission,  on  account  of  the 
note,  within  six  years  before  action 
brought.  It  was  held,  that  the  pay- 
ment of  such  dividend  was  such  an 
acknowledgment  of  the  debt  as  took 
the  case  out  of  the  statute  of  limita- 
tions as  to  the  other  maker.     This  last 


CH.  VII.]        RIGHTS   OP   PARTNERS   BETWEEN   THEMSELVES. 


203 


*  and  as  resting  on  the  principle  that  the  courts  should  not    *  186 
enforce  an  unpaid  debt,  if  it  were  old  and  stale,  then  the 


case,  and  the  wliole  doctrine  of  Wliit- 
comb  V.  Whiting,  were,  it  is  true, 
strongly  questioned  in  Brandrum  v. 
Wiiarton,  1  B.  &  Aid.  463.  So  also 
in  Atkins  v.  Tredgold,  2  B.  &  C.  23, 
where,  one  of  two  makers  of  a  joint 
and  several  promissory  note  liaving 
died,  it  was  litid,  that  the  payment  of 
interest  within  six  years  by  the  other 
maker  would  not  take  the  case  out  of 
the  statute,  as  against  the  executors  of 
the  deceased  promisor.  But  in  Per- 
ham  i\  Raynal,  2  Bing.  300,  where  the 
two  cases  just  mentioned  are  consid- 
ered, Whitcomb  v.  Whiting  was  ex- 
plicitly denied  to  be  in  any  way 
impugned  by  them,  and  was  expressly 
affirmed  as  good  law.  Best,  C.  J., 
thus  concluded  his  opinion  :  "  It  seems, 
therefore,  that  the  decision  in  Whit- 
comb !'.  Whiting  rests  on  the  same 
principle  as  decisions  with  respect  to 
admissions  by  one  of  several  persons 
jointly  concerned  in  other  instances ; 
that  we  should  create  an  anomaly  by 
departing  from  it ;  that  it  has  been 
confirmed  in  many  cases,  and  not 
shaken  by  any  authority."  See  Halli- 
day  V.  Ward,  3  Camp.  32. 

The  cases  we  have  just  been  con- 
sidering were  all  adjudged  while  the 
statute  of  limitations  was  still  regarded 
as  a  statute  of  presumption,  Perham  v. 
Eaynal  being  decided  in  1824.  In  little 
more  than  a  year  after,  Court  v.  Cross, 
3  Bing.  329,  was  adjudged  in  the  Com- 
mon Pleas,  and  was  the  first  case  in 
which  a  decided  step  was  taken  to- 
wards construing  the  statute  of  limita- 
tions as  a  statute  of  repose.  C.  J., 
Best,  who  then  delivered  the  opinion 
of  the  court,  reasserted  this  view  of 
the  statute  in  Scales  v.  Jacob,  3  Bing. 
652.  The  position  he  assumed  was 
adopted  and  confirmed  by  Lord  Chief 
Justice  Tentcrden,  in  Turner  i\  Smart, 
6  B.  &  C.  608  ;  and  thenceforward  the 
statute  of  limitations  has  been  invari- 
ably regarded  and  construed  as  a  stat- 
ute of  repose.  The  earlier  doctrine 
was  also  applied  to  payments  of  inter- 


est, made  by  one  of  the  makers  of 
a  joint  and  several  promissory  note, 
though  more  tlian  six  years  after  it 
became  due.  They  were  held  to  take 
the  case  out  of  the  statute,  as  against 
the  other  maker.  Manderston  v.  Rob- 
ertson, 4  Man.  &  Ry.  440  ;  Channell  v. 
Ditchburn,  5  M.  &  W.  494.  But,  in 
such  case,  the  payment  or  payments 
must  be  distinctly  shown  to  be  made 
on  account  of  the  particular  debt. 
Holme  V.  Green,  1  Stark.  488.  So, 
where  A.  and  B.  made  a  joint  and  sev- 
eral promissory  note,  B.  being  merely 
a  surety,  a  part  payment  by  A.,  within 
six  years  and  during  the  lifetime  of  B., 
was  held  to  take  the  case  out  of  the 
statute  so  as  to  make  B.'s  administrator 
liable  on  the  note.  Burleigh  v.  Stott, 
8  B.  &  C.  36.  See  Perham  v.  Raynal, 
2  Bing.  306 ;  Wyatt  r.  Hodson,  8  id. 
309.  And  where  one  of  three  joint 
contractors,  more  than  si.x  years  after 
the  contracting  of  the  original  debt,  but 
within  six  years  of  the  action  brought, 
made  a  payment  on  account  of  a  joint 
debt,  but  in  fraud  of  liis  co-contractors, 
it  was  nevertheless  held  to  bar  the 
operation  of  the  statute  as  against  the 
other  two.  Goddard  v.  Ingram,  3  Q.  B. 
839.  See  Martin  r.  Brydges,  3  Car. 
&  P.  83.  But,  as  we  have  already 
seen,  payment  of  interest  by  one  or 
two  makers  of  a  joint  and  several  prom- 
issory note,  after  the  death  of  the  other, 
will  not  take  the  case  out  of  the  statute, 
as  against  the  executor  of  the  deceased 
maker.  Atkins  v.  Tredgold,  supra. 
See  Ault  v.  Goodrich,  4  Russ.  430; 
Way  V.  Bassett,  5  Hare,  55;  the  prin- 
ciple being  that  the  joint  contract  is 
determined  by  the  death  of  one  of  the 
joint  contractors ;  nor  after  the  death 
of  one  of  two  joint  contractors  will  a 
payment  on  joint  account  by  the  exec- 
utor of  the  deceased  take  a  debt  out 
of  the  statute,  as  against  the  survivor. 
Slater  r.  Lawson,  1  B.  &  Adol.  390. 
See  Giffin  v.  Asliby,  2  C.  &  K.  139. 
See  further,  in  confirmation  of  the  gen- 
eral principle,  Rew  v.  Pettet,  1  A.  & 


204 


THE   LAW    OF    PARTNERSHIP. 


[CH.  VII. 


*  187    l)ar  of  the  statute  *  could  only  be  removed  by  a  new  prom- 
ise ;  that  is,  the  old  debt  could  not  itself  be  demanded,  but 


EI.  106  ;  Pease  v.  Hirst,  10  B.  &  C.  122 ; 
Clark  V.  Hooper,  10  Bing.  480  ;  Pritch- 
ard  V.  Draper,  1  Russ.  &  Myl.  191. 

Respecting  acknowledgments  or 
promises  by  words  only,  the  question 
is  put  at  rest  in  England  by  Lord 
Tenterden's  act  (9  Geo.  4,  ch.  14), 
wliich,  after  reciting  21  Jac.  1,  ch.  16, 
and  the  Irish  act  of  10  Car.  1,  sess.  21, 
ch.  26,  declares  "  that  where  there 
shall  be  two  or  more  joint  contractors, 
or  executors  or  administrators  of  any 
contractor,  no  such  joint  contractor, 
executor,  or  administrator,  shall  lose 
the  benefits  of  the  said  enactments,  or 
either  of  them,  so  as  to  be  chargeable 
in  respect  or  by  reason  only  of  any 
written  acknowledgment  or  promise 
made  and  signed  by  any  other  or 
otiiers  of  them."  But,  with  respect  to 
admissions  by  payments,  the  same 
statute  provides  "  that  nothing  therein 
contained  shall  alter,  take  away,  or 
lessen  the  effect  of  any  payment  of 
any  principal  or  interest  by  any  per- 
sons wliatsoever."  The  effect  of  this 
proviso  is,  to  leave  the  effect  of  past 
payment  of  principal  or  interest,  by  one 
of  several  joint  debtors,  the  same  as 
before  the  passage  of  the  statute  ;  and 
the  reason  for  it  is  said  by  Chief  Jus- 
tice Tindal,  in  Wyatt  v.  Hodson,  8 
Bing.  312,  to  be,  "  Because  the  pay- 
ment of  principal  or  interest  stands  on 
a  different  footing  from  the  making  of 
promises,  whicli  are  often  rash  or  ill 
interpreted  ;  while  money  is  not  usually 
paid  witliout  deliberation,  and  payment 
is  an  unequivocal  act,  so  little  liable  to 
misconstruction  as  not  to  be  open  to 
the  objection  of  an  ordinary  acknowl- 
edgment." Chippendale  v.  Timrston, 
4  C.  &  P.  98;  1  Moody  &  M.  411; 
Waters  i-.  Tompkins,  2  C,  M.  &  R.  723. 

The  principle,  then,  being  establislied 
in  the  English  law,  that  an  acknowledg- 
ment by  one  of  several  joint  debtors  of 
the  existence  of  a  joint  debt  will  oper- 
ate as  a  new  promise  by  all  to  pay, 
which  principle  is,  however,  by  statute 
limited  in  its  application  to  acknowl- 


edgments by  past  payments,  we  may 
next  inquire  what  is  the  effect  in  the 
English  law  of  a  payment  by  one  of 
several  partners  of  principal  or  interest 
on  account  of  a  partnership  debt,  after 
the  firm  has  been  dissolved.     That  is, 
Whitcomb   v.    Whiting,    as   now   con- 
strued, deciding   that   one   of   several 
joint  contractors  has  an  implied  power, 
residting  from  their  community  of  inter- 
est, to  bind  all  by  a  promise  to  pay  a 
debt  barred  by  the  statute  of  limita- 
tions, the  precise  question  with  respect 
to  partners  is,  How  long  does  this  com- 
munity  of  interest,   from   which   this 
implied    power   is    derived,  continue  1 
Does  it  exist  after  the  dissolution  of 
the  firm,  so  that  one  partner  may  tlien 
still  charge  his  copartners  by  a  promise 
to  pay  a  debt  against  which  the  statute 
has   run  ?     It   seems   to  be  settled  in 
England  that  it  does  so  exist ;  and  that 
one  partner  may,  after  dissolution,  im- 
pose afresh  charge  upon  his  copartners, 
by  a  payment  of  principal  or  of  interest, 
on  account  of  an  unliquidated  partner- 
ship   debt    barred   by    the    statute    of 
limitations.     Two  reasons  seem  to  be 
given   for   this  doctrine.     In   the  first 
place,  partners  after  dissolution,  being 
still  jointly  liable  for  the  partnership 
debts,  are  still  regarded  as  joint  debt- 
ors, and   therefore  within  the  rule  of 
Whitcomb  v.  Whiting.     Furthermore, 
it  was  decided  in  Wood  v.  Braddick,  1 
Taunt.  104,  that  an  admission  by  one 
of  two  partners,  after  the  dissolution  of 
the  partnership,  concerning  joint  con- 
tracts made  during  the  partnership,  is 
competent  evidence  to  charge  the  other 
partner.      In   Pritchard   v.   Draper,    1 
Russ.  &  Myl.  191,  199,  Lord  Chancellor 
Brougham  asserted  the  same  doctrine; 
and  it  being  objected  that  the  declara- 
tions of  one  partner  after  dissolution 
as   to   a   fact   relating   to   partnership 
transactions,  but  which  fact  also  took 
place   after  dissolution,  were   not   ad- 
missible evidence  against  the  other  part- 
ner, he  said  :  "  The  partnersliip,   it  is 
true,  had  ceased ;  but  so,  in  Whitcomb 


CH.  VII.]       RIGHTS    OF   PARTNERS   BETWEEN    THEMSELVES. 


205 


it  was  a  good  consideration  *  for  a  new  promise ;  and, 
if  this  were  made,  it  could  be  enforced.     But  the  ques- 


188 


V.  Whiting,  had  the  connection  between 
the  two  makers  of  the  promissory  note. 
And  in  Goddard  v.  Ingram,  3  Q.  B. 
839,  wliere  one  of  several  partners,  after 
the  dissolution  of  his  firm  and  more 
tlian  six  years  after  tlie  incurring  of 
the  original  debt,  but  within  six  years 
of  the  bringing  of  the  action,  had  made 
a  part  jiayment  on  account  of  it,  which 
tlie  jury  found  to  be  fraudulent  upon 
his  copartners,  it  was  held,  nevertheless, 
that  the  payment  barred  the  operation 
of  the  statute." 

Such  seems  to  be  the  state  of  the 
English  law  upon  this  subject.  With 
respect  to  the  law  of  this  country,  as 
we  have  before  said,  it  seems  to  be 
settled,  generally,  and  perhaps  uni- 
versally, that  the  statute  of  limitations 
is  one  of  repose,  and  not  one  of  pre- 
sumption. Whitcomb  v.  Whiting,  as 
above  explained  in  connection  with 
the  statute  of  limitations,  has  also 
been  followed  in  many  autlioritative 
cases,  and  its  principle  applied  to  all 
kinds  of  acknowledgments  and  ad- 
missions, except  where  in  England  its 
operation  has  been  restricted  by  ex- 
press enactment.  Thus  in  the  New  Eng- 
land States,  with  the  exception  of  New 
Hampshire,  the  doctrine  of  that  case 
has  been  uniformly  approved.  Getch- 
ell  V.  Heald,  7  Greenl.  26;  Pike  v. 
Warren,  15  Me.  390;  Dinsmorey.  Dins- 
more,  21  id.  433 ;  Shepley  v.  Water- 
house,  22  id.  497  ;  Martin  v.  Root,  17 
Mass.  227 ;  Cambridge  i\  Hobart,  10 
Pick.  232  ;  Ilsley  v.  Jewett,  2  Mete.  168 ; 
Wheelock  v.  Doolittle,  18  Vt.  440; 
Joslyn  V.  Smith,  13  id.  353 ;  Turner  v. 
Ross,  1  R.  I.  88 ;  Bound  v.  Lathrop,  4 
Conn.  336  ;  Coit  v.  Tracy,  9  id.  1.  So 
also  in  Virginia,  Shelton  v.  Cocke,  3 
Munf.  191  (see  Farmers'  Bank  v. 
Clarke,  4  Leigh,  603)  ;  in  South  Caro- 
lina, in  the  early  cases,  Beitz  v.  Fuller, 
1  McCord,  541 ;  Fisher  v.  Tucker,  1 
McCord,  Ch.  169 ;  which  are,  however, 
now  overruled  (see  next  note)  ;  in 
North  Carolina,  Davis  v.  Coleman,  7 
Ired.   424 ;    in    Pennsylvania,    Zent   v. 


Heart,  8  Barr,  337,  overruling  prior 
case ;  in  New  York,  in  some  of  the 
early  decisions,  which,  however,  have 
since  been  overruled,  see  Smith  v. 
Ludlow,  6  Johns.  257 ;  Johnson  v. 
Beardslee,  15  id.  3,  and  next  note.  The 
rule  of  Whitcomb  v.  Whiting,  as  in 
England,  has  also  been  frequently  ap- 
plied in  this  country  to  tlie  case  of  a 
joint  and  several  promissory  note, 
made  by  two  or  more  parties,  but  by 
some  of  them  only  in  the  character  of 
surety.  Hunt  v.  Bridgliam,  2  Pick. 
681;  Sigourney  v.  Drury,  14  id.  387; 
Shepley  v.  Waterhouse,  22  Me.  497  ; 
Joslyn  V.  Smith,  13  Vt.  356 ;  Clark  v. 
Sigourney,  17  Conn.  511;  Caldwell  y. 
Sigourney,  19  id.  37 ;  Zent  v.  Heart, 
8  Barr,  337.  And  in  Fisher  v.  Tucker, 
1  McCord  Ch.  169,  and  Hathaway  v. 
Haskell,  9  Pick.  42,  it  is  held,  in  ac- 
cordance with  Atkins  v.  Tredgold,  and 
Brandrum  r.  Wharton,  supra,  that,  one 
of  two  joint  debtors  dying,  neither  the 
survivor  nor  the  representatives  of  the 
deceased  can,  as  against  each  other,  by 
their  acknowledgments,  part  payment 
&c.,  take  the  debt  out  of  the  statute. 
See  also  Roosevelt  v.  Mark,  6  Johns. 
Ch.  266,  291,  292.  Partners,  after 
dissolution,  being  jointly  liable  for  the 
partnership  debts,  may  still  be  regarded, 
therefore,  as  joint  contractors.  On 
this  ground  alone,  in  those  courts 
where  Whitcomb  v.  Whiting  is  fol- 
lowed, the  principle  upon  which  it 
proceeds  miglit  be  expected  to  be,  and 
is  generally,  ai^plied  to  them.  But,  in 
some  of  the  cases  upon  this  point,  the 
doctrine  laid  down  in  Wood  v.  Brad- 
dick,  1  Taunt.  104,  is  also  asserted ; 
and  partners  of  a  firm  which  has  been 
dissolved  are  held  to  have  tlie  power 
of  charging  each  other  by  acknowl- 
edgments of  debts  barred  by  the 
statute  of  Umitations,  on  the  ground 
tliat,  as  to  all  past  partnership  trans- 
actions, the  partnership,  and,  of 
course,  with  it,  the  ijower  of  each 
partner,  still  continues.  The  general 
doctrine  of  Wood  v.  Braddick  we  shall 


206 


THE   LAW   OF   PARTNERSHIP. 


[CH.  VII. 


*  189    tion  then  is,  Who  makes  it  ?     And  this  *  will  depend 
upon  whether  the  partnership  is  still  in  existence,  or  has 


consider  hereafter.  Here  it  is  suffi- 
cient to  remark,  that  it  seems  to  be 
applicable  to  the  case  of  a  debt  barred 
by  the  statute  of  limitations,  only  on 
the  supposition  that  the  statute  is  to 
be  construed  as  one  of  presumption 
merely,  and  that  the  original  debt 
still  constitutes  a  valid  claim  when 
once  proved ;  a  supposition,  as  we 
have  seen,  wholly  inconsistent  with  the 
modern  authorities.  As  cases  illus- 
trative of  the  above  remarks,  see 
Greenleaf  v.  Quincy,  3  Fairf.  11; 
Dinsmore  v.  Dinsmore,  21  Me.  436, 
439 ;  Austin  v.  Bostwick,  9  Conn.  496 ; 
Smith  V.  Ludlow,  6  Johns.  267 ;  Pat- 
terson V.  Choate,  7  Wend.  441 ;  Hop- 
kins V.  Banks,  7  Cow.  G50 ;  White  v. 
Hall,  3  Pick.  291 ;  Cady  v.  Shepherd, 
11  id.  400,  407  ;  Vinal  r.  Burrill,  16  id. 
401  ;  Wheelock  v.  Doolittle,  18  Vt. 
440 ;  Brockenbrough  v.  Hackley,  6 
Call,  51 ;  SheUon  o.  Cocke,  3  Munf. 
191;  Simpson  v.  Geddes,  2  Bay,  633; 
Kendrick  v.  Campbell,  1  Bailey,  522 ; 
Fisher  r.  Tucker,  1  McCord  Ch.  190; 
Mclntire  v.  Oliver,  2  Hawks,  209; 
Walton  V.  Robinson,  5  Ired.  341 ;  Ward 
V.  Howell,  5  Harris  &  J.  60.  But 
though  the  rule  of  Whitcomb  v.  Whit- 
ing, and,  in  connection  with  it,  tliat  of 
Wood  V.  Braddick,  have,  to  so  great 
an  extent,  been  adopted  in  this  coun- 
try, they  have,  also,  now  generally  re- 
ceived important  qualifications.  One 
of  these  is,  that  before  the  acknowl- 
edgment of  a  partner,  as  to  a  debt, 
can  be  received,  to  charge  his  copart- 
ners, the  existence  of  tlie  original 
joint  debt  must  be  proved  aliunde. 
The  acknowledgment  of  one  partner 
alone,  after  dissolution,  is  not  com- 
petent both  to  prove  the  original  joint 
indebtedness  and  to  take  the  debt  out 
of  the  statute  as  against  all  his  co- 
partners. Smith  V.  Ludlow,  Patterson 
V.  Choate,  Shelton  v.  Cocke,  Fisher  v. 
Tucker,  Ward  v.  Howell,  Cady  v. 
Shepherd,  Vinal  v.  Burrill,  Greenleaf 
V.  Qmncy ,  supra  ;  Hackley  v.  Patrick, 
8  Johns.  536  ;  Owings  v.  Low,  6  Gill  & 


J.  1.34,  144;  Willis  v.  Hill,  2  Dev.  & 
Bat.  231 ;  Lachourette  v.  Thomas,  5 
Hob.  (La.)  172;  Meggett  v.  Finney,  4 
Strobh.220 ;  Walker  v.  Duberry,  1  A.  K. 
Marsh.  189. 

For  a  criticism,  by  Judge  Story, 
upon  this  qualification  of  the  original 
rule,  see  Bell  v.  Morrison,  1  Pet.  372. 
It  is  also  held  in  many  instances,  that 
though  the  admission  of  one  joint 
debtor,  as  partner,  after  dissolution,  is 
competent  evidence  by  which  to  fix 
all  with  a  promise  to  pay  the  barred 
debt,  yet  it  is  not  conclusive.  Joslyn 
V.  Smith,  13  Vt.  358;  Fisher  i'.  Tucker, 

I  McCord  Ch.  190;  Cady  v.  Shepherd, 

II  Pick.  408;  Vinal  v.  Burrill,  16  id. 
406  ;  Austin  v.  Bostwick,  9  Conn.  496. 
And  if  an  acknowledgment  of  a  joint 
debt  by  one  partner,  after  dissolution, 
appears  to  be  coUusively  made  with  a 
view  to  promote  that  partner's  inter- 
ests in  some  way,  evidence  of  an  ac- 
knowledgment made  under  such  cir- 
cumstances is  not  sufficient  to  remove 
the  bar  of  the  statute  as  against  all 
the  partners.  Coit  v.  Tracy,  8  Conn. 
268. 

It  is  to  be  added  that,  in  a  number 
of  the  States  (and  the  number  is  in- 
creasing), statutes  similar  to  9  Geo.  4, 
ch.  14,  have  rendered  the  acknowl- 
edgment of  one  joint  contractor  in- 
sufficient to  take  any  case  out  of  the 
statute  of  limitations  as  to  his  cocon- 
tractors.  Generally,  as  in  the  English 
statute,  though  not  uniformly,  an  ex- 
ception is  made  of  an  acknowledgment 
by  part  payment.  See  Mass.  Gen. 
Stat.  ch.  155,  §  14;  Williams  v.  Grid- 
ley,  9  Mete.  482 ;  Maine  Rev.  Stat.  ch. 
146,  §  27  ;  Sibley  v.  Lambert,  30  Me. 
253;  Vt.  Gen.  St.  ch.  63,  §§  23,  28; 
Carlton  v.  Ludlow  Woollen  Mill,  1 
Williams,  496 ;  Caldwell  v.  Lawrence, 
20  Ga.  94;  Foute  v.  Bacon,  24  Miss. 
156;  Briscoe  v.  Anketell,  28  id.  361; 
Webster  v.  Stearns,  44  N.  H.  498; 
Griswold  v.  Haven,  25  N.  Y.  595.  A 
debt  may  become  barred,  by  the 
statute  of  limitations,  as  to  one  mem- 


CH.  YII.]       RIGHTS    OF   PARTNERS    BETWEEN   THEMSELVES. 


207 


been  dissolved.  If  it  still  exists,  the  partner  making  the 
*  promise  has  a  right  to  make  it  for  his  copartners  and  *  190 
himself,  and  it  is  then  the  promise  of  the  wliole  partner- 
ship. But,  if  the  partnersliip  be  dissolved,  his  authority  has 
wholly  gone,  and  the  new  promise  which  he  makes  is  his  own 
only.  The  cases  are  very  numerous  in  which  these  questions 
are  raised  ;  and  we  endeavor  to  exhibit  in  our  notes  the  prin- 
cipal authorities.  It  will  be  seen  that  in  these  cases,  not  only 
the  general  question  of  the  authority  of  the  partner  is  consid- 
ered, but  tlie  particular  questions  which  occur  when  the  new 
promise  is  made,  if  at  all,  not  only  by  an  acknowledgment, 
but,  in  the  absence  of  this,  by  part  payment  of  the  principal  or 
of  the  interest,  (o) 


ber  of  a  partnership  in  the  State,  and 
not  as  to  those  out  of  tlie  State. 
Spauhling  v.  Ludlow  Woollen  Mill,  3G 
Vt.  luO. 

(o)  See  Bell  v.  Morrison,  1  Pet.  3.51, 
37L  See  also  Exeter  Bank  v.  Sulli- 
van, 6  N.  H.  124,  where  the  same  ques- 
tion was  raised.  Story,  J.,  in  the 
former  case,  held,  that  an  acknowledg- 
ment by  one  partner,  after  the  dis- 
solution of  the  partnership,  was  not 
sufKcient  to  take  the  case  out  of  the 
statute  of  limitations  as  to  the  other 
partners.  The  doctrine  of  that  case 
has  been  adopted  and  applied  in  other 
cases,  in  New  Hampshire,  New  York, 
Pennsylvania,  South  Carolina,  Indi- 
ana, Georgia,  Tennessee,  and  Ala- 
bama. Kelley  v.  Sanborn,  9  N.  H.  46 ; 
Mann  v.  Locke,  11  id.  240;  Whipple  i'. 
Stevens,  2  Foster,  219 ;  Tappan  r. 
Kimball,  10  id.  136 ;  Van  Keuren  v. 
Parmelee,  2  Comst.  523  ;  Shoemaker 
V.  Benedict,  1  Kern.  176 ;  Searight  v. 
Craighead,  1  Barr,  135 ;  Levy  v.  Cadet, 
17  S.  &  R.  126 ;  Steele  v.  Jennings,  1 
McMullan,  297  ;  Gowdy  v.  Gillam,  6 
Rich.  29 ;  Lefavour  v.  Yandes,  2 
Blackf.  240 ;  Yandes  v.  Lefavour,  id. 
371;  Kirk  v.  Hiatt,  2  Cart.  (Ind.)  322; 
Brewster  v.  Hardeman,  Dudley  (Ga.), 
138  ;  Belote  i-.  Wynne,  7  Yerger,  534  ; 
Muse  1-.  Donelson,  2  Humph.  16G ; 
Wilson  v.  Torbet,  8  Stew.  296.  See, 
further,  Bispham  r.  Patterson,  2  Mc- 
Lean, 87  ;   Clementson  v.  Williams,  8 


Cranch,  72 ;  Zent  v.  Heart,  8  Barr, 
337  ;  Lowther  v.  Chappell,  8  Ala.  353; 
Whitney  v.  Reese,  11  Minn.  138; 
[Mayberry  v.  Willoughby,  Sup.  Ct. 
Neb.,  3  L.  &  Eq.  Reptr.  380.]  In  quite 
a  number  of  cases,  a  distinction  is  taken 
between  acknowledgments  made  before 
and  those  made  after  a  debt  has  been 
barred  by  the  statute ;  the  former, 
when  made  by  a  joint  contractor  or  a 
partner,  after  dissolution,  being  some- 
times thought,  as  against  the  cocon- 
tractors,  to  have  the  effect  of  arresting 
tlie  progress  of  the  statute,  and  of  fix- 
ing a  new  point  from  which  the  origi- 
nal joint  debt  should  begin  to  run. 
See  Scales  v.  Jacob,  3  Bing.  638;  Gard- 
ner V.  McMahon,  3  Q.  B.  501,  566  ; 
Brewster  v.  Hardeman,  Dudley  (Ga.), 
138,  150  ;  Tillinghast  v.  Nourse,  14  Ga. 
641 ;  Fisher  v.  Tucker,  1  McCord  Ch. 
169,  172;  Meggett  v.  Finney,  4  Strobh. 
220 ;  Sigourney  v.  Drury,  14  Pick. 
387,  391 ;  EUicott  v.  Nichols,  7  Gill,  85; 
Dunham  i-.  Dodge,  10  Barb.  566 ;  Reid 
V.  McNaughton,  .15  id.  168.  See  also 
Wiieelock  v.  Doolittle,  18  Vt.  440. 
The  later,  if  not  better,  opinion  seems 
to  be,  however,  that  there  is  no  distinc- 
tion, in  effect,  between  acknowledg- 
ments made  before  and  those  made 
after  the  statute  has  ceased  to  run. 
See  the  opinion  of  the  court  in  Shoe- 
maker I'.  Benedict,  1  Kern.  170,  186. 
See  Reppert  v.  Colvin,  48  Penn.  248. 


208 


THE   LAW   OF    PARTNERSHIP. 


[CH.  VII. 


*  191  *  A  similar  principle  determines  all  the  questions 
raised  by  the  acts  of  one  partner.  If  the  partnership  has 
ceased,  his  authority  has  gone,  unless  he  derives  it  from  his 
power  to  settle  the  estate  as  surviving  [)artner,  or  in  some 
other  especial  manner.  That  is,  he  can  no  longer  make  a  new 
promise,  which  shall  be  their  promise  as  well  as  his.  But  it 
does  not  follow  that  his  admissions  and  acknowledgments,  as 
those  of  one  well  acquainted  with  the  facts,  especially  if  they 
are  against  his  interest,  should  not  be  received  as  determining 
a  question,  not  of  future  promise,  but  of  a  past  fact.  We  can- 
not but  think,  however,  that  the  true  principle  which  should 
decide  this  much-vexed  question,  must  be  this  :  After  a  dis- 
solution, however  caused,  the  new  words  and  acts  of  those  who 
were  partners  shall  have  no  effect  upon  the  rights  or  obliga- 
tions of  their  former  copartners,  excepting  so  far  as  these 
words  and  acts  fairly  belong  to  the  settlement  of  the  concern, 
and  the  power  which  each  partner  has  in  winding  it  up.  (p)    If 


(p)  There  are  many  conflicting 
opinions  upon  the  point  whetlier  tiie 
admissions,  acknowledgments,  &c.,  of 
one  partner  after  dissolution,  respect- 
ing partnership  transactions  which 
occurred  during  tlie  continuance  of  the 
firm,  are  competent  evidence  upon 
which  to  charge  the  other  partners. 
Whether  one  partner  can  after  dissolu- 
tion make  this  new  contract  for  his 
firm  is  different  from  the  questions  as 
to  the  statute  of  limitation,  which  we 
have  already  considered.  Is  that 
which  a  partner  does  or  says  after  the 
dissolution  of  the  firm,  respecting  the 
past  joint  concerns,  admissible  evi- 
dence to  aifect  the  partnership  ?  The 
general  view  taken  of  the  question  is 
this :  Partners  after  dissolution,  being 
still  jointly  liable  for  the  partnership 
debts  as  well  as  jointly  entitled  to  the 
partnership  credits,  may  therefore  be 
regarded  as  holding  the  relations  and 
possessing  the  rights  of  all  joint  con- 
tractors. But  by  the  dicta  of  Lord 
Mansfield  in  Whitcomb  v.  Whiting, 
Doug.  652,  which  have  always  been 
greatly  deferred  to,  "  payment  by  one 
of  several  joint  contractors  is  payment 
for  all,  the  one  acting,  virtually,  as 
agent  for  the  rest;    and,  in  the  same 


manner,  an  admission  by  one  is  an 
admission  by  all."  Hence  has  resulted 
the  doctrine,  that  when  a  partnership 
is  dissolved,  the  dissolution  takes  effect 
only  as  to  things  future,  not  as  to 
things  past ;  and  that,  respecting  the 
latter,  each  partner  may  charge  his 
copartners  by  his  acts  or  declarations, 
thou^'h  such  evidence  is  not  conclu- 
sive. The  leading  case  is  Wood  v. 
Braddick,  1  Taunt.  104.  This  was  an 
action  brought  to  recover  from  the 
defendant  the  proceeds  of  certain  lin- 
ens, which  the  bankrupts,  in  the  year 
1796,  had  consigned  for  sale  in  Amer- 
ica, as  the  plaintiffs  alleged,  to  the  de- 
fendant jointly  with  one  Cox,  who  was 
then  his  partner,  but,  as  the  defendant 
contended,  to  Cox  only.  The  defend- 
ant pleaded  the  general  issue,  and  the 
statute  of  limitations.  At  the  trial  at 
Guildhall,  before  Mansfield,  C.  J.,  the 
plaintiffs  produced  in  evidence  a  letter 
from  Cox,  dated  the  24th  of  June,  1804, 
stating  a  balance  of  919/.  to  be  then 
due  to  the  bankrupts  upon  this  con- 
signment. It  was  in  proof  that  on  the 
30th  of  July,  1802,  Braddick  &  Cox 
dissolved  their  partnership,  as  from  the 
17th  of  November,  1800.  Cockell  & 
Lens,    Sergeants,   objected,   that   this 


CH.  Vir.]       RIGHTS   OF   PARTNERS   BETWEEN   THEMSELVES. 


209 


the  *  partnership  exists,  the  question  then  is,  Do  tlie  act    *  192 
or  the  words  refer  to  the  *  business  of  the  partnership?    *  193 


letter  being  written  after  the  dissolu- 
tion of  the  partnership,  was  not  admis- 
sible evidence  to  charge  Braddick. 
The  Chief  Justice  overruled  the  objec- 
tion, but  reserved  the  point ;  and  the 
jury,  being  of  opinion  that  the  agency 
was  undertaken  by  Cox  on  the  part- 
nership account,  found  a  verdict  for  the 
Iihuutitr.  Mansfield,  C.  J.  :  "  Clearly 
tlie  admission  of  one  partner,  made 
after  tlie  partnership  has  ceased,  is  not 
evidence  to  charge  the  other,  in  any 
transaction  which  has  occurred  since 
their  separation ;  but  the  power  of 
partners,  with  respect  to  rights  created 
pending  the  partnership,  remains  after 
the  dissolution.  Since  it  is  clear  that 
one  partner  can  bind  the  other  during 
all  the  partnership,  upon  what  princi- 
ple is  it,  tliat,  from  the  moment  when 
it  is  dissolved,  his  account  of  their 
joint  contracts  should  cease  to  be  evi- 
dence ;  and  that  those  who  are  to-day 
as  one  person  in  interest  should  to- 
morrow become  entirely  distinct  in 
interest  with  regard  to  past  transac- 
tions which  occurred  while  they  were 
so  united  f " 

Heath,  J. :  "  Is  it  not  a  very  clear 
proposition,  that  when  a  partnership  is 
dissolved,  it  is  not  dissolved  with  re- 
gard to  things  past,  but  only  with 
regard  to  things  future  ?  With  regard 
to  things  past,  the  partnership  contin- 
ues, and  always  must  continue." 

The  principle  of  Wood  v.  Braddick 
is  affirmed  in  Pritchard  v.  Draper,  1 
Russ.  &  M.  lyl,  where  it  was  held,  that 
the  declaration  of  one  of  two  part- 
ners, that,  subsequently  to  dissolution, 
a  debt  due  to  the  partnership  had 
been  paid,  was  admissible  as  evidence 
against  the  other  partner.  See  God- 
dard  v.  Ingram,  3  Q.  B.  839 ;  Lacy  v. 
M'Neile,  4  Dow.  &  U.  7,  9.  See  also 
Barker  v.  Morrell,  2  C.  &  K.  599,  where 
it  was  held,  that  the  answer  in  chancery 
of  one  who  had  been  a  partner  in  a 
firm,  but  wlio  had  retired  from  the  firm 
and  ceased  to  have  any  interest  in  it 
before  the  commencement  of  the  suit, 


is  not  admissible  in  evidence  against 
the  continuing  partners  of  the  firm, 
although  it  relates  to  transactions 
which  occurred  with  the  firm  at  the 
time  when  the  retired  partner  was  a 
member  of  it.  The  doctrine  of  Wood 
V.  Braddick  is  maintained  in  many 
American  cases.  Thus  the  acknowl- 
edgment of  one  partner,  after  dissolu- 
tion, as  to  the  balance  of  an  account, 
has  been  held  to  be  competent  evi- 
dence against  all  the  partners.  Vinal 
v.  Burrill,  16  Pick.  401;  Bridge  v. 
Gray,  14  id.  55 ;  Simpson  v.  Geddes, 
2  Bay,  533;  Garland  v.  Agee,  7  Leigh, 
362.  See  Woodworth  v.  Downer,  13 
Vt.  522.  See  further,  as  to  the  general 
doctrine,  Cady  v.  Shepherd,  11  Pick. 
407 ;  Austin  v.  Bostwick,  9  Conn.  496; 
Kendrick  v.  Campbell,  1  Bailey,  522 ; 
Gay  V.  Bowen,  8  Mete.  100 ;  Fisher  v. 
Tucker,  1  McCord  Ch.  190;  Brewster 
r.  Hardeman,  Dudley  (Ga.),  140; 
Greenleaf  v.  Quincy,  3  Fairf  11;  Mann 
V.  Locke,  11  X.  H.  246;  Parker  v.  Mer- 
rill, 6  Greenl.  41 ;  Ide  ir.  Ingraham,  5 
Gray,  106  ;  Darling  r.  March,  22  Me. 
184;  Reimsdyk  v.  Kane,  1  Gallis.  635, 
636.  The  qualification  which  is  gen- 
erally, if  not  universally,  put  upon  the 
rule,  that  the  joint  contract  must  first 
be  proved  by  evidence  aliunde  the  ad- 
mission of  the  single  partner,  we  have 
already  considered. 

In  opposition  to  this  view  of  the 
power  of  one  partner  after  dissolution, 
it  is  held  by  weighty  authorities  in 
this  country,  that,  when  a  partnership 
ceases  to  exist,  the  power  of  each 
partner  wholly  ceases  also ;  so  that, 
unless  he  have  special  authority,  his 
acts,  declarations,  &c.,  even  when  they 
relate  to  past  partnership  transactions, 
are  utterly  inadmissible  as  against  his 
firm.  Judge  Story,  who  takes  this 
view,  says  it  seems  difficult  upon  prin- 
ciple to  perceive  how  the  acts,  declara- 
tions, &c.,  of  one  partner  after  dissolu- 
tion can  be  binding  upon  his  partnership 
"any  more  than  tlie  dechimtions,  or 
acts,  or  acknowledgments  of  any  other 
14 


210 


THE   LAW   OF   PARTNERSHIP. 


[CH. 


VII. 


*  194    If  so,  it  binds  the  firm.  (9)     Thus,  *  an  admission,  by 
one  partner  (the  partnership  or  joint  liability  having 


agent  of  tiie  partnership  would  be, 
after  Iiis  agency  had  ceased.  In  the 
latter  case,  they  are  constantly  held 
inadmissible  by  the  courts  of  common 
law,  upon  grounds  which  seem  abso- 
lutely irresistible."  Story  on  Part. 
§  328.  In  New  York,  Wood  v.  Braddick 
is  definitively  overruled,  and  the  law 
settled  in  accordance  with  the  princi- 
ples we  have  just  stated.  In  Van 
Keuren  v.  Parmelee,  2  Comst.  530, 
Bronson,  J.,  said  :  "  Although  the  rule 
is  different  in  England  in  relation  to 
admissions  concerning  partnership 
transactions  (Wood  v.  Braddick,  1 
Taunt.  104),  it  has  been  settled  by  a 
series  of  adjudications  in  this  State, 
that  the  authority  of  partners  to  bind 
each  other  by  any  undertaking  or  ad- 
mission, even  though  it  relate  to  part- 
nership transactions,  ceases  with  the 
partnership.  In  Hackley  v.  Patrick 
(3  Johns.  536),  although  it  was  men- 
tioned in  the  notice  of  dissolution,  that 
Hastie,  one  of  the  partners,  would  ad- 
just the  unsettled  business  of  the  part- 
nership, it  was  field,  that  his  subsequent 
admission  of  a  balance  due  from  the 
firm  to  the  plaintiffs,  on  account,  would 
not  bind  his  copartner.  The  court  said 
it  was  '  a  clear  case.  After  the  disso- 
lution of  a  copartnership,  the  power  of 
one  party  to  bind  the  otiiers  wholly 
ceases.  There  is  no  reason  why  his 
acknowledgment  of  an  account  should 
bind  his  copartners,  any  more  than  his 
giving  a  promissory  note  in  the  name 
of  the  firm,  or  any  other  act.'  This 
doctrine  was  reasserted  and  applied 
in  Sandford  v.  Mickles  (4  Johns.  224), 
where  it  was  held,  that  a  partner  to 
whom  authority  had  been  given  on  the 
dissolution  to  collect  and  pay  debts, 
could   not  indorse   a  promissory  note 


belonging  to  the  firm  so  as  to  pass  the 
title  to  the  indorsee.  See  Yale  v.  Eames 
(1  Mete.  486).  In  Walden  v.  Sherburne 
(15  Johns.  409),  it  was  again  decided 
that  the  admission  by  one  of  the  part- 
ners, after  a  dissolution,  of  a  balance 
against  the  firm,  did  not  bind  the  other 
partner.  And  where  the  notice  of  dis- 
solution stated  that  the  business  would 
be  settled  by  one  of  the  partners,  who 
was  duly  authorized  to  sign  the  name 
of  the  firm  for  that  purpose,  it  was  held, 
that  such  partner  could  not  renew  a 
note  previously  given  by  the  firm,  and 
which  was  running  in  the  bank  at  the 
time  of  the  dissolution.  National 
Bank  v.  Norton,  1  Hill,  572.  Mitchell  v. 
Ostrom,  2  Hill,  520,  asserts  the  same 
general  doctrine.  And  in  Baker  v. 
Stackpoole,  9  Cowen,  420,  the  rule, 
that  one  partner,  after  a  dissolution, 
cannot  bind  his  fellows  by  an  admis- 
sion relating  to  partnership  transac- 
tions, was  sanctioned  by  the  unanimous 
judgment  of  the  Court  for  the  Correc- 
tion of  Errors."  Mercer  v.  Toler,  Anth. 
N.  P.  110 ;  Gleason  v.  Clark,  9  Cow. 
57;  Hopkins  v.  Banks,  7  id.  650;  Bris- 
ban  V.  Boyd,  4  Paige,  17 ;  Bank  of 
Vergennes  v.  Cameron,  7  Barb.  143. 
See  also,  upon  the  same  point.  Bell  v. 
Morrison,  1  Pet.  351 ;  Bootes  v.  Wal- 
ford,  4  Munf.  215 ;  Chardon  v.  Oliphant, 
3  Brev.  183  ;  Walker  v.  Duberry,  1  A. 
K.  Marsh.  189 ;  Craig  v.  Alvesson,  6 
J.  J.  Marsh.  014  ;  Barringer  v.  Sneed, 
3  Stew.  201 ;  Demott  v.  Swaim,  3 
Stew.  &  P.  293;  Beckham  v.  Pray,  2 
Bailey,  133  ;  Atwood  v,  Gillett,2  Doug. 
(Mich.)  206;  Pope  v.  Kisley,  23  Mo. 
185;  Miller  v.  Neimerick,  19  111.  172; 
Lefavour  v.  Yandes,  2  Blackf.  240,  371 ; 
Kirk  r.  Hiatt,  2  Cart.  (Ind.)  322  ;  Brady 
V.  Hill,  1  Miss.  315;  0 wings  v.  Low,  5 


(q)  Thus  Abbott,  C  J.,  In  Sandi- 
lands  V.  Marsh,  2  B.  &  Aid.  678  :  "  But 
the  true  construction  of  the  rule  is  this, 
that  the  act  and  assurance  of  one  part- 
ner, made  with  reference   to  business 


transacted  by  the  firm,  will  bind  all 
the  partners."  Rapp  v.  Latham,  id.  795, 
801 ;  Lacy  v.  M'Neile,  4  Dow.  &  R.  7. 

See  also v.  Layfield,  1  Salk.  292, 

and  French  v.  Eowe,  15  Iowa,  563. 


CH.  VII.]       RIGHTS    OF   PARTNERS   BETWEEN   THEMSELVES. 


211 


been  proved  or  admitted),  of  a  fact  bearing  on  the  issue  of  a 
case  at  bar,  is  admissible  evidence ;  (r)  so  the  existence  of 


Gill  &  J.  134  ;  Flannagin  v.  Champion, 

1  Green  Ch.  51 ;  Bispliam  v.  Patterson, 

2  McLean,  87;  Levy  r.  Cadet,  17  8.  & 
R.  120  ;  Lambeth  v.  Vawter,  6  Rob. 
(La.)  127;  Hamilton  v.  Summers,  12 B. 
Mon.  11.  Of  the  two  views  which  we 
have  above  presented  respecting  the 
power  of  one  partner  after  dissolution 
to  bind  his  copartners  by  his  acts  or 
declarations,  it  may  be  remarked  that, 
while  both  have   something  of  truth, 


(?•)  The  declarations  of  one  partner 
are  of  course,  as  a  general  rule,  ad- 
missible in  evidence,  only  when  they 
are  admissions,  and  are  supposed  to 
have  been  made  against  the  interests 
of  the  party  and  of  his  firm.  Inde- 
pendently of  statutes,  they  are  compe- 
tent to  charge,  but  not  to  exonerate, 
the  partnership.  Hence,  in  a  suit 
against  A.  &  B.  as  partners,  tlie  decla- 
rations of  A.  are  inadmissible  in  belialf 
of  B.  to  disprove  the  partnership  al- 
leged. Young  V.  Smith,  25  Mo.  341 ; 
Clark  V.  Huft'aker,  26  id.  264.  See 
Danforth  v.  Corter,  4  Clarke  (la.),  230. 
But  before  one  partner's  acknowledg- 
ments can  thus  be  admitted  to  affect 
others  as  copartners,  a  joint  liability 
must  be  shown.  A  prima  facie  case 
of  partnership,  at  least,  must  first  be 
made  out.  Nicholls  i;.  Dowding,  1 
Stark.  81 ;  Gray  v.  Hodson,  1  Esp. 
135 ;  Grant  v.  Jackson,  Peake,  203 ; 
Reirasdyk  v.  Kane,  1  Gall.  635 ;  Teller 
V.  Muir,  Pennington,  548 ;  Robbins  v. 
Willard,  6  Pick.  464 ;  Corps  v.  Robin- 
son, 2  Wash.  C.  C.  388 ;  Harris  v.  Wil- 
son, 7  Wend.  57 ;  Bucknam  v.  Barnam, 
15  Conn.  67 ;  Bispham  v.  Patterson, 
2  McLean,  88;  Plannagin  v.  Cham- 
pion, 1  Green,  Ch.  51 ;  Grafton  Bank 
V.  Moore,  13  N.  H.  99;  Dutton  v. 
Woodman,  9  Cush.  255 ;  Alcott  v. 
Strong,  id.  323.  And  admissions  by 
a  part}^  that  he  is  a  x'artner  with  otliers 
bind  himself  only.  They  are  not  com- 
petent evidence  of  partnership  to  all. 
Mont  V.  Mainwaring,  8  Taunt.  139; 
Burgue  v.  Firmin,  3  Stark.  53;  Ditch- 


yet  neither,  as  we  think,  sets  forth  the 
precise  principle  which  should  govern 
the  case.  On  the  one  hand,  though 
partners  after  dissolution  may  be  jointly 
indebted,  they  are  yet  joint  debtors  of  a 
peculiar  kind,  who  possess  rights  and 
come  under  obligations  which  spring 
solely  from  the  circumstance  that  a 
partnership  has  been  dissolved,  and, 
in  no  way  arise  from  the  general  rela- 
tions of   ordinary  joint   debtors.     On 


burn  V.  Spracklin,  3  Esp.  31 ;  Tinkler 
V.  Walpole,  14  East,  226;  Gibbons  v. 
Wilcox,  2  Stark.  43  ;  Parker  v.  Brewer, 

3  J.  B.  Moore,  226;  Whitney  v.  Fer- 
ris, 10  Johns.  66 ;  Whitney  v.  Ster- 
ling, 14  id.  215;  McPherson  v.  Rath- 
bone,  7  Wend.  216  ;  Tuttle  v.  Cooper, 

5  Pick.  414  ;  Bridge  v.  Gray,  14  id.  61 ; 
Grafton  Bank  v.  Moore,  13  N.  H.  99 ; 
McCutchin  v.  Bankston,  2  Kelly,  244; 
Phillips  r.  Purington,  15  Me.  425  ;  Tay- 
lor V.  Henderson,  17  S.  &  R.  453 ;  Nel- 
son V.  Lloyd,  9  Watts,  22  ;  Anderson 
V.  Levan,  1  Watts  &  S.  334  ;  Ostrom 
V.  Jacobs,  9  Mete.  454;  Mitchell  v. 
Roulstone,  2  Hall,  351 ;  Gilpin  v.  Tem- 
ple, 4  Ilarr.  190 ;  Evans  v.  Cornell,  1 
G.  Greene,  25  ;  Fenn  v.  Timpson,  4  E. 
D.  Smith,  276 ;  Kirby  v.  Hewitt,  26 
Barb.  607.     See  Evans  v.  Drummond, 

4  Esp.  89,  91 ;  Heath  v.  Sansom,  4  B. 

6  Ad.  172,  175.  So  it  seems  to  be 
settled,  as  a  general  rule,  that  a  plain- 
tiff cannot  prove  the  partnership,  of 
those  whom  he  had  made  defendants, 
by  the  admissions  of  one  of  tliem  made 
in  his  answer  filed  to  a  bill  in  equity 
against  him.  Rooth  v.  Quin,  7  Price, 
193  ;  Field  v.  Holland,  6  Cranch,  8,  24  ; 
Van  Reimsdyk  v.  Kane,  1  Gall.  630, 
635 ;  Clark  v.  Van  Reimsdyk,  9  Cranch, 
153,  156;  Osborn  v.  U.  S.  Bank,  9 
Wheat.  788,  832  ;  Christie  v.  Bishop,  1 
Barb.  Ch.  105,  116;  Chapin  v.  Cole- 
man, 11  Pick.  831.  See  Studdy  v. 
Sanders,  2  D.  &  R.  347;  Pritchard 
V.  Draper,  1  Russ.  &  M.  191 ;  Bevans  v. 
Sullivan,  4  Gill,  383. 


212 


THE   LAW   OF   PARTNERSHIP. 


[CH.  VII. 


*  195    a  *  partnership  may  be  proved  by  the  separate  admissions 

of  all  who  are  sued ;  or  by  the  acts,  decki rations,  and 

conduct  of  the  parties ;  or  by  the  act  of  one,  and  tlie  declara- 

ations  or  conduct  of  others,  (s)     If  there  be  a  question  of 


the  other  hand,  tlie  proposition  tliat, 
upon  tlie  dissolution  of  a  partnership, 
the  power  of  one  partner  to  represent 
his  firm  w/wl/ij  censes,  cannot  be  re- 
ceived as  literally  true.  For,  though 
a  partnership  may  be  declared  at  an 
end,  yet  the  law  continues  it  for  cer- 
tain purposes,  and  therewith,  also,  the 
power  of  each  partner  for  the  same 
purposes.  The  law  prolongs  the  exist- 
ence of  a  firm  after  its  formal  dissolu- 
tion, from  the  necessity  of  the  case, 
that  the  joint  concerns  may  be  wound 
up,  and  hence  also  prolongs  in  each 
partner  so  much  of  his  former  power 
as  is  indispensable  to  the  attainment 
of  that  end.  Hence  we  think  neither 
the  rule  of  Wood  v.  Braddick,  nor  its 
opposite,  that  adopted  by  Judge  Story 
and  the  New  York  courts,  to  be  cor- 
rect, or  to  be  founded  upon  a  true  view 
of  the  subject.  Tlie  question,  how  far 
the  acts  and  declarations  of  one  partner 
after  dissolution  are  binding  upon  his 
copartners,  is  to  be  determined,  not  so 
much  by  drawing  remote  analogies  be- 
tween partners  and  other  classes  of 
joint  debtors,  as  by  closely  considering 
the  peculiar  nature  of  the  partnership 
connection  ;  and  the  peculiar  rules  of 
law  which  must,  therefore,  necessarily 
be  applied  to  cases  arising  under  it. 
In  this  view  of  the  subject,  the  conclu- 
sion would  seem  to  be,  as  suggested  in 
the  text,  that,  after  dissolution,  what  a 
partner  says  or  what  he  does  must 
generally  be  binding  upon  his  copart- 
ners, just  so  far  as  the  acts  or  the 
words  are  indispensable  to  the  proper 
winding  up  of  the  partnership  concerns. 
But  the  subject  of  the  power  of  a  part- 
ner after  his  firm  has  ceased  to  exist 
will  be  considered  as  a  whole  when  we 
come  to  speak  of  the  consequences 
of  dissolution,  post,  ch.  12,  §  4.  [Whit- 
comb  V.  AVhiting  and  Jackson  i-.  Fair- 
banks have  been  much  shaken,  if  not 
entirely  destroyed,  as  authorities,  even 


in  England  (see  Davies  v.  Edwards,  6 
Eng.  L.  &  Eq.  620) ;  and,  in  this  coun- 
try, very  satisfactorily  shown  to  be 
unsound,  by  the  very  learned  anil  vig- 
orous judgment  of  Mr.  Justice  Bronson, 
in  Van  Keuren  v.  Parmelee,  2  Comst. 
(N.  Y.)  523.  It  is  now  generally  ac- 
cepted law,  that  after  known  dissolution 
and  after  dissolution  by  bankruptcy  or 
death,  which  are  presumed  to  be  known, 
one  partner  cannot,  by  his  act  or  ad- 
mission, involve  his  copartner  in  any 
legal  liability.  See,  in  England,  Wat- 
son V.  Woodman,  L.  R.  20  Eq.  721,  in  ex- 
position of  the  14tli  section  of  the  Mer- 
cantile Law  Amendment  Act  of  1856  ; 
and,  in  this  country,  Lange  v.  Kennedy, 
20  Wis.  279;  Gale  v.  Miller,  54  N.  Y. 
576 ;  Cruraless  v.  Sturgess,  6  Heisk. 
(Tenn.)  190;  Moore  v.  Lackman,  52 
Mo.  323;  Haddock  v.  Crocheron,  32 
Tex.  276  ;  Wilson  v.  Forder,  20  Ohio 
St.  89;  Hall  v.  Lanning,  91  U.  S.  IGO; 
Conery  v.  Hayes,  19  La.  Ann.  325 ; 
Myatts  V.  Ball,  41  Ala.  222;  Montague 
V.  Reakert,  6  Bush  (Ky.),  393  ;  Dickin- 
son V.  Dickinson,  25  Gratt.  ( Va.)  321 ; 
Dowzelot  V.  Rawlings,  58  Mo.  75 ;  Bush 
V.  Stowell,  71  Penn.  St.  208.  Co)itra, in 
Connecticut,  Beardsley  v.  Hall,  3G  Conn. 
270;  and  in  Pennsylvania,  where  one 
partner  is  authorized  by  the  others  to 
liquidate,  Lloyd  v.  Thomas,  79  Penn. 
St.  68;  McCowin  v.  Cubbison,  72  id. 
358.  But  in  Michigan  it  is  observed 
that  a  liquidating  partner  can  make  a 
new  contract.  Sheldon  v.  Sheldon,  25 
Am.  L.  Reg.  n.  s.  292.] 

(s)  Welsh  V.  Speakman,  8  Watts  & 
S.  257  ;  Haughley  v.  Strickler,  2  Watts 
&  S.  411 ;  Johnston  v.  Warden,  3 
Watts,  101 ;  Jennings  v.  Estes,  16  Me. 
323.  In  Sangster  v.  Mazarredo,  1 
Stark.  161,  where  the  action  was  as- 
sumpsit against  four  as  the  acceptors 
of  bills  of  exchange,  three  of  wiiom 
resided  abroad  and  had  been  outlawed, 
it  was  held,  that  an  admission  of  part- 


CH.  VII.]       RIGHTS    OP    PARTNERS    BETWEEN   THEMSELVES.  213 


partnership,  the  admissions  of  one  are  evidence  against  him, 
but  not  against  the  others,  unless  the  partnership  be  proved,  (ss) 
The  partnership  being  proved  aliunde,  entries  of  account  made 
by  one  partner  during  the  existence  of  the  firm,  are  admissi- 
ble evidence  to  charge  all.  (f)      So  notice  or   kno^yledge   of 


nership  by  one  was  evidence  as  against 
that  one  of  a  joint  promise  by  the 
four;  since,  in  a  future  action  by  the 
present  defendant  against  his  code- 
fendants  for  contribution,  tlie  record 
in  tlie  present  case  would  not  be  suffi- 
cient evidence  of  tlie  joint  liability. 
See  Ellis  V.  Watson,  2  Stark.  453,  478. 
But  an  admission  by  one  that  he  is  a 
partner  with  others  is  to  be  construed 
with  reference  to  the  circumstances 
under  wliich  it  is  made,  and,  if  fairly 
applicable  only  to  a  single  transaction, 
will  not  be  sufficient  to  establish  a 
general  partnership.  De  Berkom  v. 
Smith,  1  Esp.  29.  See  Ridgway  v. 
Philip,  1  Cromp.,  M.  &  R.  415.  Where 
the  issue  of  partnership  was  raised  by 
a  plea  in  abatement  for  the  non- joinder 
of  parties  as  defendants,  the  admission 
of  liability  as  a  partner  by  one  not 
joined  in  the  suit,  being  good  in  an 
action  against  him,  was  held  to  be 
also  receivable  on  this  issue  to  prove 
him  a  partner.  2  Greenl.  Ev.  §  484  ; 
Clay  V.  Lanslow,  1  Moody  &  M.  45. 

It  was  hdd  in  one  case,  Whately  v. 
Manhim,  2  Esp.  608,  that  in  an  action 
by  A.  against  B.  &  C.  as  partners,  A. 
might  establish  the  partnership  by 
putting  in  evidence  a  verdict  on  an 
issue  between  B.  &  C.  directed  out  of 
a  court  of  equity,  to  try  whether  they 
were  partners.  But  this  case  has  been 
questioned,  by  high  authority,  for 
reasons  that  seem  entirely  conclusive. 
2  Stark.  Ev.  (7th  Am.  ed.fsOS,  n.  And 
in  Burgess  v.  Lane,  3  Greenl.  65,  it 
was  held,  that  a  verdict  and  judgment 
thereon  can  be  admissible  evidence  of 
a  copartnership  in  another  action,  only 
when  both  the  parties  to  the  second  suit 
are  the  same  as  the  parties  to  the  first. 
See  Fogg  v.  Greene,  16  Me.  282 ;  Ellis 
V.  Jameson,  17  id.  235;  Cragin  v. 
Carleton,  21  id.  492  ;  Latham  v.  Ken- 
niston,  13  N.  II.  203.  See  Folk  i-. 
Wilson,  21  Md.  538. 


{ss)  Crossgrove  v.  Himmelrich,  54 
Penn.  St.  203 ;  Degan  v.  Singer,  41  III. 
28.     [See  also  ante,  p.  *  12,  note  (/).] 

(t)  Walden  v.  Sherburne,  15  Johns. 
409.  See  Ciiamplin  r.  Tilley,  3  Day; 
307  ;  Noyes  v.  Brumaux,  3  Yeates,  30. 
And,  if  a  partner  has  not  received  his 
certificate  of  discharge,  his  admission 
will  bind  his  copartners,  though  made 
after  his  bankruptcy.  Grant  v.  Jack- 
son, Peake,  203.  See  Boyce  v.  Wat- 
son, 3  J.  J.  Marsh.  498 ;  Howard  v. 
Cobb,  3  Day,  309  ;  Martin  v.  Root,  17 
Mass.  227.  So,  if  two  partners  are 
garnishees,  and  one  answers  for  both 
and  acknowledges  a  joint  indebtedness, 
judgment  may  be  entered  against  the 
firm.  Anderson  v.  Wanzer,  5  How. 
(Miss.)  587.  See,  further,  in  illustration 
of  the  general  rule,  Vicary's  Case,  Bac. 
Abr.  tit.  "  Evidence,"  623  ;  Hodenpyl  v. 
Vingerhold,  Chitty  on  Bills,  489,  note  ; 
Cheap  V.  Cramond,  4  B.  &  Aid.  663  ; 
Lucas  V.  De  la  Cour,  1  Maule  &  S. 
249;  Lacy  v.  M'Xeile,  4  Dow.  &  R. 
7;  Rex  r.  Inhabitants  of  Hardwick,  11 
East,  578,  589;  NichoUs  r.  Dowding, 
1  Stark.  81 ;  Odiorne  v.  Maxcy,  13 
Mass.  182,  15  id.  44  ;  Bridge  v.  Gray, 
14  Pick.  61  ;  Bound  v.  Lathrop,  4 
Conn.  336 ;  Fisk  v.  Copeland,  1  Over. 
383 ;  Reimsdyk  v.  Kane,  1  Gall.  635  ; 
Williams  r.  Hodgson,  2  Harris  «&.  J. 
474  ;  Hart  v.  Palmer,  12  Wend.  523  ; 
Cook  v.  Castner,  9  Cusli.  266  ;  Fickett 
V.  Swift,  41  Me.  65 ;  Foil  v.  IMcArthur, 
31  Ala.  26;  Smitha  v.  Cureton,  id. 
652;  Kahn  v.  Boltz,  39  Ala.  66.  It 
makes  no  difference  as  to^the  binding 
force  of  the  declarations  of  any  one 
partner,  that  some  of  the  firm  are 
dormant,  Kaskaskia  Bridge  Co.  v. 
Shannon,  1  Gilm.  15,  25;  see  Lea  v. 
Gnice,  13  Smedes  &  M.  656;  Corps 
V.  Robinson,  2  Wash.  C.  C.  388 ;  Allen 
V.  Owens,  2  Speers,  170;  nor  that  the 
partner  making  admissions  or  acknowl- 
edgments respecting  joint  affairs  iunot 


214 


THE   LAW    OF    PARTNERSHIP. 


[CH.  VII. 


*  196    *  any  one  partner  is  notice  or  knowledge  affecting  all 

the  rest,  or  rather  the  partnership  as  a  whole  ;  (w)  and 

*  197    snch  notice,  even  if  *  coupled  with  a  demand,  as  a  notice 

to  quit  certain  premises,  (v)  or  a  demand  on  which  trover 


a  party  to  the  suit  in  which  they  are 
offered  as  evidence,  see  McCutchin 
V.  Bankston,  2  Kelly,  244,  247; 
Thwaites  v.  Richardson,  Peake.  IG. 
But  if  a  partnership  is  established 
between  codefendants,  and  the  admis- 
sions of  one  .ire  offered  in  evidence  to 
charge  all,  the  copartners  may  show 
that  such  admissions  relate  to  other 
than  the  partnership  concerns,  Jag- 
gers  ?'.  Binnings,  1  Stark.  64  ;  or  to 
transactions  antecedent  to  the  partner- 
ship ,  Cutt  r.  Howard,  3  Stark.  3  ;  or 
tliat  they  were  made  by  mistake, 
Ridgway  v.  Philip,  1  Cromp.,  M.  &  R. 
415.  And  if  a  partner  makes  a  pur- 
chase, apparently  for  himself,  not 
mentioning  his  firm,  and  afterwards 
declare  that  he  made  the  purchase  for 
the  use  of  the  partnership,  such  decla- 
ration, by  itself,  is  not  admissible  to 
charge  the  firm  for  the  price  of  the 
thing  purchased,  on  tlie  ground  of  in- 
terest in  the  party  making  it.  White 
V.  Gibson,  11  Ired.  283. 

(«)  As  in  the  case  of  notice  by  or  to 
one  partner  in  legal  proceedings.  If 
one  of  several,  jointly  interested  in  a 
cargo,  effects  an  insurance  for  the 
benefit  of  all,  he  may  give  notice  of 
abandonment  for  all.  Hunt  v.  Royal 
Exchange  Ass.  Co.,  5  Maule  &  S.  47. 
As  one  partner  may  hind  his  firm  by 
giving  notice,  so  he  may  by  receiving 
it,  always  supposing  the  transaction  to 
be  hond  fide.  Lord  Ellenborough,  C.  J., 
in  Bignold  v.  Waterhouse,  1  Maule  & 
S.  259 ;  Alderson  v.  Pope,  1  Camp. 
404,  n. ;  Ex  parte  Waithman,  2  Mont.  & 
A.  364.  Thus,  if  several  joint  defend- 
ants, makers  of  a  promissory  note, 
sufflsr  judgment  by  default,  service  of 
a  rule  nisi,  to  compute  the  principal 
and  interest  due  on  the  note,  made 
upon  one,  is  service  on  all ;  for  quoad 
hoc  they  are  partner?.  Figgins  v. 
Ward,  2  Cromp.  &  M.  424 ;  Carter  v. 
Southall,  3  M.  &  W.  128.  See  further 
Mayhew  v.  Eames,  1  C.  &  P.  550; 
Lansing    v.    M'Killup,    7    Cow.    416 ; 


Powell  ;;.  Waters,  8  id.  670 ;   Gilly  v. 
Singleton,  3  Litt.  249;  Fitch  v.  Stamps, 

6  How.  (Miss.)  487;  Hayward  ?;.  Har- 
mon, 17  111.  477  ;  Miser  v.  Trovinger, 

7  Oliio  St.  281.  In  like  manner,  notice 
to  one  of  two  or  more  partners  of  a 
prior  unrecorded  deed  is  notice  to  all 
the  partners,  and  will  render  void  a 
subsequent  deed  of  tlie  same  land  to 
all  the  partners.  Barney  v.  Currier, 
1  D.  Chip.  315.  See  Watson  v.  Wells, 
5  Conn.  468.  If  a  bill  accepted  by  a 
firm  is  dishonored  by  one  partner, 
notice  of  the  dishonor  need  not  be 
given  to  the  other  partners  ;  and,  if  the 
drawer  of  a  bill  be  a  partner  in  the 
house  upon  which  it  is  drawn,  proof 
of  notice  to  the  drawer  of  the  dishonor 
is  not  necessary.  Porthouse  ?'.  Parker, 
1  Camp.  82 ;  Gowan  v.  Jackson,  20 
Johns.  176;  Bouldin  v.  Page,  24  Mo. 
595.  Farther,  if  a  note  indorsed  by  a 
firm  becomes  due  after  its  dissolution, 
notice  of  dishonor  given  to  one  of  the 
late  partners  will  be  sufficient,  if  the 
holder  has  not  been  notified  of  the  dis- 
solution. Nott  V.  Downing,  6  La.  684. 
See  Darling  v.  March,  22  Me.  189,  190. 
And  notice  to  the  surviving  partner  of 
the  dishonor  of  a  note  indorsed  by  the 
firm  is  sufficient  to  bind  the  estate 
of  the  deceased  partner,  though  the 
holder  knew  of  the  death  of  the  de- 
ceased partner  before  the  note  became 
due.  Dabnej'  v.  Stidger,  4  Smedes  & 
M.  749.  See  Cocke  v.  Bank  of  Ten- 
nessee, 6  Humph.  51.  But  persons 
who  are  joint  indorsers  of  a  note  or 
bill,  but  are  not  partners,  must  be  sev- 
erally notified  of  its  dishonor ;  and, 
without  notice  to  both,  it  seems  that 
neither  can  be  holden.  Shepard  v. 
Hawley,  1  Conn.  368 ;  Bank  of  Che- 
nango V.  Root,  4  Cow.  126 ;  Dabney  v. 
Stidger,  supra.  See  1  Pars.  Notes  and 
Bills,  502. 

(/')  Doe  d.  Eliot  v.  Halme,  2  Man.  & 
R.  433.  Otherwise,  if  tlie  joint  lessees 
are  not  partners.  Goodtitle  v.  Wood- 
ward, 3  B.  &  Aid.  689. 


CH.  VII.]       RIGHTS   OF   PARTNERS   BETWEEN   THEMSELVES.  215 

is  to  be  founded,  (ly)  may  be  given  or  made  by  one  partner  on 
his  general  authority.  Almost  the  whole  law  on  this  subject 
resolves  itself  into  the  rule,  that  the  representations  or  misrep- 
resentations of  a  partner  are  binding  on  the  firm,  provided  they 
are  made  in  the  course  of,  and  relate  to,  and  are  material  to,  the 
transaction  of  the  business  of  the  firm. 

6.    Of  the  Poiver  to  vary  the  Business  of  the  Partnershij}. 

From  the  same  principle,  that  the  power  of  each  partner 
grows  out  of  the  business  of  the  firm,  and  is  measured  by  it, 
another  rule  is  drawn,  namely,  that  the  business  of  a  partner- 
ship is  not  to  be  materially  varied,  except  by  consent  of  the 
other  partners.  It  cannot  be  changed  as  to  its  object  and 
character,  nor  materially  enlarged  beyond  its  originally  intended 
scope ;  nor  can  a  new  branch  of  business  be  taken  up  and 
added  to  the  old.  For  the  very  first  thing  for  a  partnership 
to  do  is  to  determine  what  business  it  shall  transact ;  that  must 
be  the  determination  of  all,  and  remains  in  force  until 
changed  by  all.  (x)    At  the  same  *  time  there  may  be  an    *  198 

(w)  See  ante,  p.  *  156  and  note.  of  partnership  expressly  or  impliedly 

(x)    The  leading,  and  perhaps  the  gave  that  power ;    because,  if  this  was 

only  case  directly  bearing   upon   the  otherwise,  an  individual  or  individu. 

proposition  of  the  text  is  that  of  Na-  als,  by  engaging  in  one  specified  con- 

tusch  V.  Irving,  cited  in  the  Appendix  cern,  might  be  implicated  in  any  other 

to   Gow   on    Part.   p.    398.      There    a  concern  whatever,   however   different 

large  number  of  persons  had  united  in  in  its  nature,  against  his  consent.     But 

forming  a  joint-stock  company,  for  the  if  a  part  of  the  six  openly  and  publicly 

purpose  of  effecting  fire  and  life  assur-  professed  their  intention  to  engage  tlie 

ances.     The  plaintiff,  a  shareholder  in  partnersliip    in   another  concern,  and 

the  company,  on  behalf  of  himself  and  clearly  and  distinctly  brought  this  to 

the  other  shareholders,  filed  a  bill   in  the  knowledge  of  one  or  more  of  the 

equity  against  the  president  and  direc-  otlier  partners ;  and  such  one  or  more 

tors  of  said  company ;  praying,  amongst  of  the  otlier  partners  could  be  clearly 

other  things,  that  they  might  be  re-  shown  to  have  acquiesced  in  such  inten- 

strained  from  employing  the  capital,  tion,  and  to  have  permitted  the  other 

credit,  &c.,  of  the  said  company  in  the  partners  to  have  entered  upon  and  to 

business  of  marine  insurances.      Lord  have  engaged  themselves  and  the  body 

Chancellor  Eldon,  in  giving  his  opinion  in  such  new  projects,  and  thereby  to 

upon  the  facts,  put  the  following  case:  have  placed  their  partners,  so  engaged, 

"  If  six  persons  join  in  a  partnership  of  in  difficulties  and  embarrassments,  un- 

life    assurance,   it    seems    clear    that  less  they  were  permitted  to  proceed  in 

neither  the  majority,  nor   any  select  the  farther  execution  of  such  projects, — 

part  of  them,  nor  five  out  of  the  six,  if  a  court  of  equity  would  not  go  the 

could  engage  that  partnership  in  ma-  length  of  holding  that   such   conduct 

rine   insurances,   unless    the    contract  was  consent,  it  would  scarcely  tiiiiik 


216 


THE   LAW   OF   PARTNERSHIP. 


[CH.  VII. 


apparent  exception  to  this  rule  in  relation  to  third  parties. 
If  a  partner  enter  into  a  new  branch  of  business  in  the  name 
of  the  firm,  but  without  the  authority  of  the  firm,  and  this  is 
unprofitable,  the  firm  —  if  they  have  in  no  way  adopted  or 
ratified  tlie  transactions  —  may  refuse  to  participate  in  the 
loss,  and  cast  the  whole  on  that  partner,  treating  it  as  his  sev- 
eral business.  And  any  third  party  dealing  with  that  partner, 
and  knowing,  or  having  sufficient  means  of  knowing,  that  he 
goes  beyond  the  business  of  the  firm  and  transcends  his  rights, 
can  look  only  to  him  ;  for  the  firm  may  then  repudiate  this  new 
business  as  well  to  this  third  person  as  to  the  partner. (?/)  But 
it  may  happen  that  this  new  business  has  nothing  in  itself  to 
distinguish  it  from  the  general  business  of  the  firm,  and  that 
the  third  person  had  no  notice  that  it  was  so  distinguished  ; 
then  he  will  hold  the  firm,  and  on  the  same  ground  on 
*199  which  he  would  be  *  unaffected  by  any  private  stipu- 
lations or  limitations  of  the  firm  not  made  known 
to  him.  (2) 


parties  so  conducting  themselves  en- 
titled to  the  festinum  remeditim  of  in- 
junction." These  principles  being 
apphcable  as  well  to  a  partnership  of 
six  hundred  as  to  one  of  six,  his  lord- 
ship said  that  "  the  court  would  re- 
strain particular  members  of  those 
bodies  from  engaging  other  members 
in  projects  in  which  they  have  not 
consented  to  be  engaged,  or  the  engag- 
ing in  which  they  have  not  encour- 
aged, assented  to,  empowered,  or  ac- 
quiesced in,  expressly  or  tacitly,  so  as 
to  make  it  not  equitable  that  they 
should  seek  to  restrain  them."  It  was 
further  considered  that  an  offer  to 
return  to  the  plaintiff  in  this  suit  his 
capital  with  interest ;  or  to  indemnify 
him  against  losses  from  transactions 
outside  the  specified  purposes  of  the 
institution,  or  the  fact  that  the  plain- 
tiff could  sell  his  shares  for  more  than 
he  gave  for  them,  that  any  or  all  these 
circumstances,  did  not  affect  his  right 


to  liold  his  associates  to  the  original 
business  of  the  partnership,  and  to  pre- 
vent them  by  injunction  from  trans- 
gressing its  reasonable  limits.  See 
Kean  v.  Johnson,  1  Stock.  401. 

(y)  See  ante,  p.  *  99,  note  (y),  to  the 
point  that  the  nature  of  the  particular 
business  of  a  firm  is  generally  notice 
to  the  world  of  tlie  limitations  thereby 
put  upon  the  power  of  each  partner ; 
and,  consequently,  that  persons  dealing 
with  a  partner  in  matters  beyond  the 
scope  of  that  particular  business  can- 
not charge  the  partnership  thereon, 
without  proof  of  that  partner's  special 
authority.  [Guillou  v.  Peterson,  9 
Phila.  22-5.  A  partnership  is  not 
bound  by  the  acts  of  another  partner- 
ship having  a  common  member,  unless 
it  authorizes  or  ratifies  such  acts. 
Cobb  (,'.  Ilhnois  Central  R.  R.  Co.,  38 
Iowa,  601.] 

(z)  See  Barnley  v.  Rice,  18  Tex. 
481. 


CH.  VII.]       RIGHTS    OP   PARTNERS   BETWEEN   THEMSELVES.  217 


SECTION    IV. 

OF   NEGOTIABLE   PAPER. 

The  whole  doctrine  of  negotiable  paper,  so  far  as  it  differs 
from  the  common  law  of  contracts,  is  derived  from  tlie  law- 
merchant.  The  law  of  partnership,  as  we  have  seen,  has  no 
other  source.  And  when  they  meet,  as  in  the  powers  of  part- 
ners to  make,  indorse,  receive,  or  otherwise  deal  with  negotiable 
paper,  for  the  partnership,  we  have  a  twofold  reason  for  solv- 
ing the  question  which  this  topic  presents,  by  the  law-merchant, 
as  that  has  been  established  by  adjudication,  or  by  that  usage 
of  merchants  which  is  the  foundation  of  the  law-merchant. 

The  first  remark  to  be  made  in  this  connection  is  that  which 
must  be  repeated  whenever  the  powers  of  partners  are  under 
consideration.  It  is,  that  as  these  powers  grow  out  of  the  busi- 
ness of  the  partnership,  so  they  are  controlled  and  limited  by 
it.  (a)     And  very  many  other  principles  are  involved  in  this. 


(a)  It  was  establisliecl,  as  long  ago 
as  the  reign  of  William  III.,  that,  "by 
the  custom  of  England,  when  there  are 
two  joint  traders,  and  one  accepts  a 
bill  drawn  on  both,  for  him  and  part- 
ner, it  binds  both,  if  it  concerns  the 
trade."  Pinkney  v.  Hall,  1  Salk.  126, 
1  Ld.  Raym.  175.  The  same  doctrine 
has  also  been  always  applied  both  to 
the  making  and  to  the  indorsement 
of  bills  of  exchange  and  promissory 
notes,  as  well  in  law  as  in  equity.  "In 
drawing  and  accepting  bills  of  ex- 
change, it  never  was  doubted  but  that 
one  partner  might  bind  the  rest." 
Lord  Kenyon,  in  Harrison  v.  Jackson, 
7  T.  R.  207.  See  Anon.,  Styles,  370  ; 
Smitli  V.  Jarves,  2  Ld.  Raym.  1484  ; 
Lane  v.  Williams,  2  Vern.  277 ;  Smith 
V.  Baily,  11  Mod.  401;  BuUer  N.  P. 
270 ;  Sutton  v.  Gregory,  2  Peake,  150 ; 
Arden  u.  Sliarpe,  2  Esp.  525;  Swan  v. 
Steele,  7  East,  210;  Ridley  v.  Taylor, 
13  id.  175 ;  Livingston  v.  Roosevelt,  4 
Johns.  265 ;  Smith  v.  Lusher,  5  Cow. 
689;  Manhattan  Company  y.  Ledyard, 
1  Caines,  191;  Kane  v.  Scofield,  2  id. 
368 ;   McGowan  v.  Bank  of  Kentucky, 


5  Litt.  271 ;  Commercial  Bank  of  Man- 
chester V.  Lewis,  13  Smedes  &  M.  226 ; 
Crozier  v.  Kirker,  4  Tex.  252.  On 
the  other  hand,  if  there  are  several 
drawees  or  payees  of  a  bill  or  note, 
who  are  not  partners,  an  acceptance 
or  indorsement  by  one  of  them  will  not 
be  the  act  of  all,  nor  bind  all.  See  Car- 
vick  V.  Vickcry,  Doug.  653,  n.,  Holt, 
297,  March,  64,  1  Beawes,  445.  The 
power  of  each  partner  to  put  the  name 
of  the  firm  to  negotiable  paper  is  so 
universally  implied  from  the  very 
existence  of  the  partnersliip,  that  stip- 
ulations among  the  partners  that  one 
or  more  of  them  shall  not  have  this 
right  will  not  affect  third  parties,  un- 
less made  known  to  them ;  and  this 
is  true  whether  all  the  partners  be 
known  or  whether  some  be  unknown 
and  dormant.  Hubert  v.  Nelson,  Da- 
vies'  B.  L.  8;  Winship  v.  Bank  of  the 
United  States,  5  Pet.  529,  5  Mason, 
176;  South  Carolina  Bank  v.  Case,  8 
B.  &  C.  427  ;  Grant  v.  Hawkcs,  Chitty 
on  Bills,  42 ;  Bank  of  Kentucky  v. 
Brooking,  2  Litt.  41 ;  Walden  r.  Sher- 
burne, 15  Johns.  409,  413;   AVhitaker 


218 


THE   LAW   OF   PARTNERSHIP. 


[CH.  VII. 


*  200    *  Tims,  it  is  always  open  to  tlie  partners  to  show  that 

negotiable  paper  bearing  their  name  was  never  their 
paper,  or  not  signed  with  their  name  in  and  for  their  busi- 
ness ;  or,  if  their  paper,  that  it  was  not  transferred  on 
their  account ;  and  if  this  be  so,  and  the  third  party  claim- 
ing of  them  had  no  belief,  grounded  on  sufficient  circumstances, 
that  it  was  their  paper,  then  they  are  not  held.  We  have 
already  remarked  that  an  individual  is  held  liable  as  a  partner 
because  he  was  so  in  fact,  or  because  he  was  held  out  as  one. 
An  exactly  analogous  rule  applies  to  negotiable  paper  bearing 
the  name  of  a  firm  :  it  binds  the  firm  either  if  it  was  their  paper 
negotiated  in  their  business,  or  if  it  was  "  held  out "  as  such ; 

that  is,  so  treated  and  dealt  with  by  the  firm,  or  with 

*  201    their  *  knowledge  and  without  their  objection,  as  to  jus- 


V.  Brown,  16  Wend.  505;  Bank  of 
Rochester  i'.  Monteath,  1  Denio,  402. 
Nor  is  it  incumbent  upon  persons  deal- 
ing with  a  partner  to  inquire  wliether 
he  is  authorized  to  sign  the  partner- 
ship name  to  commercial  paper.  In 
the  absence  of  facts  to  the  contrary, 
they  have  a  right  to  presume  tlmt  he 
has  tliis  power.  Coursey  v.  Baker,  7 
Harris  &  J.  28 ;  Storer  v.  Hinkley, 
Kirby,  147  ;  Cliampion  v.  Munford,  id. 
172  ;  Hawes  v.  Dunton,  1  Bailey,  146  ; 
Drake  v.  Elwyn,  1  Caines,  184 ;  Val- 
lett  V.  Parker,  6  Wend.  615;  Portfer 
V.  Cumings,  7  id.  172 ;  Foster  v.  An- 
drews, 2  Penn.  160 ;  LeRoy  v.  John- 
son, 2  Pet.  186,  197.  Nor,  with  respect 
to  this  implied  power  of  eacli  partner, 
is  there  any  difference  between  general 
and  special  partnerships.  Livingston 
V.  Roosevelt,  4  Johns.  251.  See  Da- 
vidson V.  Robertson,  3  Dow,  229 ;  Wil- 
liams V.  Thomas,  6  Esp.  18.  There 
are  partnerships,  however,  which  are 
not  strictly  tradinrj  partnerships,  and  in 
the  course  of  whose  business  the  use 
of  negotiable  paper  is  generally  neither 
customary  nor  necessary.  Partners  in 
such  firms  have  not  prima  facie  or  im- 
plied authority  to  bind  them  by  putting 
the  firm  name  upon  bills  or  notes.  Of 
this  sort  are  professional  partnerships, 
and  those  for  mining  and  farming  pur- 


poses. See  ante,  p.  *  99,  note  (y) ; 
p.  *156,  note  (rj).  But  the  mere  cir- 
cumstance that  the  business  of  a  firm 
consists  in  making  profits  out  of  real 
estate,  as  in  working  a  stone  quarry, 
will  not  take  the  case  out  of  the  gen- 
eral rule.  Thicknesse  v.  Bromilow,  2 
Cromp.  &  J.  425,  430. 

The  act  of  drawing  a  bill  of  ex- 
change by  one  partner,  in  his  own 
name,  upon  the  firm  of  which  he  is  a 
member,  for  the  use  of  the  partnership 
concern,  has  been  held  to  be  an  ac- 
ceptance of  the  bill  by  the  drawer  in 
behalf  of  the  firm,  and  to  bind  the 
firm  as  on  an  accepted  bill.  Dougal 
V.  Cowles,  5  Day,  511.  See  also  Beach 
V.  State  Bank,  2  Ind.  488;  Miller  v. 
Thompson,  3  Man.  &  G.  576.  And 
it  seems  that  in  such  case,  if  the  part- 
nership were  not  held  to  be  bound  at 
law,  yet,  if  the  bill  were  actually  drawn 
on  partnership  account,  equity  would 
enforce  payment  of  it.  Reimsdyk  v. 
Kane,  1  Gall.  630.  See,  as  to  the 
subject  of  this  note  generally,  1  Pars. 
Notes  and  Bills,  123-148.  A  partner 
may  indorse  a  note,  of  which  his  firm 
is  payee,  in  the  name  of  his  firm,  to 
himself;  and  may  then,  in  his  own 
name,  sue  and  recover  from  the  maker. 
Kirby  v.  Cogswell,  1  Caines,  505 ; 
Burnham  v.  Whittier,  5  N.  H.  334. 


CH.  VII.]       EIGHTS   OF   PARTNERS   BETWEEN   THEMSELVES.  219 


tify  others  in  believing  it  to  be  their  paper,  and  the  making 
or  transfer  of  it  their  transaction,  {b) 

money  went  into  the  business  of  the 
partnership.  Union  Bank  v.  Eaton,  5 
Humph.  499.  See  Ala.  Coal  Mining 
Co.  V.  Brainarcl,  35  Ala.  476;  Con- 
necticut River  Bank  v.  French,  6  Allen, 
31.3 ;  Fielclen  v.  Lahens,  9  Bosworth, 
436  ;  Stephens  v.  Reynolds,  2  Fost.  & 
Fin.  147  ;  Dow  v.  Phillips,  24  111.  249  ; 
Maynard  v.  Fellows,  43  N.  H.  255. 
[The  making  or  indorsement  of  a 
promissory  note,  in  the  name  of  the 
firm,  on  presentment  by  one  of  the 
firm,  does  not  bind  the  firm,  if  the 
payee  or  indorsee  knows,  or  ought 
from  the  circumstances  to  know,  that  it 
is  on  private  account,  or  unless  spe- 
cially authorized  or  ratified  by  the  other 
partners.  Ditts  v.  Lonsdale,  49  Ind. 
529;  Reubin  v.  Cohen,  48  Cal.  545; 
First  Nat.  Bank  v.  Breese,  39  Iowa, 
640 ;  Hotchkiss  v.  Englash,  6  T.  &  C. 
(N.  Y.  S.  C.)  658;  Tompkins  v.  Wood- 
ford, 5  W.  Va.  216  ;  Graves  v.  Kellen- 
berger,  51  Ind.  66 ;  Lime  Rock  Ins. 
Co.  V.  Treat,  58  Me.  415;  Zuel  v. 
Bowen,  78  111.  284;  Bankhead  v.  Allo- 
way,  6  Cold.  (Tenn.J)  56;  Blodgett  v. 
Weed,  119  Mass.  217;  Crocker  v.  Col- 
well,  46  N.  Y.  212.  But  see  Bush  v. 
Crawford  (U.  S.  C.  Ct.),  9  Phila.  392, 
where  it  is  held  that  nothing  short  of 
had  faith  of  the  plaintiflT  can  be  availa- 
ble as  a  defence  to  such  a  note.  See 
also,  to  same  point,  Canadian  Bank 
V.  Wilson,  36  U.  C.  Q.  B.  9.  And 
if  the  person  receiving  such  a  note 
indorses  the  same  before  maturity  to  a 
bond  fide,  holder,  for  value,  he  is  liable 
in  damages  to  the  defrauded  partners. 
Calkins  v.  Smith,  48  N.  Y.  614.  Nor 
is  it  a  defence  to  a  note  given  to  a 
partnership,  that  one  of  the  partners 
agreed  that  it  might  be  paid  by  off- 
setting a  debt  due  from  the  partner  so 
agreeing.  Harper  v.  Wrigley,  48  Ga. 
493.  See  also  Stearns  v.  Ilougliton, 
38  Vt.  583.  A  firm  is  not  bound  for 
capital  contributed  by  any  partner, 
even  if  a  firm  note  be  given  tlierefor, 
if  the  note  be  given  without  the  au- 
thority of  the  other  partners.  Wil- 
tram  v.  Van  Wormcr,  44  111.  97 ;  Heap 


(h)  We  have  just  seen  that  it  is 
witliin  the  general  implied  power  of 
each  partner  to  bind  his  firm  by  all 
contracts  concerning  negotiable  paper. 
As  against  his  copartners,  the  making, 
accepting,  or  indorsing  of  such  paper 
by  one  partner  is  valid  only  when  the 
act  is  within  the  scope  of  the  joint  busi- 
ness and  is  actwdli/  on  the  joint  account. 
But,  as  far  as  third  parties  are  con- 
cerned, such  act  of  a  single  partner 
charges  the  partnership,  if  only  it 
fairly  appear  to  be  within  the  joint 
business  and  on  the  joint  account. 
Hence,  wherever  the  partnership  name 
appears  on  negotiable  paper  the  firm 
is  bound,  unless  in  some  way  the  title 
of  the  holder  can  be  impeached.  Win- 
tie  V.  Crowther,  1  Cromp.  &  J.  .316, 
318;  Lane  v.  Williams,  2  Vern.  277; 
Baker  i\  Charlton,  1  Peake,  80;  Arden 
V.  Sharpe,  2  Esp.  523  ;  M'Nair  v.  Flem- 
ing, 1  Montagu  on  Part.  37 ;  3  Dow, 
229;  2  Bell  Comra.  672;  Lloyd  v. 
Ashby,  2  B.  &  Ad.  23 ;  Vere  v.  Ashby, 
10  B.  &  C.  288 ;  Livingston  v.  Roose- 
velt, 4  Johns.  251 ;  Winship  i\  Bank 
of  the  United  States,  5  Pet.  529; 
Etheridge  i:  Binney,  9  Pick.  272,  274 ; 
Miller  v.  Manice,  6  Hill,  114.  And  it 
seems  that  the  fact  that  the  payee  of  a 
note,  made  by  one  partner  in  the  name 
of  tlie  firm,  believed  that  the  money  for 
which  the  note  was  given  was  to  be 
applied  to  the  individual  purposes  of 
the  acting  partner,  would  not  inval- 
idate the  note  as  to  the  firm,  unless 
such  misappropriation  really  took 
place.  Hamilton  v.  Summers,  12  B. 
Mon.  11.  Nor,  if  a  partner  has  bor- 
rowed money  on  his  own  credit,  and 
given  his  separate  note  therefor,  is  it  a 
fraud  afterwards  to  substitute  the  note 
of  the  firm,  provided  the  money  bor- 
rowed actually  came  to  the  use  of  the 
firm.  Neither,  if  the  original  loan  was 
made  on  the  credit  of  the  firm,  though 
the  separate  note  of  the  borrowing 
partner  was  executed  for  it,  would  it 
be  a  fraud  to  substitute  for  the  sepa- 
rate security  tlie  note  of  the  firm,  not- 
withstanding it  did  not  api)ear  that  the 


220 


THE  LAW   OF   PARTNERSHIP. 


[CH.  VII. 


The  making  of  the  note,  the  signature,  indorsement,  or 
waiver  of  demand  or  notice,  may  be  fraudulent  as  against  the 
firm  ;  but  the  firm  will  be  held  if  the  thing  is  done  apparently 
in  the  course  of  business,  and  the  other  party  has  no  privity 
with  the  fraud  and  no  notice  or  knowledge  of  it.  But  a  party 
cannot,  as  to  his  copartners,  waive  notice  upon  a  note  indorsed 
by  him  for  his  own  benefit,  (bb') 

The  question  has  been  very  much  discussed,  on  whom  lies 
the  burden  of  proof ;  and  we  have  already  alluded  to  it,  in  con- 
nection with  the  question  to  whom  credit  is  given.  There  is 
some  fluctuation  in  the  adjudication  both  of  England  and  of 
this  country  ;  but  we  think  there  is  no  material  difference  in 
the  principles  adopted  by  the  two  countries.  It  must  be  re- 
garded as  the  general  presumption  of  law,  that  all  paper 
*  202  upon  which  the  signature  of  *  the  firm  has  been  put  by 
a  partner,  is  the  paper  and  bears  the  signature  of  the 
partnership ;  and  that  all  transfers  of  such  paper  by  him  were 
lawful.  (<?)     This,  therefore,  would  call  on  the  partnership  to 

(c)  See  ante,  p.  *20I,  note  (b)  ; 
Manuf.  &  Mecli.  Bank  v.  Winship,  5 
Pick.  11 ;  Etlieridge  v.  Binney,  9  id. 
274;  Waldo  Bank  v.  Greely,  16  Me. 
419 ;  Barrett  v.  Swann,  17  id.  180 ; 
Vallett  V.  Parker,  6  Wend.  615  ;  Doty 
V.  Bates,  11  Johns.  544  ;  Knapp  v.  Mc- 
Bride,  7  Ala.  19  ;  Ensmingery.  Marvin, 
5  Blackf.  210;  Miller  ;;.  Hines,  15  Ga. 
197;  Thurston  v.  Lloyd,  4  Md.  283; 
Manning  v.  Hays,  6  id.  5 ;  Powell  v. 
Messer,  18  Tex.  401 ;  Hickman  v.  Kun- 
kle,  27  Mo.  401 ;  [Carrier  v.  Cameron, 
31  Mich.  373.]  If  a  creditor  of  a  part- 
nership take  a  bill  from  his  debtors, 
drawn  by  them  upon  another  firm, 
and  this  bill  is  afterwards,  in  the  usual 
course  of  business,  accepted  in  the 
name  of  the  firm  drawn  upon,  though 
by  a  partner  who  is  also  a  member  of 
the  drawing  firm,  it  cannot,  in  such  a 
case,  be  inferred  as  matter  of  law  from 
this  latter  fact,  standing  alone,  that  the 
purpose  of  the  parties,  or  even  that  the 
efTect  of  the  transaction,  is  to  subject 
the  funds  of  the  acceptors  to  the  pay- 
ment of  the  debt.  These  facts  alone 
appearing,  the  acceptance  is,  priiiid 
facie,  an  acceptance   ou  the  joint  ac- 


V.  Dobson,  15  C.  B.  n.  s.  460;  Baxter 
V.  Plunkett,  4  Houst.  (Del.)  450.] 

Where  one  partner,  holding  notes 
for  the  benefit  of  the  firm,  attempts  to 
pawn  or  pledge  them  for  his  own 
private  debts,  the  court  will  interfere 
to  restrain  it  as  an  act  of  fraud  on  his 
copartners.  Stockdale  v.  Ullery,  37 
Penn.  486.  Moreover,  the  title  of  the 
holder  is  not  aflfected  by  any  knowl- 
edge acquired  by  him  subsequently  to 
his  reception  of  the  paper.  In  Swan 
V.  Steele,  7  East,  210,  see  the  very  in- 
structive opinion  of  Lord  EUenborough, 
C.J. 

We  shall  find  this  same  principle 
occurring  and  being  applied  to  nearly 
all  the  questions  which  we  are  about 
to  consider  respecting  the  liability  of  a 
firm  upon  negotiable  paper  issued  or 
transferred  by  one  partner.  See  post, 
p.  *211,  et  seq.,  respecting  cases  where 
paper  bearing  the  firm  name,  but 
originally  made  or  afterwards  trans- 
ferred in  fraud  of  the  firm,  has  come 
into  the  hands  of  a  bond  Jide  holder  for 
value. 

(bb)  Windham  County  Bank  v.  Ken- 
dall, 7  R.  L  77. 


CH.  VII.]       RIGHTS    OF   PARTNERS   BETWEEN   THEMSELVES.  221 


discharge  itself,  and  therefore  would  lay  the  burden  of  proof 
on  them. 

Thus  far  the  law  seems  to  be  clear.  Then  the  American 
adjudication  very  decidedly  assumes  that  the  third  party  taking 
this  paper,  with  the  knowledge  that  it  was  given  for  the  private 
and  personal  debt  only  of  one  partner,  knows  enough  to  put 
him  on  his  guard,  and  that  he  is  now  bound  to  inquire  whether 
the  firm  authorized  this  use  of  their  name,  and  can  only  hold 
them  on  the  ground  that  they  did  so  authorize  it  in  fact ;  and 
this  he  must  show  as  the  foundation  of  his  claim.  In  other 
words,  the  American  courts  hold  the  doctrine  that  a  third  party 
taking  from  a  partner  the  signature  of  his  firm  for  his  own 
debt,  cannot  hold  that  firm,  without  proof  of  authority, 
adoption,   or   ratification  by    the   firm.  (cZ)     We   should   say 


count  of  the  accepting  firm,  and  binds 
a  partner  tiierein  wlio  is  not  a  mem- 
ber of  the  drawing  firm,  and  did  not 
expressly  assent  to  it.    Tutt  v.  Addams, 

24  Mo.    18G.     See  Phinsen  v.  Negley, 

25  Penn.  St.  207.  Nor  is  the  fact  tliat 
a  draft  or  bill,  made  in  the  name  of 
tiie  firm,  is  made  payable  to  the  order 
of  one  of  the  partners,  any  indication 
that  the  paper  was  not  drawn  on  part- 
nership account,  and  in  the  usual 
course  of  the  business  of  the  firm. 
Nor  is  the  presumption  that  a  draft  or 
bill,  so  signed,  is  regular  partnership 
paper,  changed  by  showing  that  such 
paper  was  discounted  at  the  request 
of  the  partner  who  drew  the  draft  in 
the  name  of  the  firm  whose  name  was 
inserted  as  payee,  who  indorsed  it,  and 
drew  out  the  proceeds.  Haldeman 
V.  Bank  of  Middletown,  28  Penn.  St. 
440 ;  Phinsen  v.  Negley,  supra.  See 
Pierce  v.  Jackson,  21  Cal.  686;  Uhler 
V.  Browning,  4  Dutch.  79 ;  Hurd  v. 
Haggerty,  24  111.  171;  Littell  v.  Fitch, 
11  Mich.  525. 

[A.,  the  indorser  of  a  promissory 
note  made  by  B.,  one  member  of  a 
firm  consisting  of  B.  &  C,  payable  to 
the  order  of  A.,  who  indorsed  it  to  C, 
A.'s  indorsement  being  for  the  accom- 
modation of  the  firm,  may  maintain 
an  action  against  B.  &  C.  jointly,  to 
recover  the  amount  which  he,  A.,  may 


liave  been  compelled  to  pay.    Thaj'er 
V.  Smith  et  «/.,  116  Mass.  863.] 

(d)  Chazournes  v.  Edwards,  3  Pick. 
5;  Homer  v.  Wood,  11  Cush.  62  ;  Dav- 
enport  V.  Runlett,  3  N.  H.  386 ;  Wil- 
liams V.  Gilchrist,  11  id.  535 ;  Living- 
ston V.  Hastie,  2  Gaines,  246  ;  Lansing 
V.  Gaine,  2  Johns.   300;  Livingston  v. 
Roosevelt,  4  id.  251 ;  Laverty  v.  Burr, 
1   Wend.   529;  Wardell  v.   Hughes,  3 
id.  418;  Whitaker  v.  Brown,  11  id.  75; 
Gansevoort   v.    Williams,   14  id.   133; 
Joyce  V.  Williams,  id.  141;  Wilson  v. 
Williams,  id.  146 ;  Baird  v.  Cochran,  4 
S.  &  li.  397 ;  Cotton  v.  Evans,  1  Dev. 
&  B.  Eq.  284;  Abpt  v.  Miller,  5  Jones, 
32  ;  Weed  v.  Richardson,  2  Dev.  &  B. 
535  ;  Hagar  v.  Mounts,  3  Blackf.  261 ; 
Taylor  v.   Hillyer,  id.  433  ;    Hickman 
V.    Rieneking,  6  id.    387 ;    Rogers    v. 
Batchelor,    12   Pet.    221 ;    Mauldin   v. 
Branch  Bank  at  Mobile,  2  Ala.  502  ; 
Darling  v.  March,  22  Me.  184  ;  Brown 
y.  Duncanson,  4  Harris  &  McH.  350; 
Poinde.xter  v.   Waddy,  6   Munf.   418; 
Robertson    v.   Mills,  2    Harris    &    G. 
98  ;  Stearns  v.  Burnham,  4  Greenl.  84 ; 
ElUiott  V.  Dudley,  19  Barb.  326  ;  Lanier 
V.  McCabe,  2  Fla.  32  ;  Tutt  v.  Addams, 
24  Mo.  186  ;  Powell  u.  Messer,  18  Tex. 
401;    Clay   v.   Cottrell,    18   Penn.    St. 
408.     The  fact   that  a  note  given  by 
one  partner,  in  the  name  of  his  firm, 
but  mainly  for  his  own  debt,  includes 


222 


THE   LAW   OF    PARTNERSHIP. 


[CH.  VII. 


*  203    that  the  weight  of  *  authority  in  the  English  courts  is 

*  204    in  favor  of  rules  substantially  *  similar,  (e)     That  is, 

within  it  a  small  debt  of  the  firm,  will  wherever  the  firm  name  is  put  by  one 
not  make  the  firm  liable  on  the  note,  partner  upon  negotiable  paper  under 
King  V.  Faber,  22  Penn.  St.  21.    And    circumstances  whicii   make  the  trans- 


(e)  The  English  and  American  rules 
on  this  point  have  frequently  been  con- 
trasted in  the  courts  of  tliis  country. 
The  views  taken  of  the  points  of  dif- 
ference between  the  two,  though  vari- 
ously stated,  are  in  the  main  in  unison 
with  those  of  the  text.  Thus  in  Cha- 
zournes  v.  Edwards,  3  Pick.  5,  Parker, 
C.  J.,  after  stating  the  American  rule, 
says  :  "  The  only  case  winch  has  a 
contrary  tendency  is  that  of  Ridley  v. 
Taylor,  13  East,  175,  in  which  case, 
however,  the  principle  above  stated  is 
admitted ;  but  it  was  thought  tliat  the 
facts  did  not  show  that  knowledge  on 
the  part  of  the  creditor  which  would 
constitute  the  transaction  fraudulent 
on  his  part.  There  were  circumstances 
in  the  case  from  which  it  was  tliought 
the  plaintiffs  might  reasonably  infer 
that  the  bill  given  to  them  by  their 
debtor  was  one  which  he  had  a  right 
within  his  general  autliority  as  a  part- 
ner to  transfer.  Though  the  decision 
does  not  seem  to  be  in  exact  conform- 
ity with  the  rule  as  before  settled  in 
several  cases,  yet  the  principle  is 
clearly  admitted."  In  Dob  v.  Halsey, 
16  Johns.  o8,  Spencer,  J.,  thus  ex- 
presses the  distinction  :  "  The  only 
difference  between  the  decision  of  this 
court  and  that  of  the  King's  Bench 
consists  in  this :  We  require  the  sep- 
arate creditor,  who  has  obtained  the 
partnership  paper  for  the  private  debt 
of  one  of  the  partners,  to  show  the 
assent  of  the  whole  firm  to  be  bound. 
The  rule  of  the  King's  Bench  throws 
the  burden  of  avoiding  such  security 
on  the  firm,  by  requiring  them  to  prove, 
that  the  act  was  covinous  on  the  part 
of  the  partner  for  whose  private  debt 
the  paper  of  the  firm  was  given,  b}^ 
showing  that  it  was  done  without  the 
knowledge,  and  against  the  consent,  of 
the  other  partners,  and  that  the  fact 
was  known   to   the  separate   creditor 


when  he  took  the  paper  of  the  firm." 
See  Laverty  ?'.  Burr,  1  Wend.  529,  531, 
opinion  of  Sutherland,  J.  The  opinion 
of  Nelson,  J.,  in  Gansevoort  v.  Wil- 
liams, 14  Wend.  133,  upon  the  same 
point,  is  very  full  and  elaborate.  He 
says  :  "  The  English  cases  upon  this 
subject  are  not  always  consistent  with 
themselves;  and  even  the  same  court, 
while  they  profess  to  adhere  to  this 
general  position,  namely,  that  the  part- 
ner denying  the  authority  of  his  asso- 
ciate must  prove  affirmatively  that  the 
holder  knew  the  paper  was  given  in  a 
transaction  unconnected  with  the  part- 
nership, and  also  that  he  did  not  assent, 
sometimes  substantially  disregard  the 
latter  qualification  of  the  rule  in  the 
application  of  it  to  facts."  He  illus- 
trates tlie  above  remarks  by  a  citation 
of  some  of  the  leading  English  author- 
ities, from  the  examination  of  which 
he  concludes  "  that  while  the  English 
courts  hold  to  the  position  that  the  firm 
is  liable  on  a  bill  or  note  made  by  one 
out  of  the  partnership  business,  unless 
the  holder  knows  that  it  was  so  made, 
and  that  the  other  partners  did  not 
concur,  the  frequent  practical  operation 
and  effect  of  it  under  their  direction 
does  not  essentially  differ  from  the 
rules  as  settled  in  this  court.  They 
undoubtedly  put  the  defence  of  the  co- 
partner upon  the  ground  of  fraud,  com- 
mitted upon  him  by  his  associate  and 
the  holder ;  but  this  is  sometimes  in- 
ferred from  the  fact  that  the  bill  or 
note  is  given  for  a  private  debt,  and 
that  known  to  the  holder  ;  and  at  other 
times  further  proof  is  required  negativ- 
ing a  presumed  concurrence  of  the  co- 
partner." See  opinion  of  Bronson,  J., 
in  Wilson  v.  Williams,  14  Wend.  146, 
158;  of  Tracy,  Senator,  in  State  v. 
Catskill  Bank,  18  id.  480;  Rogers  v. 
Batchelor,  12  Pet.  221;  Bank  of  Ten- 
nessee V.  Saflarans,  3  Humi)h.  597. 


CH.  VII.]       RIGHTS   OF   PARTNERS   BETWEEN   THEMSELVES.  223 


they  also  hold,  that,  if  a  creditor  of  one  partner  *take    *205 
partnership  paper  in  payment  of  his  debt  from  that 


action  actually  or  constructively  fraud- 
ulent,  and    therefore   void   as   to   the 
firm,  the   bill  or  note,  also,  is  void  in 
the  hands  of  the  fraudulent  holder  as 
to  any  of  the  other  parties  to  it ;  for, 
otherwise,  the  partnership  would  event- 
ually be  made  reliable  upon  it.     Kid- 
ley  V.  Taylor,  13  East,  175 ;  Livingston 
V.   Hastie,  2  Caines,  2iQ ;  Chazournes 
V.   Edwards,  3  Pick.    5;    Williams   v. 
Walbridge,    3    Wend.   415;    Hagar   v. 
Mounts,  3  Blackf  261.   But  see  Bowen 
V.  Mead,  1  Mann.  (Mich.)  432.     As  to 
the  question  of  the  consent  of  the  firm 
to  the  act  of  one  partner,  by  which  he 
pledges  the  partnership  name  for  his 
private  debt,  it  is  not  a  matter  of  legal 
presumption,  but  a  matter  of  fact,  of 
■which  the  jury  must  be  satisfactorily 
convinced.      Hence,   where    the  jury 
were   instructed   that,  if  one   of   two 
partners  was   present  and   heard   the 
other   partner  make   an   arrangement 
by   which   the  partnership  name  was 
pledged   in   a  matter   outside   of   the 
partnership   concerns,   the   law  would 
presume  that  the   former  assented  to 
it,  it  was  held,  that  such   instruction 
was  ground  for  a  new  trial.     Mercein 
V.  Andrus,   10  Wend.   2(jl ;    Foster  r. 
Andrews,    2    Penn.    St.    1(30 ;    Jones 
V.  Booth,    10   Vt.   268;    Mclvinney  i: 
Brights,  16  Penn.  St.  399.     But  where 
a  partner  gives  the  partnership  name 
for  his  individual  debt,  the  assent  of 
his  copartners  to  the  act,  or  their  rati- 
fication  of   it,   may  be   implied   from 
circumstances,  and  need  not  be  proved 
by   e.xpress    agreement.      Gansevoort 
V.   Williams,  14  Wend.   133;  Noble  v. 
M'Clintock,  2  Watts  &  S.  152;   Cha- 
zournes V.  Edwards,  3  Pick.  11 ;  Cotton 
V.  Evans,  1  Dev.  &  B.  Eq.  284 ;  Abpt 
V.   ^filler,   5   Jones,  32  ;    Brewster   v. 
Mott,  4  Scam.  378 ;  Powell  v.  Messer, 
18  Tex.  401;  Kemegs  v.  Richards,  11 
Barb.  312 ;  Wheeler  v.  Rice,  8  Cush. 
205.     See  Elliott  v.  Dudley,  19  Barb. 
326.     ]S'or  need  there  be  any  new  and 
independent  consideration  for  the  act 
of  the  partners,  ratifying  and  promis- 


ing to  be  bound  by  the  act  of  a  co- 
partner who  has  wrongfully  used  the 
partnership  name  for  his  own  benefit. 
Commercial  Bank  v.  Warren,  15  N.  Y. 
577.    In  Plagg  v.  Upham,  10  Pick.  147, 
it  appeared  that  Valentine,  one  of  two 
partners,  had  given  the  firm  note  for 
liis  several  debt ;  and  that  afterwards 
his  copartner,  acting  under  a  mistake 
of   law,   acknowledged   himself   liable 
upon  the   note,  and  gave  his  written 
guaranty  for  its  payment.    The  payee, 
bringing  his  action  upon  the  guaranty, 
the  court  said  :  "  The  note  was  made 
in  the  partnership  name,  purported  to 
bind  both  partners,  and  was  binding 
upon  the  partners,  if  made  with  their 
consent.     Supposing  it  to  be  made  by 
Valentine  for  his  several  debt,  without 
the  consent  of  the  defendant,  it  would 
not,  indeed,  be  binding  upon  him  ;  but 
no  one  else  could  make  the  objection, 
and  it   depended  on  himself   to  insist 
on,  or  to  waive,  the  objection.     Under 
these     circumstances,     knowing     the 
terms    of    the    partnership     between 
Valentine  and  himself,  and  knowing 
the  consideration  for  which  the  note 
was  given,  we  are  of  opinion  that  his 
acknowledgment  of  his  own  liability, 
and  his  express  obligation  to  guarantee 
the  payment,  were  a  waiver   of   any 
objection  which  he  might  have  made 
to  the   note,   and   therefore   that   this 
guarantee  was  given  upon  a  good  con- 
sideration, and  that  he  is  bound  by  it." 
See  Stearns  v.  Burnham,  4  Greenl.  84 ; 
Leverson  v.  Lane,  13  C.  B.  x.  s.  (106 
Eng.  Com.  L.  R.)  278.    In  Taylor  v. 
Hillyer,  3   Blackf.  433,  where  one  of 
two  partners  had  given  a  note,  in  the 
name  of  his  firm,  for  his  private  debt, 
and  this  was  known  to   the  payee,  a 
subsequent  oral  promise  by  tlie  other 
partner  to  pay  the  note  was  deemed 
to  be  within  the  statute  of  frauds,  and 
therefore  not  binding   on   him.      See 
Mercein    v.   Andrus,    10   Wend.   461 ; 
Fielden  v.  Lahens,  9  Bosw.  436;  Whit- 
more   V.  Adams,  17  Iowa,  567 ;  Bur- 
leigh V.  Parton,  21  Tex.  585. 


224 


THE   LAW   OF   PARTNERSHIP. 


[CH.  VII. 


partner,  and  there  are  no  further  facts  in  the  case,  the  partner- 
ship would  not  be  held,  and  the  act  of  the  holder  of  that  paper 
would  be  deemed  fraudulent  in  law.  (/)  But,  if  further  facts 
come  in,  these  do  not  seem  to  be  construed  with  the  same  se- 
verity, in  reference  to  the  holder,  as  they  would  be  in  this 
country.  Thus,  if  the  paper  be  larger  than  the  debt,  and  not 
agreeing  with  it  in  point  of  time,  and  is  indorsed  before  the 
holder  sees  it,  such  facts  have  been  considered  as  war- 
*  206  ranting  the  conclusion  that  the  holder  honestly  *  be- 
lieved, and  might  rationally  have  believed,  that  the  firm 


{/)  This  is  the  principle  of  Hope  v. 
Cust,  cited  by  Lawrence,  J.,  in  1  East, 
62.  The  same  principle  was  applied 
in  Shirreff  v.  Wilks,  1  East,  48,  the  case 
in  which  Hope  c.  Cust,  supra,  was 
cited.  Lord  Kenyon,  C.  J.,  said : 
"  This  is  an  action  brought  against 
three  persons,  Wilks,  Bishop,  and  Rob- 
son,  as  acceptors  of  a  bill  of  exchange. 
It  appears  that  the  acceptance  was  in 
fact  made  by  Bishop  alone,  in  the  name 
of  the  firm.  The  consideration  for 
this  bill  was  some  porter,  which  had 
been  sold  by  the  plaintiffs  to  Wilks  & 
Bishop  only,  at  a  time  when  Robson 
had  no  concern  with  the  house.  Wlien 
the  plaintiffs,  knowing  this,  draw  the 
bill  upon  all  the  three  partners,  and 
knowingly  take  an  acceptance  from  one 
of  them  to  bind  the  other  two,  one  of 
whom,  Kobson,  had  no  concern  with  the 
matter,  and  was  no  debtor  of  theirs,  — 
no  assent  of  his  being  found,  and  noth- 
ing stated  to  show  that  he  had  any 
knowledge  of  the  transaction.  It  is 
hard  enough  for  one  partner  in  any 
case  to  be  able  to  bind  another  with- 
out liis  knowledge  or  consent ;  but  it 
would  be  carrying  the  liability  of  part- 
ners for  each  other's  acts  to  a  most  un- 
just extent,  if  we  suffered  a  new  part- 
ner to  be  bound  in  tliis  manner  for  an 
old  debt  incurred  by  other  persons. 
The  plaintiffs,  therefore,  ought  not  in 
justice  to  have  taken  this  securitj^  by 
which  they  were  to  bind  one  who  was 
not  their  debtor :  the  transaction  is 
fraudulent  upon  the  face  of  it."  So  in 
Green  v.  Drakin,  2  Stark.  347.  There 
H.  and  B.  being  partners,  the  plaintiff 


lent  H.  500/.  to  enable  him  to  enter  into 
partnership  with  D.,  the  defendant, 
and  shortly  after,  D.,  H.,  and  B.  be- 
came partners.  To  pay  part  of  the 
sum  borrowed,  H.  drew  a  bill  of  ex- 
change in  the  partnership  name,  to  his 
own  order,  and  indorsed  the  same  to 
the  plaintiff.  Being  called  as  a  witness, 
he  testified  that  he  had  drawn  the  bill 
in  question  without  the  knowledge  of 
his  copartners,  but  that  tlie  plaintiff 
did  not  know  this.  The  defendant  had 
given  no  notice  of  his  intention  to  dis- 
pute the  consideration  of  the  bill.  But 
Lord  EUenborough  was  of  opinion  that 
the  nature  of  the  transaction  was  in- 
trinsically notice,  and  he  directed  that 
the  plaintiff  should  be  nonsuited,  on 
the  ground  that  one  partner  had  no 
right  to  bind  another  without  his  knowl- 
edge, by  drawing  a  bill  for  his  own  pri- 
vate debt.  Ex  /xtrte  Goulding,  2  Glyn 
&J.  118.  See  Jones  v.  Yates,  9  B.  & 
C.  532  ;  Ex  parte  Thorpe,  3  Mont.  &  A. 
716;  Ex  parte  Bonbonus,  8  Ves.  540; 
Ex  parte  Peele,  6  id.  604 ;  May  v.  Chap- 
man, 16  M.  &  W.  355 ;  Smith  v.  Cole- 
man, 7  Jur.  1053.  In  Franklin  v. 
M'Gusty,  1  Knapp,  301,  the  Master  of 
the  Rolls  said  :  "  I  take  it  to  be  clear, 
from  all  the  cases  upon  the  subject, 
that  it  lies  upon  a  separate  creditor 
wlio  takes  a  partnership  security  for 
the  payment  of  his  separate  debt,  if  it 
be  taken  simpliciter,  and  there  is  noth- 
ing more  in  the  case,  to  prove  that  it 
was  given  with  the  consent  of  the 
other  partners."  And  see  Blinn  v. 
Evans,  24  111.  317. 


CH.  VII.]       RIGHTS   OF   PARTNERS   BETWEEN   THEMSELVES.  225 

authorized  the  transfer.  (^)     But,  while  it  is  true  that 
paper  agreeing  *  in  amount  and  time  with  the  debt,  and    *  207 


(g)  Tlie  principal  case  is  Ridley  v. 
Taylor,  U  East,  175.  The  plaintiffs 
in  November,  1806,  sold  to  Ewbank, 
of  the  firm  of  Ord  &  Ewbank,  linen 
drapers,  on  his  separate  account,  a 
cargo  of  coals,  to  the  amount  of  34/. 
lis.  In  Ma}'  following,  Ewbank  paid 
51.  on  account,  and  gave  his  note  for 
the  balance.  This  note  was  dishon- 
ored, and  taken  up  by  the  plaintiffs, 
who  shortly  after  received  from  Ew- 
bank, for  the  same  balance,  the  bill  in 
suit.  This  bill,  for  40/.,  was  drawn 
and  indorsed  by  Ewbank  in  the  style 
and  firm  of  Ord  &  Ewbank,  and  was 
before  that  time  accepted  by  the  de- 
fendant Taylor.  After  delivering  this 
acceptance  to  the  plaintiffs,  Ewbank 
applied  to  the  plaintiffs  for  the  balance 
of  9/.  19s.  9d. ;  but  the  plaintiffs  re- 
fused to  pay  it  until  the  bill  upon  the 
defendant  sliouid  have  been  paid. 
The  plaintiffs  negotiated  the  bill  for 
40/.,  but  were  subsequently  obliged  to 
pay  it,  and  thereupon  debited  Ewbank 
alone  for  the  amount.  Ord  &  Ewbank 
having  become  bankrupt,  the  defend- 
ant was  sued  as  acceptor,  and  a  ver- 
dict found  for  the  plaintiffs  to  the 
amount  of  the  bill,  subject  to  the  opin- 
ion of  the  court  on  the  above  facts. 
It  was  held,  in  the  King's  Bench,  that 
the  verdict  should  stand  to  the  amount 
of  Ewbank's  debt. 

The  same  circumstances,  of  the 
partnership  paper  being  for  an  amount 
larger  than  the  private  debt,  and  of  its 
being  drawn,  accepted,  and  indorsed 
before  the  creditor  saw  it,  and  of  its 
differing  in  point  of  time,  seem  to 
have  determined  the  opinion  of  the 
court  in  ^x  porte  Kirby,  1  Buck,  511. 
There  T.,  M.,  and  F.  were  in  partner- 
ship, under  the  firm  of  M.,  F.,  &  Co. 
T.  also  carried  on  business  on  his  own 
account,  and,  being  separately  indebted 
to  K.  to  the  amount  of  100/.,  he  sent 
to  K.  a  bill  of  exchange  for  300/. 
already  drawn  and  accepted,  and  also 
indorsed  by  M.,  F.,  &  Co.,  the  payees, 
but  which  wanted  nearly  three  months 


of  being  due.  At  the  same  time,  T. 
requested  K.  to  place  100/.  to  his  credit, 
and  to  send  him  a  bill  for  the  balance, 
200/.  K.  accordingly  sent  a  draft  for 
200/.,  which  was  duly  paid.  The  bill 
for  300/.  being  dishonored,  and  M.,  F., 
&  Co.  having  become  bankrupt,  K. 
was  held  to  have  made  a  bond  Jide  ex- 
change of  security,  and  to  be  entitled 
to  prove  against  the  joint  estate, 
though  not  against  the  separate  estate 
of  T. 

Upon  the  same  principle,  appar- 
ently, it  was  held,  in  Ex  parte  Bon- 
bonus,  8  Ves.  540,  that  the  mere  fact 
that  money  advanced  to  one  partner 
upon  the  security  of  the  firm  was 
carried  to  his  separate  account,  even 
with  the  knowledge  of  the  lender,  was 
not  sutficient  to  make  the  transaction 
fraudulent  as  to  the  other  copartners, 
and  thereby  to  discharge  the  firm  from 
liability.  The  fiicts  were  as  follows  : 
Rogers  was  a  merchant  in  Bristol,  on 
his  individual  account ;  he  also  was  in 
partnership  with  Blake  &  Parnell  in 
the  business  of  insurance  brokers. 
But  the  private  and  partnership  con- 
cerns in  which  Rogers  was  engaged, 
though  both  were  carried  on  at  Bris- 
tol, were  conducted  in  separate  estab- 
lishments ;  and  the  accounts  of  the  two 
concerns  were  kept  in  distinct  sets  of 
books.  Parnell  was  the  manager  of 
the  partnership  concern.  A  commis- 
sion of  bankruptcy  issued  against 
Rogers,  and  at  the  same  time  against 
Rogers,  Blake,  &  Parnell.  Under  the 
joint  commission,  Atwood  &  Co., 
bankers,  proved  a  very  large  sum,  ad- 
vanced to  Rogers  upon  partnership 
notes,  drafts,  or  bills.  The  joint  cred- 
itors prayed  that  the  above  proof  of 
Atwood  &  Co.,  under  the  joint  com- 
mission, might  be  expunged ;  and, in 
support  of  their  ijetition,  suggested 
that  all  the  said  bills  or  notes,  except 
two,  were  drawn  by  Rogers,  or  by  his 
direction,  without  the  privity  of  Par- 
nell ;  tiiat  they  were  all  made  at  the 
same  time,  though  bearing  different 
15 


226 


THE    LAW    OF    PARTNERSHIP. 


[CH.  VII. 


therefore  more  obviously  made  for  the  debt,  would  be 
*  208    more  suspicious,  we  have  some  doubt  *  whether  this  coin- 


dates,  and  for  a  very  large  sum  ad- 
vanced within  a  very  short  space  of 
time,  wliile  Rogers  was  greatly  har- 
assed and  threatened  by  his  creditors  ; 
that  no  part  of  tiie  consideration  came 
to  the  hands  of  rarncll,  or  to  the  use  of 
the  firm,  but  exclusively  to  Rogers. 
Lord  Eldon  said  :  "  This  petition  is 
presented  upon  a  principle  which  it  is 
very  difficult  to  maintain,  that  if  a 
partner,  for  his  own  accommodation, 
pledges  the  partnership,  as  the  money 
comes  to  the  account  of  the  single  part- 
ner only,  tlie  partnership  is  not  bound. 
I  cannot  accede  to  that.  I  agree,  if  it 
is  manifest  to  the  persons  advancing 
money  that  it  is  upon  the  separate  ac- 
count, and  so,  that  it  is  against  good 
faith  that  he  should  pledge  tiie  partner- 
ship, then  they  show  that  he  had 
authority  to  bind  the  partnership. 
But  if  it  is  in  the  ordinary  course  of 
commercial  transactions,  as  upon  dis- 
count, it  would  be  monstrous  to  hold, 
that  a  man  borrowing  money  upon  a 
bill  of  exchange,  pledging  the  partner- 
ship, without  any  knowledge  in  the 
banker  that  it  is  a  separate  transac- 
tion, merely  because  that  money  is  all 
carried  into  the  books  of  tlie  individual, 
therefore  the  partnership  should  not  be 
bound.  No  case  has  gone  that  length. 
It  was  doubted  whether  Hope  v.  Cust 
was  not  carried  too  far,  yet  that  does 
not  reach  this  transaction  ;  nor  Shirreff 
i;.  Wilks,  as  to  which  I  agree  with 
Lord  Kenyon,  tiiat,  as  partners,  whether 
they  expressly  provide  against  it  in 
their  articles  (as  they  generally  do, 
though  unnecessarily)  or  not,  do  not 
act  with  good  faith  when  pledging  the 
partnership  property  for  the  debt  of 
the  individual,  so  it  is  a  fraud  in  the 
person  taking  that  pledge  for  his  sepa- 
rate debt."  Further,  it  has  been  held 
both  here  and  in  England,  that  if  one 
partner,  to  pay  his  separate  debt,  give 
the  partnership  acceptance  to  an 
amount  greater  than  the  debt,  the 
creditor  may,  in  an  action  against  the 
firm,   recover  the  difference  between 


the  amount  of  the  bill  and  his  separate 
demand ;  the  whole  transaction,  it 
seems,  not  being  vitiated  by  the  fraud 
as  to  part.  Thus,  in  VVintle  v.  Crow- 
ther,  1  Crompt.  &  J.  316,  the  defendants, 
Crowther  &  Combes,  were  sued  as  the 
acceptors  of  two  bills  of  excliange, — 
one  for  130/.  10s.  Of/.,  the  other  for  45/. 
lOs.  Respecting  the  former  bill,  these 
facts  were  in  evidence:  Crowther  & 
Combes  carried  on  business  in  partner- 
ship as  coal  merchants,  Combes  being 
a  dormant  partner.  Crowther  was 
also  engaged  in  another  kind  of  busi- 
ness on  his  separate  account,  and 
therein  became  separately  indebted  to 
the  plaintiffs  for  80/.  The  plaintiffs 
drew  on  him  two  bills  of  excliange ; 
the  one  for  40/.,  the  other  for  88/.  8s. 
6c/.,  the  first  of  which  was  dishonored. 
When  the  second  became  due,  Crow- 
ther took  to  the  plaintiff  the  bill  for 
130/.  10s.  6f/.,  wiiich  was  accepted  in 
the  name  of  Crowther  &  Co.  in  the 
handwriting  of  Crowther.  The  two 
separate  bills  of  Crowther  were  given 
up,  and,  as  the  evidence  indicated  very 
strongly,  in  exchange  for  the  partner- 
ship bill  for  130/.  10s.  6f/.  The  cause 
was  twice  tried.  Upon  the  first  trial, 
a  verdict  was  found  for  the  defendants  ; 
but  it  was  set  aside  as  being  against 
evidence.  Upon  the  second  trial,  the 
jury  found  for  the  plaintiffs  upon  both 
bills ;  and  the  plaintiffs  having  con- 
sented to  reduce  this  verdict  by  the 
amount  of  Crowther's  two  separate 
bills  for  40/.  and  38/.  8s.  6d.  (a  clear 
admission  of  fraud,  as  to  that  part  of 
the  transaction  at  least),  it  was  held  in 
the  Exchequer  that  they  might  retain 
their  verdict  for  the  residue.  Wilson 
V.  Lewis,  2  Scott's  N.  R.  115;  Gam- 
ble V.  Grimes,  2  Cart.  (Ind.)  392.  See 
also  Barber  v.  Backhouse,  1  Peake,  61. 
The  English  rule  seems  to  be  very 
clearly  stated  by  the  Master  of  the 
Rolls,  in  Frankland  v.  M'Gusty,  1 
Knapp,  301 :  "  I  take  it  to  be  clear, 
from  all  the  cases  upon  the  subject, 
that  it  lies  upon  a  separate   creditor 


CH.  VII.]       RIGHTS    OF   PARTNERS   BETWEEN   THEMSELVES.  227 


cidcnce  between  the  private  debt  to  be  paid,  and  the  paper 
of  the  firm  which  pays  it,  with  no  evidence  of  authority  or 
adoption  by  the  firm,  would  always  be  sufficient,  in  England,  to 
discharge  the  firm.  But,  on  the  other  hand,  we  are  quite  con- 
fident that  American  courts  would  require  better  reason  for 
believing  in  the  good  faith  of  the  holder,  than  any  coincidence 
between  the  date  and  amount  of  the  firm's  paper  and  those  of 
the  private  debt  which  it  pays  or  secures.  In  other  words,  the 
fact  that  the  private  creditor  of  a  partner  takes  from  him  the 
paper  of  the  firm  to  pay  his  debt,  raises  a  stronger  presumption 
of  fraud  in  this  country  than  in  England. 

Lord  Eldon  says,  very  truly,  that  it  may  be  of  great  moment 
to  a  partnership  that  the  mercantile  credit  of  one  of  the  part- 


wlio  takes  a  partnersliip  security  for 
the  payment  of  liis  separate  debt,  if  it 
be  taken  simpliciter,  and  there  is  notli- 
ing  more  in  the  case,  to  prove  tliat  it 
was  given  witli  tlie  consent  of  the  other 
partners.  But  there  may  be  other  cir- 
cumstances attending  tiie  transaction, 
which  may  aflford  the  separate  creditor 
a  reasonable  ground  of  belief  that  the 
security  so  given  in  the  partnership 
name  is  given  with  the  consent  of  the 
other  partners  ;  and  these  circumstances 
occurred  in  the  case  which  was  cited, 
and  which  seemed  to  be  inconsistent 
with  the  other  authorities.  I  refer 
now  to  the  case  of  Ridley  i\  Taylor. 
In  that  case  the  bill  was  dated  eighteen 
days  before  its  delivery  by  the  partner, 
to  his  separate  creditor,  and  it  was  not 
known  by  the  creditor  that  it  was  drawn 
and  indorsed  by  the  debtor  alone ;  and 
the  bill  was  to  a  greater  amount  than 
the  separate  debt.  The  court,  there- 
fore, were  of  opinion,  that  there  was 
reasonable  ground  for  the  separate 
creditor  believing  it  not  to  have  been 
given  to  him  in  fraud  of  the  partner- 
ship, and  that  the  general  presumption, 
that  a  partnership  security,  when  ap- 
plied in  payment  of  a  separate  debt,  is 
in  fraud  of  the  partnership,  was  re- 
pelled by  the  special  circumstances 
which  belonged  to  that  particular  occa- 
sion. Upon  a  consideration,  therefore, 
of  all  the  authorities,  I  am  of  opinion 
that  the  law  is,  that  taken  simjdiciter 


the  separate  creditor  must  show  the 
knowledge  of  the  partnership  ;  but,  if 
there  are  circumstances  to  show  a  rea- 
sonable belief  that  it  was  given  with 
the  consent  of  the  partnersliip,  it  lies 
upon  the  partners  to  prove  the  fraud. 
I  think  that  will  reconcile  all  the 
cases."  We  have  already  seen  [p. 
*20.3,  note  (d)],  that,  in  this  country, 
if  one  partner  use  the  partnership 
paper  under  such  circumstances  of 
separate  advantage  to  himself,  and  of 
collusion  or  of  negligence  on  the  part 
of  the  one  dealing  with  him,  as  to  make 
the  transaction  prima  facie  fraudulent 
and  void  as  to  the  firm,  the  firm  may 
still  be  held  upon  proof  of  its  previous 
consent  to,  or  subsequent  adoption  of, 
the  single  partner's  act.  The  same  is 
also  the  doctrine  of  the  English  courts. 
Thus,  in  A'x  parte  Bonbonus,  stated 
above.  Lord  Eldon  said :  "  There  is 
no  doubt  now,  the  law  has  taken  this 
course ;  that  if,  under  the  circum- 
stances, the  party  taking  the  paper 
can  be  considered  as  being  advertised 
in  the  nature  of  the  transaction,  that  it 
was  not  intended  to  be  a  partnership 
proceeding,  as  if  it  was  for  an  ante- 
cedent debt,  prima  facie  it  will  not  bind 
them  :  but  it  will,  if  you  can  show  pre- 
vious authority  or  subsequent  appro- 
bation ;  a  strong  case  of  subsequent 
approbation  raising  an  inference  of  pre- 
vious positive  authority."  See  Tall- 
madge  v.  Penoyer,  35  Barb.  120. 


228 


THE   LAW    OF   PARTNERSHIP. 


[CH.  VII. 


ners  should  be  preserved,  and  tliat  the  courts  should  not  em- 
barrass tlie  lawful  use  of  the  paper  of  a  firm,  by  a  partner,  for 
his  own  accommodation,  seeing  that  this  is  often  connected 
with  the  advantage  of  the  firm,  (/«)  But  to  all  considerations  of 
this  kind  there  is  one  answer.  The  power  of  a  partner  is  lim- 
ited by  the  business  of  the  firm  ;  he  wlio  knows  that  a  partner's 
act  is  not  within  the  business  of  the  firm,  knows  that  it  is  not 
authorized  ;  and,  if  all  he  knows  is  that  the  act  of  the 

*  209    partner  is  for  his  own  *  immediate  and  direct  and  several 

benefit,  he  has  no  right  to  presume  that  the  firm  are 
benefited  also,  and  therefore  authorized  it ;  because  it  is  gen- 
erally very  easy  for  him  to  ascertain  how  this  is,  if  he  wishes 
not  to  be  a  party  to  a  fraud. 

Similar  doctrines  must  be  applied  if  a  partner  disposes  of 
any  other  securities ;  or  of  the  goods  or  property  of  any  kind, 

of  the  firm,  in  payment  of  his  personal  debt,  or  for  his 

*  210    personal    relief,  (i)      *  And,  generally,  the  true    rule 


(/()  Ex  parte  Bonbonus,  8  Ves.  544. 
See  The  Trader's  Bank  of  Rocliester 
V.  Bradner,  43  Barb.  379 ;  Freeman  v. 
Carpenter,  17  Wis.  120. 

[i)  Tlins  where  two  firms  are  part- 
ners in  a  contract  to  supi)ly  provisions 
for  the  navy,  and  one  firm  consigns 
goods  to  tlie  other  with  which  to  per- 
form the  joint  contract ;  if  tlie  latter 
house  pledge  the  bill  of  lading  of  such 
goods  as  security  for  their  own  sepa- 
rate debts,  and  their  separate  creditor 
is  conusant  of  all  the  facts,  tlie  pledge 
is  fraudulent  and  void.  Snaitli  v.  Bur- 
ridge,  4  Taunt.  684.  And  if  one  part- 
ner assign  or  transfer  to  his  separate 
creditor,  in  discharge  of  his  separate 
debt,  partnership  stock  in  trade,  securi- 
ties, funds,  &c.,  and  such  property  is 
known  to  tiie  creditor  to  belong  to  the 
firm,  the  same  principle  must  apply 
as  in  the  case  of  a  like  transfer  of 
partnership  negotiable  paper.  The 
partnership  cannot  be  concluded  with- 
out their  consent,  by  such  application 
of  its  funds  and  the  discharge  of  the 
one  partner's  private  debts.  Dob  v. 
Halsey,  16  Johns.  34;  Halstead  v. 
Shepard,  23  Ala.  558;  Nail  v.  Mc- 
Intyre,   31    id.   532.      See    Bourne  v. 


Wooldridge,  10  B.  Mon.  402;  Daniel 
V.  Daniel,  9  id.  195.  The  courts  of 
this  country  liave  gone  yet  further. 
In  Jones  v.  Yates,  9  B.  &  C.  5.32,  Sykes 
&  Bury  being  in  partnership,  Sykes 
fraudulently  gave  the  bills  of  the 
partnership  in  discharge  of  his  sepa- 
rate debt.  He  likewise  applied  part- 
nership funds  to  the  same  purpose, 
his  creditor  being  conusant  of  and 
privy  to  these  fraudulent  transactions. 
The  firm  of  Sykes  &  Bury  having 
brought  trover  for  the  bills  and  as- 
sumpsit for  the  money,  it  was  held 
that  they  could  not  recover.  Lord 
Tenterden  :  "  It  was  said,  in  support 
of  the  argument,  that  the  property 
did  not  pass  from  Sykes  by  his  wrong- 
ful act,  but  remained  in  Sykes  &  Bury. 
This  was  ingeniously  and  plausibly 
put :  but  as  against  Sykes  the  property 
did  pass  at  law ;  and  there  was  no 
remedy  at  law  for  Bury  to  recover  it 
back  again  ;  he  could  not  do  so  with- 
out making  Sykes  a  party."  But  here 
it  seems  to  be  pretty  well  settled,  that 
if  the  creditor  of  one  partner  receive 
for  his  debt  partnership  property, 
without  the  knowledge  or  consent  of 
the   other  partners,   the    title  of   the 


CH.  V[I.]       RIGHTS    OF    PARTNERS    BETWEEN    THEMSELVES. 


229 


should  be,  and  we  are  confident  that  it  is  so  in  the  United 
States,  that  any  act  whatever  of  a  partner,  certainly  for 
his  own  individual  and  several  benefit,  and  not  obviously 
for  that  of  the  firm  also,  does  not  bind  the  firm,  until  the 
holder  proves  their  authority  or  ratification.  When  a  note 
signed  in  the  firm  name  was  given  not  for  partnership  purposes, 
and  a  partner  said  he  would  settle  it,  "  if  he  could  get  the 
books,  notes,  and  accounts  from  the  partner  who  signed  the 
note,"  and  he  did  not  get  them,  it  was  held  that  he  was  not 
liable.  Qii)     And  a  release,  by  one  partner,  of  a  debt  due  to 


partnership  is  not  divested,  and  tlie 
creditor  acquires  notliing  by  the  trans- 
fer, whetiier  the  property  thus  taken 
belong  to  the  partnership  or  not.  Rog- 
ers V.  Batfhelor,  12  Pet.  221 ;  Brew- 
ster V.  Mott,  4  Scam.  878  ;  Kelley  v. 
Greenieaf,  3  Story,  93 ;  Hester  v. 
Lumpliin,  4  Ala.  509,  514  ;  Buck  v. 
Mosley,  24  Miss.  170  ;  Tanner  v.  Hall, 
1  Barr,  417,  418 ;  Goode  v.  McCartney, 
10  Tex.  193.  These  cases  proceed 
upon  the  intelligible  ground,  "  that  one 
partner  caiuiot  apply  the  partnership 
funds  or  securities  to  the  discharge  of 
his  own  private  debt,  without  the  con- 
sent of  his  copartners  ;  and  that,  with- 
out their  consent,  their  title  to  the 
property  is  not  divested  in  favor  of 
such  separate  creditor,  whether  he 
knew  it  to  be  partnership  property  or 
not.  In  short,  his  right  depends  not 
upon  his  knowledge  that  it  was  part- 
nership property,  but  upon  the  fact, 
whether  the  other  partners  had  as- 
sented to  such  disposition  of  it  or  not." 
Per  Story,  J.,  in  Rogers  v.  Batchelor, 
supra ;  [Geery  v.  Cockroft,  37  N.  Y. 
Sup'r  Ct.  147.]  The  principle  here  laid 
down  is  entirely  consistent  with  that 
we  have  jtist  been  considering  respect- 
ing the  application  by  one  partner  of 
negotiable  paper,  bearing  on  its  face 
tiie  name  of  the  firm,  to  his  separate 
debts.  Nor  is  it  at  all  in  conflict  with 
another  rule  to  which  we  shall  pres- 
ently come ;  namely,  that  the  firm  is 
bound  by  mercantile  paper  bearing  its 
signature,  in  the  hands  of  a  Loud  Jide 
holder  for  value,  however  fraudulent 
may  have  been  its  incei)lion.     And  see 


Ha^' ward  v.  French,  12  Gray,  453,  and 
Cadwallader  v.  Kroesen,  22  Md.  204. 

(ii)  Burleigh  v.  Parton,  21  Tex. 
585.  [Nor  can  the  purchaser  of  goods 
from  a  firm  plead,  in  pa^'ment  or  set- 
off, a  debt  due  him  from  one  of  the 
firm.  Wise  i\  Copley,  36  Ga.  508. 
Nor  can  a  creditor  of  a  partner,  by  an 
attachment  and  sale  of  firm  property, 
on  execution,  for  his  private  debt,  ac- 
quire title  as  against  the  creditors  of 
the  firm.  Miner  v.  Pierce,  38  Vt.  610. 
A  sale  by  a  partner  of  part  of  the  firm 
property,  the  proceeds  to  be  applied  to 
the  private  account  of  the  partner,  is 
fraudulent  as  against  the  other  part- 
ners, and  gives  the  purchaser  no  title 
as  against  them.  Williams  v.  Barrett, 
10  Kansas,  455 ;  Stegall  v.  Coney,  49 
Miss.  761.  If  a  partner  fraudulently 
appropriate  the  funds  of  a  firm  to  the 
purchase  of  real  estate,  or  to  the  pay- 
ment of  life-insurance  premiums  on  a 
policy  for  the  benefit  of  his  wife,  a 
court  of  equity  will  follow  the  funds 
and  their  proceeds,  and  appropriate 
them  to  the  use  of  the  firm.  Shaler  v. 
Trowbridge,  Ct.  of  Er.  &  Ap.  (N.  J.),  5 
Reporter,  214.  One  v.'ho  takes,  in  pay- 
ment of  the  individual  note  of  A.,  for 
his  private  debt,  notes  payable  to  A., 
but  belonging  to  the  firm  of  which  he 
was  a  member,  has  a  good  title,  if  he 
was  ignorant  of  the  fact  of  partnership. 
Kellogg  V.  Fancher,  23  Wis.  21.  The 
banker  of  a  firm  who  knowingly  trans- 
fers funds  of  the  firm  to  the  i)rivate 
account  of  one  of  the  firm,  for  the 
purpose  of  speculation,  is  liable  to  the 
other  partners  for  the  funds  so  trans- 


230 


THE    LAW    OF   PARTNERSHIP. 


[CH. 


VII. 


the  partnersliip,  or  a  receipt  of  payment,  which  he  has  unques- 
tionably authority  to  give  if  in  good  faith,  will  be  inoperative 
if  given  for  a  consideration  whicli  is  known,  or  ought  to  be 
known,  to  inure  only  to  his  own  benefit.  And  many  decisions 
illustrating  this  principle  may  be  found  in  the  note.  Qj) 


ferred.  Billings  v.  Meigs,  53  Barb. 
(N.  Y.  S.  C.)  272.  And,  generally,  a 
partner  cannot  use  partnership  funds 
or  credits  to  pay  his  private  debts,  or 
promote  liis  private  interests.  McNair 
V.  Piatt,  4G  111.  211  ;  Broadus  v  Evans, 
63  N.  C.  G33 ;  Downing  v.  Linville,  3 
Bush  (Ky.),  472;  Wise  v.  Copley,  36 
Ga.  508. f 

( / )  Everenghim  v.  Ensworth,  7 
Wend.  326  ;  Gram  i'.  Cadwell,  5  Cow. 
48!) ;  Farrar  v.  Hutchinson,  9  A.  &  E. 
641;  Greeley  v.  Wyeth,  10  N.  H.  16; 
Minor  v.  Gaw,  11  Sniedes  &  M.  322. 
See,  however.  Halls  v.  Coe,  4  McCord, 
136  ;  Beckham  v.  Peag,  2  Bailey,  133. 
An  arrangement  is  sometimes  made 
between  one  partner  and  a  customer 
of  the  firm,  by  which  it  is  agreed  that 
goods  sold  or  services  rendered  to  such 
customer  by  the  partnership  siiall  be 
paid  for  by  a  debt  due  from  tliat  part- 
ner alone,  or  by  articles  furnished  for 
his  separate  use.  Thus,  one  of  a  firm 
of  grocers  may  agree  with  a  tavern- 
keeper  that  the  debt  of  the  latter  for 
provisions  bought  of  the  partnership 
shall  be  set  off  against  the  debt  of  the 
former  for  entertainment  furnished  at 
the  inn.  Is  such  an  engagement,  en- 
tered into  by  one  partner,  valid  as 
against  his  copartners,  wlio  are  not 
privy  to  it  ?  The  adjudications  seem 
to  be  somewhat  in  conflict.  But  the 
doctrine  of  quite  a  number  of  cases 
seems  to  be,  that  as  one  partner  has  an 
undoubted  right  to  sell  the  goods  of 
the  partnership,  or  to  contract  for  its 
services ;  and  as  he  may  take  pay 
therefor  in  behalf  of  tlie  partnership 
in  either  specific  articles  or  money  ; 
and  as  an  appropriation  by  him  of 
sucli  articles  or  money,  once  received 
for  the  partnership,  to  his  private  use, 
would  not  suljject  the  party  from 
whom  he  received  them  to  an  action 
by  the  firm, — the  nature  of  the  case 


is  not  changed,  if  the  party,  thus  deal- 
ing with  one  partner,  knows  at  the 
time  that  what  he  pays  for  labor, 
materials,  &c.,  furnished  him  by  the 
partnersliip,  is  intended  to  come  to  the 
use  of  tiiat  partner  alone.  The  dispo- 
sition of  the  articles,  or  money,  re- 
ceived by  one  partner,  for  benefits 
conferred  by  the  partnership,  is  a 
matter  entirely  between  the  different 
partners.  Greeley  v.  AVyeth,  10  N.  H. 
15;  White  v.  Toles,  7  Ala.  569  ;  Strong 
V.  Fish,  13  Vt.  277  ;  Halls  v.  Coe,  4 
McCord,  136  ;  Henderson  v.  Wild,  2 
Camp.  561  ;  Perry  v.  Butt,  14  Ga.  699. 
See  also  M'Kee  v.  Stroup,  Rice,  291 ; 
Arnold  v.  Brown,  24  Pick.  89,  93 ;  Yale 
V.  Yale,  13  Conn.  185  :  contra,  Pierce 
V.  Pass,  1  Porter,  232  ;  Goode  v.  M'Cart- 
ney,  10  Te.x.  193  ;  Norment  v.  Johnson, 
10  Ired.  89;  Ramey  v.  McBride,  4 
Strobh.  12.  The  practical  rule  applica- 
ble to  the  point  is,  we  think,  well 
stated  in  Warder  v.  Newdigate,  11  B. 
Mon.  174,  177.  Where  the  plaintiffs, 
partners,  had  boarded  with  the  defend- 
ant, and  each  had  told  him  "  that  what 
one  might  call  for  would  be  the  same 
as  if  both  should  order  it,"  the  defend- 
ant's account  for  liquors,  &c.,  furnished 
to  each,  was  held  to  create  a  joint 
indebtedness,  and  to  constitute  a  valid 
counter-claim  to  the  demand  of  the 
two  plaintiffs  for  goods  sold  and  de- 
livered. Hartung  i\  Siccardi,  3  E.  D. 
Smith,  560.  It  lias  been  held,  that  a 
suit  at  law  cannot  be  maintained  in 
the  names  of  all  the  partners,  for  a  debt 
from  which  one  of  the  joint  plaintiffs 
has  already  discharged  the  defendant, 
although  such  discharge  may  have 
been  a  fraud  upon  the  firm,  in  which 
the  released  debtor  was  participant ; 
as  where  it  has  been  given  in  consid- 
eration of  one  partner's  receiving  a 
discharge  from  his  private  and  sepa- 
rate debt.      Jones  v.  Yates,  9  B.  &  C. 


CH.  VII.]       RIGHTS   OF   PARTNERS    BETWEEN   THEMSELVES.  231 


Taking  the  individual  note  of  a  member  of  a  firm  for  goods 
sold  to  the  firm  will  not  discharge  the  other  members  from 
liability  for  the  goods,  unless  there  be  an  agreement  with  the 
firm  to  that  effect.  And  this  is  so  although  the  note  be  nego- 
tiable, if  it  remains  in  the  hands  of  the  payee,  (jj') 

*  A  bill  of  exchange  thus  drawn  fraudulently  or  so    *  211 
accepted,  or  a  promissory  note  so  made  or  indorsed,  does 
not  bind  the  firm  to  an  indorsee  of  the  original  wrongful  holder 
or  indorsee,  even  if  this  second  indorsee  be  wholly  innocent, 
unless  he  can  show  that  he   paid   a  consideration  for  it.  (A;) 


532,  530  ;  Wallace  v.  Kelsall,  7  M.  & 
W.  264  ;  Gordon  v.  Ellis,  7  Man.  &  G. 
607,  621  ;  Greeley  v.  Wyeth,  10  N  H. 
15;  Homer  v.  Wood,  11  Cush.  G2. 
Upon  similar  grounds,  it  is  said,  if  a 
partnership  draw  a  bill  of  exchange, 
and  one  partner  agrees  with  the 
drawee,  though  in  fraud  of  the  firm, 
that  he  will  provide  for  it  when  due, 
the  firm  cannot  maintain  an  action  on 
the  bill  against  the  acceptor.  Rich- 
mond V.  Heapy,  1  Stark.  202  ;  Johnson 
V.  Peck,  3  id.  06  ;  Sparrow  v.  Chisman, 
9  B.  &  C.  241.  See  further  Longman 
V.  Pole,  1  Moody  &  M.  223 ;  and  com- 
pare with  Jones  v.  Yates,  supra ;  Hen- 
derson !'.  Wild,  2  Camp.  561.  See 
also  Minor  v.  Gaw,  11  Smedes  &  M. 
322 ;  Brewster  v.  Mott,  4  Scam.  378  ; 
Purdy  V.  Powers,  6  Barr,  492.  Though 
a  discharge  or  release  from  a  debt  by 
one  of  several  plaintiflTs  who  are  part- 
ners, is,  even  when  fraudulently  given, 
a  good  defence  to  the  joint  action,  yet 
a  receipt  of  payment,  given  by  one  of 
several  plaintiffs,  copartners,  is  noth- 
ing more,  as  evidence,  than  a  prima 
facie  acknowledgment  that  the  debt 
sued  has  been  paid  ;  and  the  plaintiffs 
may,  notwithstanding,  show  the  con- 
trary. Skaife  v.  Jackson,  3  B.  &  C. 
421  ;  Farrar  v.  Hutchinson,  9  A.  &  E. 
641  ;  Opinion  of  Parke,  B.,  in  Wallace 
I'.  Kelsall,  3  B.  &  C.  273.  See  Siier- 
wood  V.  Barton,  36  Barb.  284. 

(.//)  Folk  V.  Wilson,  21  Md.  538. 

(k)  Grant  v.  Hawkes,  Chitty  on 
Bills,  42;  Heath  v.  Sansom,  2  B.  & 
Ad.  291.  In  this  last  case,  Sansom  & 
Evans  were  partners  under  the  firm  of 


Sansom  &  Co.  Sansom  was  also  a 
partner  in  the  Droitwitch  Patent  Salt 
Company ;  and,  being  indebted  to  tiiem, 
drew  a  bill  in  the  name  of  Sansom  & 
Co.,  payable  to  the  Salt  Company. 
The  latter  indorsed  the  bill  to  the 
plaintiff,  though  not,  as  it  appeared, 
for  any  valuable  consideration.  The 
plaintiff  brought  his  action  against 
Sansom  &  Evans.  It  was  held,  that 
the  Droitwich  Company  could  not 
have  sued  Evans  on  the  note,  it  being 
given  to  them  in  fraud  of  Evans  ;  and 
that,  as  it  did  not  appear  why  the 
plaintiff  sued  the  makers  of  the  note, 
whom  he  did  not  know,  rather  than 
the  indorsers,  who  were  a  solvent  and 
well-known  partnership,  it  was  incum- 
bent upon  the  plaintiff,  under  the  cir- 
cumstances, to  show  that  he  gave  a 
valuable  consideration  for  the  indorse- 
ment to  him.  Held,  also,  Parke,  J., 
dissentiente,  that  in  all  cases  where, 
from  defect  of  consideration,  the  origi- 
nal payees  caimot  recover  on  the  note 
or  bill,  tlie  indorsee,  to  maintain  an 
action  against  the  maker  or  acceptor, 
must  prove  consideration  given  by 
himself  or  a  prior  indorsee,  though  he 
may  have  had  no  notice  that  such 
proof  will  be  called  for.  But  where, 
in  an  action  by  indorsee  against  accept- 
ors of  a  bill  of  exchange,  some  of  the 
defendants  i)leaded  that  they  did  not 
accept,  and  it  was  proved  tliat  all  the 
defendants  were  partners,  and  that  one 
of  them,  who  had  suffered  judgment 
by  default,  had  accepted  the  bill  in  the 
name  of  the  firm,  in  fraud  of  the  part- 
nershij),  and  not  for  partnership  pur- 


232 


THE   LAW   OF   PARTNERSHIP. 


[CH.  vir. 


*212    Nor  would  it  be  good  in  his  *  hands,  whatever  the  con- 
sideration he  gave,  if  he  also  was  aware  of  the  fraud  by 


which  his  indorser  obtained  it.  (Z) 


poses,  it  was  held,  that  such  proof, 
witliout  evidence  of  knowledge  on  tlie 
part  of  tiie  plaintiff,  did  not,  under  the 
issue,  oblige  the  plaintiff  to  prove  the 
circumstances  under  which  the  bill 
was  indorsed  to  him.  Musgrave  v. 
Drake,  5  Q.  B.  185.  See  Heywood  v. 
Watson,  4  Bing.  496 ;  and  see  the  Me- 
chanics' Bank  v.  Foster,  44  Barb.  87. 

(/)  If  the  partnersiiip  prove  the 
note  or  bill  upon  which  it  is  sued  to 
have  been  issued  or  transferred  in 
fraud  of  tlieir  rights,  the  burden  is  now 
upon  the  claimant,  tlirougii  the  origi- 
nal wrongful  Jiolder,  to  show  that  he 
took  it  fairly,  and  not  under  circum- 
stances which  could  reasonably  oper- 
ate as  notice  of  tlie  fraud.  Munroe  v. 
Cooper,  5  Pick.  412  ;  Arden  v.  Sharpe, 
2  Esp.  524.  See  Blair,  Miller  v.  Doug- 
lass, cited  in  Collyer  on  Part.  §  495. 
And  in  an  action  against  one  partner 
by  the  payee  of  a  partnership  note,  the 
other  partner  is  a  competent  witness 
for  the  defendant,  to  prove  that  the 
consideration  of  said  note  was  for  the 
witness's  exclusive  benefit,  given  to 
secure  a  debt  due  by  him  on  his  own 
account ;  and  that  when  he  signed  the 
note  he  informed  the  plaintiff  that  he 
was  not  authorized  to  sign  the  defend- 
ant's name  to  it.  Robertson  v.  Mills, 
2  Harris  &  G.  98.  But  it  is  not  neces- 
sary that  adiial  bad  faith  should  be  fas- 
tened upon  the  second  indorsee  of  a 
fraudulently  circulated  bill  or  note,  to 
defeat  liis  claim  against  the  firm.  It  is 
sufficient  if  the  circumstances  under 
which  lie  became  such  indorsee  show 
that,  but  for  liis  gross  negligence,  he 
would  have  learned  tlie  fraud  in  which 
the  paper  originated,  or  by  which  it 
had  been  transferred.  N.  Y.  F.  Ins. 
Co.  V.  Bennett,  5  Conn.  574 ;  Smyth  v. 
Strader,  4  How.  404.  And,  it  seems, 
that  if  a  note  is  offered  at  a  bank,  by 
one  who  became  a  party  to  it  as  inter- 
mediate indorser,  to  be  discounted  for 
the  benefit  of  the  offerer,  the  transac- 
tion on  its  face  would  import,  that  the 


last  indorsement  was  intended  merely 
to  aid  the  negotiability  of  the  paper, 
and  would  throw  upon  the  bank,  dis- 
counting the  paper  under  such  circum- 
stances, the  onus  of  showing  the  trans- 
action to  iiave  been  regular.  Mauldin 
V.  Branch  Bank  at  Mobile,  "2  Ala.  502. 
See  Bank  of  Vergennes  v.  Cameron,  7 
Barb.  143,  150;  Cooper  v.  McClarkan, 
22  Penn.  St.  80.  But  if  the  holder  of 
a  partnership  negotiable  security,  is- 
sued or  negotiated  through  tlie  fraud 
of  one  of  the  partners,  show  liimself  to 
be  a  bond  fide  indorsee  for  value,  with- 
out notice  of  the  fraud,  the  undoubted 
general  rule  is,  that,  in  such  hands,  the 
paper  is  binding  on  the  firm ;  and,  as 
we  have  already  seen,  knowledge  ac- 
quired by  the  holder  subsequently  to 
his  taking  the  paper  will  not  affect  the 
bona  fides  of  the  transaction.  Arden  v. 
Sharpe,  2  Esp.  524 ;  Wells  v.  Master- 
man,  id.  731  ;  Lacy  v.  Wolcott,  2 
Dow.  &  R.  458  ;  Sanderson  v.  Brooks- 
bank,  4  Car.  &  P.  286 ;  Usher  v.  Daun- 
cey,  4  Camp.  97 ;  Sutton  v.  Gregory, 
2  Peake,  150;  Ex  parte  Bushell,  8  Jur. 
937 ;  Bank  of  Kentucky  v.  Brooking, 
2  Litt.  45;  Livingston  v.  Roosevelt,  4 
Johns.  279;  Smith  v.  Lusher,  5  Cow. 
689;  Vallett  »;.  Parker,  6  Wend.  619; 
Catskill  Bank  v.  Stall,  15  id.  364,  18  id. 
466 ;  Vernon  v.  Manhattan  Co.,  17  id. 
524,  22  id.  183;  Evans  v.  Wells, 
id.  325,  833,  20  id.  251 ;  North  River 
Bank  v.  Aymar,  3  Hill,  262;  Gilder- 
sleeve  V.  Mahony,  5  Duer,  383 ;  Rich 
V.  Davis,  4  Cal.  22 ;  Le  Roy  v.  John- 
son, 2  Pet.  186;  Emerson  v.  Harmon, 
14  Me.  271 ;  Waldo  Bank  v.  Lumbert, 
16  id.  416 ;  Dudley  v.  Littlefield,  21  id. 
418;  Duncan  v.  Clark,  2  Rich.  587; 
Babcock  v.  Stone,  3  McLean,  172 ; 
Commercial  Bank  v.  Lewis,  13  Smedes 
&  M.  226 ;  Freeman  v.  Ross,  15  Ga. 
252  ;  [Calkins  v.  Smith,  48  N.  Y.  614.] 
Hence,  equity  will  restrain  by  injunc- 
tion the  negotiation  of  a  bill  of  ex- 
change, though  in  the  hands  of  a 
holder  for  value,  if  he  took  it  knowing 


CII.  VII.]       RIGHTS    OF    PARTNERS   BETWEEN   THEMSELVES. 


233 


*  On  the  other  hand,  if  paper  be  drawn  or  discounted  *  213 
or  received,  bearing  only  the  signature  of  one  partner, 
and  the  proceeds  are  directly  carried  to  the  partnership  funds, 
the  partnership  cannot  be  charged  ;  because  it  is  considered 
that  the  credit  is  given  on  negotiable  paper  only  to  those  whose 
name  it  bears,  (m)  But  as  between  the  partners  it  is  a  part- 
nership note  ;  and,  if  one  partner  pays  it,  he  may  charge  it  to 
the  account  of  the  firm,  {mm}  The  strictness  of  the  rule  has 
been  relaxed  so  far  as  to  hold  the  firm  liable,  when,  by  proof 
of  usage  or  otherwise,  it  was  found  that  this  was  the  way  in 
which  they  signed  their  paper ;  for  this,  in  fact,  makes  the 
partner's  name  the  name  of  the  firm,  as  to  these  transactions.  (?i) 
So,  too,  if  a  partner  uses  neither  his  own  name  nor  that  of  the 
firm,  but  a  fictitious  one,  and  does  this  in  partnership  business 
and  on  partnership  account,  if  his  partnership  can  be  shown 


that  it  had  been  improperly  accepted, 
by  one  of  the  partners,  in  tlie  name  of 
the  partnership.  Hood  v.  Aston,  1 
Russ.  412.  In  general,  liowever,  the 
fact  that  one  partner  has  given  tlie 
partnersliip  name  on  his  own  separate 
account  is  a  matter  of  legal  defence 
only,  and  equity  cannot  relieve  unless 
defence  at  law  be  impracticable.  Sneed 
I'.  Cogle,  4  Litt.  162. 

To  an  action  by  indorsee  against  A. 
&  B.,  as  drawers  of  a  bill  of  e.xchange, 
indorsed  to  C,  and  by  him  to  the 
plaintifF,  A.  pleaded  that  he  and  B. 
were  in  copartnership  as  brewers ;  that 
B.  made  and  indorsed  the  bill,  using  the 
name  of  the  firm,  in  fraud  of  A.,  and 
not  for  the  purposes  of  the  copartner- 
ship, but  for  his  own  private  purposes, 
namely,  for  a  private  debt  due  from 
him  to  C,  and  without  the  knowledge 
or  consent  of  A. ;  that  there  was  no 
consideration  or  value  to  him,  A.,  for 
the  drawing  or  indorsement  of  the  bill : 
of  all  which  premises,  C,  at  the  time  of 
the  indorsement  to  him,  had  knowledge 
and  notice  ;  and  that  at  the  time  when 
the  bill  was  indorsed  and  delivered  to 
the  plaintiff,  he  had  full  knowledge  and 
notice  of  all  the  premises  in  the  plea 
aforesaid.  Replication,  that,  at  the 
time  when  the  bill  was  indorsed  and 


delivered  to  the  plaintifF,  he  had  not 
any  such  knowledge  or  notice  as  in  the 
plea  mentioned  ;  and  issue  thereon. 
At  the  trial,  the  jury  found  that  C.  had 
no  knowledge  of  the  original  fraud  in  the 
drawing  of  the  bill ;  but  that  the  plain- 
tifT,  at  the  time  of  the  indorsement  to 
him,  had  knowledge  of  that  fraud. 
Held,  that  the  plea  was  not  proved. 
May  V.  Chapman,  IG  IVI.  &  W. 
355. 

(m)  Farmers'  Bank  of  Mo.  v.  Bay- 
less,  35  Mo.  428,  and  same  case,  41 
Miss.  274 ;  Emly  v.  Lye,  15  East,  7 ; 
Siffkin  V.  Walker,  2  Camp.  .308;  Ex 
parte  Hunter,  1  Atk.  223 ;  Ex  parte 
Bolltho,  Buck,  100 ;  Denton  v.  Kodie, 
3  Camp.  493;  Bevan  v.  Lewis,  1  Sim. 
376.  See  Loyd  v.  Freshfield,  2  Car.  & 
P.  325 ;  GraeflF  i-.  Hitchman,  5  Watts, 
454  ;  Jaques  v.  Marquand,  G  Cow.  497  ; 
WilUs  V.  Hill,  2  Dev.  &  B.  231 ;  Allen 
V.  Coit,  6  Hill,  318;  Rogers  v.  Colt, 
id.  322;  Green  v.  Tanner,  8  Mete. 
420. 

(mm)  Sprague  v.  Ainsworth,  40  Vt. 
47. 

(n)  South  Carolina  Bank  i\  Case,  8 
B.  &  C.  427.  And  see  Hubbell  v. 
Woolf,  15  Ind.  204 ;  Schollenberger 
V.  Seldonbridge,  49  Penn.  83. 


234 


THE   LAW   OF   PARTNERSHIP. 


[CH.  vir. 


to  have  authorized  or  to  have  adopted  the  act,  they  will  be  held 
as  if  this  name  were  theirs,  (o) 

Tliat  one  partner  may  sign  a  note  so  as  to  hold  all  jointly 
and  himself  severally,  there  can  be  no  doubt.  If  A.  makes  a 
joint  and  several  note,  and  signs  it  "  A.,  B.,  &  Co.,"  and  also 
"  A.,"  we  cannot  see  why  he  is  not  so  held.  If  there  be  no 
words  making  it  joint  and  several,  it  is  only  the  joint  note  of 
all  wliich  it  is  by  the  signature  A.,  B.,  &,  Co. ;  and  therefore 
the  signature  A.  is  surplusage  and  inoperative.  But  if  the  sig- 
nature is  A.,  B.,  &  Co.,  by  A.,  then  it  is  certainly  the 
*  214  signature  of  the  company  by  an  agent,  *  who  might  be 
held  severally,  if  want  of  authority  or  other  circum- 
stances made  him  so  liable,  but  who  is  no  more  held  in  severalty 
because  he  is  a  partner  than  he  would  be  if  he  were  not.  If 
tlie  words  were,  "  I  promise,"  &c.,  it  might  tend  to  hold 
the  signer  severally,  but  would  not,  we  think,  be  sufficient  for 
this.  (  j)^ 

ners,  promise  on  behalf  of  the  Jinn,"  &c. 
A  note  signed  by  one  partner  only, 
"  for  himself  and  partners,"  will  satisfy 
the  terms  of  an  act  of  Parliament, 
which  requires  a  writing  to  be  signed 
"  with  his  or  their  name  or  names," 
and  will,  therefore,  be  a  valid  note,  and 
binding  on  the  firm.  Meux  v.  Hum- 
phrey, 8  T.  R.  267.  See  Smith  v.  Bailey, 
11  Mod.  401.  And  if  in  an  action 
against  the  drawers  of  a  bill,  or  the  mak- 
ers of  a  promissory  note,  the  declara- 
tion states  the  defendants  to  have  made 
the  bill  or  note,  "  their  own  proper  hands 
being  thereunto  subscribed,"  a  bill  or 
note  subscribed  with  the  partnership 
name  of  the  defendants  by  one  of  them 
is  sufficient  to  support  such  averment. 
Jones  V.  Mars,  2  Camp.  30.5  ;  Porter  v. 
Cumings,  7  Wend.  172.  See  Snow  i'. 
Howard,  35  Barb.  5.5.  Whether  it  is 
within  the  general  implied  powers  of  one 
partner  to  bind  Iiis  copartner  in  an  obli- 
gation which  shall  make  him  severally 
liable  to  a  creditor,  so  as  to  deprive 
such  copartner  of  a  defence  in  abate- 
ment for  the  nonjoinder  of  his  codebtor 
as  defendant,  when  prosecuted  at  law 
upon  the  obligation,  is  doubted  by 
Wells,  J.,  in  Ganson  v.  Lathrop,  25 
Barb.  455. 


(o)  Williamson  v.  Johnson,  1  B.  &  C. 
146. 

(p)  See  Galwayt;.  Matthew,  1  Camp. 
403.  This  case  expressly  decides  that 
on  a  note  of  the  above  description  the 
whole  firm  are  liable.  But  it  is  an 
inference  only  tliat  in  such  a  case  the 
partner,  signing  his  own  and  the  firm's 
name,  could  be  separately  sued.  This, 
however,  is  expressly  decided  in  Hall 
V.  Smith,  1  B.  &  C.  407.  But  Hall  v. 
Smith  has  been  overruled  in  the  Ex- 
chequer, and  cannot  now  be  regarded 
as  an  authoritative  decision.  See  jEx 
parte  Buckley,  14  M.  &  W.  469.  Parke, 
B. :  "I  really  must  say  that  I  think 
Hall  v.  Smith  cannot  be  supported." 
Alderson,  B.,  concurred.  Piatt,  B. :  "  I 
have  no  doubt  that  Hall  v.  Smith  can- 
not be  supported."  Maclae  v.  Suther- 
land, 3  Ellis  &  B.  34,  35,  25  Eng.  L.  & 
Eq.  92,  110  ;  Staats  v.  Howlett,  4  Denio, 
559.  Compare  Owen  v.  Van  Uster,  10 
C.  B.  319.  See  also  Ex  parte  Christie, 
8  Jur.  919.  See  also  Wilks  v.  Back,  2 
East,  142;  Doty  v.  Bates,  11  Johns. 
544.  In  this  last  case,  a  note  made  by 
one  partner,  and  begiiming,  "  I  promise 
to  pay,"  but  signed  with  the  name  of 
the  firm,  was  held  binding  on  the  part- 
nership, as  meaning,  "/,  one  of  the  part- 


CH.  VII.]       RIGHTS   OF   PARTNERS   BETWEEN   THEMSELVES.  235 

If  there  be  two  houses  of  tlie  same  name,  entirely  indepen- 
dent and  disconnected  in  tlieir  business,  no  otlier  difficulty  can 
arise  than  what  may  occur  when  one  man  is  charged  as  liable 
on  paper  which  another  man  of  the  same  name  has  made.  It 
is  a  question  of  fact,  and  not  of  law.  But  if  there  be  one  per- 
son who  is  a  partner  in  both  of  these  houses,  a  new  question 
arises.  And  it  seems  to  be  held,  that  a  partner  in  one  may  be 
made  lialjle  on  the  paper  of  the  other,  unless  he  could  show 
that  the  holder  knew  that  the  paper  was  that  of  the  other- 
exclusively :  (^)  as  a  general  rule,  it  may  be  said  that  if 
two  or  more  firms  are  connected  in  business,  and  use  the 
same  name,  a  holder  of  the  paper  having  that  name 
may  *  charge  upon  it  either  of  the  partnerships,  at  his  *  215 
own  election  ;  unless  he  knew,  or  ought  to  have  known, 
definitively,  that  it  belonged  to  one  of  them,  and  not  to  the 
other.  But  though  he  may  thus  elect  to  consider  it  as  the 
paper  of  one  or  the  other,  he  cannot  treat  it  as  the  paper  of 
both,  unless  their  connection  be  such  as  to  make  them  in  fact 
but  one  firm,  (r) 

A  joint  and  several  note  by  all  the  members  of  a  firm  is 
not  strictly  a  partnership  note,  nor  has  it  the  same  effect ; 
nor  could  the  holder,  in  case  of  insolvency,  claim  from  the 
partnership  funds  ;  and,  if  it  be  signed  by  some  of  the  partners 
only,  it  will  have  no  operation  against  those  not  signing  it.  (s) 

If  a  partnership  be  contemplated  and  agreed  upon,  and  a 
purchase  is  made  or  a  debt  otherwise  incurred  by  one  of  the 
partners  for  the  partnership,  but  before  the  actual  formation  of 
the  partnership,  it  is  only  the  debt  of  that  partner ;  but  this 
indebtedness  is  a  sufficient  consideration  to  sustain  the  subse- 
quent promise  of  the  partnership  when  formed,  given  in  lieu 
of  it  or  to  secure  it.  (t') 

There  are  some  acts  in  relation  to  negotiable  paper  which 
carry  with  them  the  presumption  that  tlie  partner  doing  them 

(9)  Baker  u.  Charlton,  1  Peake,  80.  drick   v.   Tarbell,   27    Vt.   512;    In   re 

(r)  M'Nair  v.  Fleming,  cited  in  Mont.  Warren,  Daveis,  320  ;  Filley  v.  Phelps, 

on  Part.    37.     See   also   ?>   Dow,  229;  18  Conn.  294;  DeJarnette  r.  McQueen, 

Miller  v.  Consolidation  Bank,  48  Penn.  31  Ala.  230 ;  ante,  p.  *  126,  note  (/)• 

514.  (0  Saville  v.  Kobertson,  4  T.  K.  720; 

(s)  Perring   v.   Hone,   4   Bing.   28 ;  see,   for   statement   of  the  case,  ante, 

Crouch  V.  Bowman,  3  Humph.  209.    See  p.  *  105,  note  {(j)  ;  p.  *  114,  note  (w). 
Norton  i*.  Seymour,  3  C.  B.  792  ;  Ken- 


236 


THE    LAW    OF   PARTNERSHIP. 


[CH.  vir. 


was  not  authorized.  One  of  these  is  the  indorsing  of  paper 
which  does  not  belong  to  the  firm.  This  is,  in  fact,  lending  or 
giving  the  credit  of  the  firm.  There  can  be  no  doubt  that  tliis 
is  frequently  done  by  mercantile  firms.  Sometimes  they  lend 
their  credit,  and  are  paid  for  it  by  a  compensation  for  the  guar- 
anty. Sometimes  they  reciprocate  accommodation  paper  with 
another  firm,  each  indorsing  for  the  benefit  of  the  other ;  and 
the  notes  are  of  the  same  amount,  or  equalized  in  some  way, 
and  perhaps  made  for  some  broken  amount,  to  give  them  the 
appearance  of  business  paper.  Of  course,  a  partnership  is  liable 
where  it  authorizes  any  such  use  of  its  name.  But  this  is  no 
part  of  general  and  regular  mercantile  business,  and  therefore 

the  presumption  of  the  law  is  rather  against  the  author- 
*  216    ity  of  the  partner  who  so  signs  the  *  name,  (m)     But 

this  presumption  may  be  overcome  not  only  by  direct 
evidence  of  authority,  but  from  usage  or  frequent  recognition 
of  such  signature,  or  such  other  similar  facts  as  would  satisfy 
a  jury  that  the  signature  was  for  the  partnership  and  by  its 
authority,  (v) 


(h)  Tlie  principle  is  clearly  stated  by 
Walworth,  Chancellor,  in  Stall  v.  Cats- 
kill  Bank,  18  Wend.  466,  477.  See 
also  Bank  of  Tennessee  v.  Saffarrans, 
3  Humph.  597.  New  York  F.  Ins.  Co. 
V.  Bennett,  5  Conn.  574 ;  Mauldin  v. 
Branch  Bank  at  Mobile,  2  Ala.  502; 
Lang  17.  Waring,  17  Ala.  145 ;  Ganse- 
voort  V.  Williams,  14  Wend.  133,  139 ; 
Williams  v.  Walbridge,  3  id.  415;  Aus- 
tin v.  Vandermark,  4  Hill,  2G1  ;  Bank 
of  Vergennes  v.  Cameron,  7  Barb.  143, 
150.  But  this  presumption  does  not 
arise  where  accommodation  paper,  exe- 


Wend.  133,  139 ;  Chenowith  v.  Cham- 
berlin,  6  B.  Mon.  60;  Sweetser  v. 
French,  2  Cush.  309;  Bank  of  Ken- 
tucky V.  Brooking,  2  Litt.  41,  45 ;  Dar- 
ling V.  March,  22  Me.  184, 188;  Tanner 
V.  Hall,  1  Barr,  417;  Dundass  v.  Gal- 
lagher, 4  id.  205.  But,  though  it  appear 
that  each  of  two  partners  have  repeat- 
edly, with'  the  knowledge  and  assent  of 
the  other,  indorsed  accommodation  notes 
in  the  firm  name,  this  is  not  sufficient 
evidence  that  either  of  them  is  author- 
ized to  sign  the  firm  name  to  such 
paper    as    maker   and  surety.     Early  v. 


cuted  by  one  partner  in  the  name  of  Reed,  6  Hill,  12.  Paper,  however,  to 
the  firm,  is  in  reality  for  the  benefit  of  which  tlie  partnership  name  has  been 
the  partnership,  rather  than  for  that    afli.xed  by  one  partner  by  way  of  accom- 


of  him  to  whom  it  is  given.  As  where 
a  bill,  drawn  b}'  one  partner  upon  the 
firm,  and  accepted  by  him  in  the  firm's 
name,  for  the  accommodation  of  the 
payee,  is  given  in  exchange  for  the 
paper  of  the  latter  to  be  used  in  raising 


modation,  is  alwa^'s  binding  upon  tlie 
firm,  in  the  hands  of  a  bnndjide  holder 
for  value,  taking  it  without  notice  of  the 
circumstances,  express  or  implied.  Id. ; 
Catskill  Bank  v.  Stall,  15  Wend.  304; 
Austin    V.    Vandermark,   4    Hill,   259; 


money  for  the  purposes  of  the  partner-  Gano  v.  Samuel,  14  Ohio,  502;   Waldo 

ship.     Gano  v.  Samuel,  14  Ohio,  592.  Bank  v.  Lumbert,  16  Me.  41(3 ;  Mauldin 

(v)  Bankof  Tennessee  y.  Saffarrans,  v.  Branch  Bank  at  Mobile,  2  Ala.  503, 

3  Humph.  597  ;   Wlialey  v.  Moody,  2  513 ;    Beach   v.    Stale   Bank,   2   Cart. 

id.   495;   Gansevoort  v.   Williams,  14  (Ind.)  488. 


CH.  VII,]       RIGHTS    OF  PARTNERS   BETWEEN   THEMSELVES.  237 

It  is  also  a  general  rule,  that  no  partner  has  any  authority 
implied  from  the  mere  fact  of  partnership  to  become  surety  for 
any  debt  in  any  way,  and  bind  the  partnership  thereto,  (w) 
The  reason  from  which  this  rule  originated,  is,  that  the  proper 
business  of  a  partnership  is  most  usually  buying  and  selling ; 
and  therefore  there  is  seldom  a  presumption  that  any  thing  but 
this  is  within  their  business.  And  the  same  rule  applies,  for 
the  same  reason,  to  guaranties  given  by  one  partner  in 
the  name  of  the  *  firm.  But  the  question  is  always  open  *  217 
to  evidence  ;  and  the  holder  of  the  guaranty  may  show 
not  only  the  peculiar  usage  of  that  firm,  or  their  frequent  rec- 
ognition of  such  guaranties,  (a;)  but  also  that  the  nature  of 
their  business  is  such  as  to  make  this  giving  of  guaranties  a 
part  of  it.     So  Lord  Mansfield  said  in  relation  to  bankers  ;  (?/) 


(w)  Foot  V.  Sabin,.19  Johns.  154; 
Laverty  v.  Burr,  1  Wend.  531  ;  N.  Y. 
i\  Ins.  Co.  V.  Bennett,  5  Conn.  674, 
680;  Andrews  v.  Planters'  Bank,  7 
Smedes  &  M.  192 ;  Langan  v.  Hewett, 
13  id.  122;  Wagnon  v.  Clay,  1  A.  K. 
Marsh.  257  ;  IloUins  v.  Stevens,  31  Me. 
454 ;  New  York  F.  Ins.  Co.  v.  Bennett, 
6  Conn.  583 ;  Butler  v.  Stocking,  4 
Selden,  408.  See  farther,  for  the  gen- 
eral principle,  Sweetser  v.  French,  2 
Cush.  309,  314;  Rolston  v.  Click,  1 
Stewart,  526 ;  Kibbler  v.  De  Forest, 
6  Ala.  92 ;  Bank  of  Rochester  v. 
Bowen,  7  Wend.  158;  Long  y.  Carter, 
3  Ired.  238.  [The  ratification  by  a 
firm  of  the  unauthorized  act  of  one 
partner,  in  signing  the  firm  name  to 
a  contract  of  suretyship,  is  ineffect- 
ual as  against  existing  partnersliip 
creditors,  being  in  substance  an  adop- 
tion by  the  firm  of  a  private  debt  of 
one  partner.  Kidder  v.  Page  &  tr.,  48 
N.  H.  380.] 

(jr)  And  a  recognition  and  adoption, 
express  or  implied,  subsequent  to  the 
giving  of  the  guaranty,  may  be  given 
in  evidence  as  well  as  a  prior  author- 
ity ;  and  either  the  one  or  the  other 
may  be  shown  by  parol  as  well  as 
by  a  written  document.  Duncan  v. 
Lowndes,  3  Camp.  478 ;  J^x  parte 
Nolte,  2  Giyn  &  J.  305,  300;  Craw- 
ford V.  Sterling,  4  Esp.  207;  llalseham 


V.  Young,  5  Q.  B.  833 ;  Long  v.  Car- 
ter, 3  Ired.  241 ;  Mayberry  v.  Bainton, 
2  Harris,  24.  See  Coursey  v.  Baker, 
7  Harris  &  J.  28.  In  Sweetser  v. 
French,  2  Cush.  309,  314,  Metcalf,  J., 
states  very  clearly  the  law  respecting 
guaranties  as  established  both  in  Eng- 
land and  this  country.  See  also 
Hamill  v.  Purvis,  2  Penn.  177  ;  Sutton 
V.  Irwine,  12  S.  &  R.  18.  Partners 
may  give  in  evidence  a  disclaimer  of  a 
guaranty,  and  a  refusal  to  be  concerned 

in  it.     V.   Layfield,    1    Salk.   292. 

And  whether  a  guaranty  has  been 
given  by  one  partner  with  the  privity 
and  consent  of  all,  is  a  question  for  the 
jury.  Payne  v.  Ives,  3  Dow.  &  R.  664. 
(y)  Hope  V.  Cust,  1  East,  53.  If  a 
guaranty  given  by  one  partner  can  be 
considered  as  an  assurance  or  represen- 
tation made  in  the  usual  course  of,  and 
with  reference  to,  the  business  of  tlie 
firm,  it  will  be  binding  on  tiie  partner- 
ship, as  being  an  act  entirely  within 
the  scope  of  one  partner's  authority. 
See  Crawford  v.  Sterling,  4  Esp.  209 ; 
Sutton  V.  Irwine,  12  S.  &  R.  13.  But 
one  partner  will  not  be  deemed  to  have 
tlie  power  of  giving  a  guaranty  in  the 
name  of  the  firm,  merely  in  conse- 
quence of  its  being  a  Teusonahle  mode 
of  carrying  into  efifect  an  acknowl- 
edged partnership  contract.  Brettel 
V.  Williams,  4  Exch.  623. 


238  THE    LAW    OF   PARTNERSHIP.  [CH.  VII. 

and  it  has  been  held,  that  in  horse-dealing  it  is  so  customary 
to  sell  with  warranty,  or  rather  so  rare  to  sell  without  it,  that 
a  buyer  may  presume  that  a  partner  (or  any  agent)  having 
authority  to  sell  has  thereby  authority  to  warrant,  (z)  The 
power  or  authority  to  sell  generally  does  not  carry  with  it  the 
power  to  warrant ;  but  we  should  be  disposed  to  hold  that  a 
warranty  by  any  partner,  of  the  property  of  the  firm  lawfully 
sold  by  liim,  would  hold  the  firm,  if  made  and  received  in  good 
faith,  (fl) 

SECTION    V. 

OF    THE    POWER    OF   A   MAJORITY   OF    THE   PARTNERS. 

Whether  a  majority  in  numbers  of  the  partners  can  lawfully 
control  the  rest,  and  conduct  the  affairs  of  the  partnership  at 
their  own  pleasure,  has  been  much  discussed.  At  one  time 
there  was  certainly  a  strong  tendency  to  sustain  this  power, 
and  to  extend  it  over  all  the  affairs  of  the  partnership,  provided 
only  that  it  was  exercised  honestly  and  deliberately,  and  with 
every  reasonable  opportunity  to  the  minority  to  make  their 
wishes  and  the  reasons  for  their  wishes  known  and  duly  con- 
sidered. It  has,  as  certainly,  been  the  tendency  of  the  courts 
in  later  years  to  limit  this  power  narrowly,  and  almost  confine 
it  within  what  may  be  called  the  domestic  acts  of  the  firm  ;  as, 
for  example,  the  appointment  or  salary  of  a  clerk,  the  arrange- 
ments of  the  counting-room,  method  of  conducting  sales,  or 

(z)  "A  case  may  be  put,  where  two  firm,  received   the   proceeds,   and  ap- 

persons  in  partnership,  for  the  sale  of  plied  them  to  the  use  of  the  firm.     At 

horses,   should   agree    between    them-  the  sale,  he  assured  the  purchaser  of 

selves   never   to    warrant    any    horse ;  the  paper  that  he  would  warrant  that 

yet,    though   this   be    their  course    of  the   notes   were  given  in   the   regular 

business,    there   is   no   doubt   that    if,  course  of  business,  and  would  be  paid  ; 

upon  the  sale  of  a  horse,  the  property  that  the   makers   and   indorsers   were 

of  the  partnership,  one  of  them  should  responsible     and     men     of    abundant 

give  a  warranty,  the  other  would  be  means.     The  notes  having  been  bought 

thereby   bound."     Per   Abbott,   C.  J.,  upon  the  strength  of  these  and  other 

in  Sandilands  v.  Marsh,  2  B.  &  Aid.  similar  representations,  which  proved 

679.     See  Penn  v.   Harrison,  3  T.  R.  to  be  false,  it  was  hdd  that  the  firm 

760.  was   bound  by  the  representations  of 

(a)  In  Sweet  v.  Bradley,  24  Barb,  the  partner  who  sold  the  notes  ;   and 

549;   the  defendant,  a  member  of  the  that   an  action  would   lie   against    all 

firm  of  B.  Bradley  &  Co.,  sold  some  the   members   of  the  firm,   upon   the 

promissory    notes    belonging    to    the  warranty. 


CH.  VII.]       RIGHTS   OP   PARTNERS   BETWEEN    THEMSELVES. 


239 


keeping  accounts,  and  the  like.  And,  even  as  to  these,  it  is  put 
upon  the  apparent  necessity  of  deciding  as  to  how  that  shall 
be  done  which  must  be  done  in  some  way.  Whereas,  if  the 
partnersliip  cannot  agree  about  a  purchase,  or  a  sale,  it  may 
be  omitted,  and  the  business  nevertheless  go  on.  Recent 
American  decisions  appear  to  enlarge  this  power  somewhat. 
Thus,  it  has  been  held  that  a  majority  of  a  firm  established  to 
publish  a  newspaper  has  authority  to  appoint  or  remove  a  pub- 
lisher, (aa)  It  will  be  apparent,  however,  from  the  authorities 
presented  in  our  note,  that  the  law  as  to  the  power  and  author- 
ity of  a  majority  of  copartners  cannot  be  considered  as  defin- 
itively established.  (6) 


{aa)  Peacock  v.  Cunimings,  46 
Penn.  St.  434.  [But  see  Yeager  v.  Wal- 
lace, 57  Penn.  St.  365.] 

(6)  Cliitty  says  (3  Laws  of  Com- 
merce, 286)  that,  in  the  absence  of 
express  stipulations  between  the  part- 
ners, "  a  majority  must  decide  as  to 
the  disposal  of  the  partnersliip  prop- 
erty ;  or,  if  no  majority  can  be  ob- 
tained to  decide  as  to  such  disposal, 
or  there  are  but  two  partners  in  the 
firm,  one  or  more  partners  may  manage 
the  concern  as  they  think  fit ;  provided 
it  be  within  the  rules  of  good  faith, 
and  warranted  by  the  circumstances 
of  the  case."  To  this  Collyer  adds 
(Collyer  on  Part.  §  197)  :  "  It  will  be 
observed  that  this  opinion  is  given 
with  considerable  caution,  and  perhaps 
it  may  be  laid  down  that,  in  a  partner- 
ship without  articles,  the  power  of  the 
majority  to  bind  the  minority  is  con- 
fined to  the  ordinary  transactions  of 
tlie  partnership."  The  English  au- 
thorities on  the  point  are  few,  and  by 
no  means  conclusive.  In  Robinson  v. 
Thompson,  1  Vern.  465,  it  was  held, 
that  an  account  of  the  profits  of  a 
voyage  settled  by  the  major  part  of 
the  part-owners  should  conclude  the 
rest.  And  in  Falkland  v.  Cheney,  5 
Bro.  P.  C.  476,  1  Bro.  P.  C.  (Dublin 
ed.)  90,  it  seems  to  have  been  laid 
down  as  a  general  principle  that,  in 
all  sea  adventures,  tiie  act  of  a  major- 
ity binds  the  whole.  But  in  that  case 
such  power  was  given  to  the  majority 


by  the  articles  of  association.  See 
Lloyd  V.  Loaring,  6  Ves.  777.  Per- 
haps the  weightiest  authority  to  be 
found  in  the  English  books  is  the 
dictum  of  Lord  Eldon  in  Const  v. 
Harris,  Turner  &  R.  516,  5-25.  After 
declaring  that  the  act  of  the  majority 
of  the  partners  is  to  be  considered  the 
act  of  all,  he  adds  :  "  I  call  that  the 
act  of  all,  which  is  the  act  of  the  ma- 
jority, provided  all  are  consulted,  and 
the  majority  are  acting  bond  Jide ;  meet- 
ing, not  for  the  purpose  of  negativing 
what  any  one  may  have  to  offer,  but 
for  the  purpose  of  negativing  what, 
when  they  are  met  together,  they  may, 
after  due  consideration,  think  proper 
to  negative.  For  a  majority  of  part- 
ners to  say,  '  We  do  not  care  what  one 
partner  may  say :  we,  being  the  ma- 
jority, will  do  what  we  please,'  is,  I 
apprehend,  what  this  court  will  not 
allow.  In  all  partnerships,  whether  it 
is  expressed  in  the  deed  or  not,  the 
partners  are  bound  to  be  true  and 
faithful  to  each  other  :  they  are  to  act 
upon  the  joint  opinion  of  all,  and  the 
discretion  and  judgment  of  any  one 
cannot  be  excluded  ;  what  weight  is  to 
be  given  to  it  is  another  question." 

The  American  authorities  are  not 
much  more  numerous  nor  satisfactory. 
The  opinion  of  the  court  in  Kirk  v. 
Hodgson,  3  Johns.  Cli.  400,  contains 
expressions  wliich,  considered  by  them- 
selves, would  ai)pear  to  give  unquali- 
fied support  to  the  above  dicta  of  Lord 


240  THE   LAW   OF   PARTNERSHIP.  [CH.  VII. 

*  219        *  We  may  consider  this  question  in  reference  to  third 

persons,  and  also  in  reference  to  the  partners  themselves. 
If  the  majority  propose  to  deal  with  a  customer,  either  in  the 
way  of  purchase  or  sale,  in  a  manner  to  which  the  minority  do 
not  assent,  it  is  certain  that  the  minority,  whether  they  with- 
hold authority  or  not,  will  be  bound,  if  they  do  not  communi- 
cate their  dissent  to  the  customer,  provided  the  transaction  be 

within  the  scope  of  the  partnership  business  ;   for  so 

*  220    would  the  majority  be  bound  if  the  minority  so  *  did  it, 

and  so  would  all  the  partners  be  bound  if  any  one  of 
them  so  did  it.  On  the  other  hand,  if  it  be  not  within  the 
business  of  the  firm,  neither  a  majority  nor  a  minority  would 
be  bound  to  third  persons,  unless  these  persons  could  show 
themselves  to  have  believed  and  to  have  been  authorized  to  be- 
lieve that  it  was  within  the  business  of  the  firm,  or  that  the 
firm  had  made  it  theirs  by  adoption  or  ratification. 

All  that  we  have  said  results  necessarily  from  principles 
which  have  been  fully  considered  in  former  chapters.  Let  us 
here  suppose  that  the  question  refers  to  some  single  act.  The 
majority  of  a  house  dealing  in  cotton  wish  to  sell  one  hundred 
bales  at  a  certain  price,  and  the  minority  refuse  to  consent ; 

Eldon.  But  Cliancellor  Kent,  who  trade,  employed  H.  as  their  clerk,  at  a 
rendered  the  decision  in  that  case,  fixed  annual  salary,  but  with  the  un- 
says of  it,  in  liis  Commentaries,  that  it  derstanding  that  the  salary  should  be 
"  related  only  to  tlie  case  of  the  man-  increased  with  the  increase  of  the 
agement  of  the  interior  concerns  of  the  firm  business  and  of  H.'s  duties.  In 
partners  among  themselves ;  and  to  the  tliird  year,  it  was  discovered  that 
that  it  is  to  be  confined."  3  Kent  II.  had  overdrawn  money  of  the  firm 
Comm.  [45].  We  have,  however,  two  and  applied  it  to  his  own  use;  and  this 
recent  cases  in  which  the  doctrine  is  breach  of  trust  was  confessed  by  him. 
asserted,  that  where  a  firm,  without  Nevertheless,  a  majority  of  the  firm, 
articles,  consists  of  more  than  two  E.  &  D.,  continued  H.  afterwards  in 
members,  any  contract  within  the  his  employment.  It  was  held,  that  this 
sphere  of  the  joint  business,  made  in  fact  was  decisive  in  favor  of  the  con- 
good  faith  by  the  majority,  will  be  tinuance  of  the  rights  of  H.  and  of  his 
binding  on  tiie  whole,  notwithstanding  claim  to  tlie  stipulated  increase  of  sal- 
at  the  time  of,  or  previous  to,  the  ary ;  that  it  was  evidence  that  he  had 
making  of  the  agreement,  the  minority  not  forfeited  tlie  confidence  of  the  firm, 
expressly  dissent,  and  communicate  and  that  tlie  overdrawings,  charged 
their  dissent  to  the  third  party  with  and  confessed,  were  not  understood 
whom  it  is  made.  See  Johnston  v.  by  them  to  be  acts  of  intentional  fraud  ; 
Dutton,,  27  Ala.  245  ;  [Campbell  v.  and  that  they  could  not,  therefore,  be 
Bowen,  49  Ga.  417.]  See  also  Western  set  up  by  the  firm  against  his  claim, 
Stage  Co.  V.  Walker,  2  Iowa,  504 ;  Irvine  founded  on  tlieir  promises  and  acknowl- 
V.  Forbes,  11  Barb.  587  ;  Kirk  v.  Hodgs-  edgments,  and  his  services.  [But  see 
don,  3  Johns.  Ch.  400.    E.,  K.,  «&  D.,  in  ante,  p.  *95  and  notes.] 


CH.  VII.]       RIGHTS    OF    PARTNERS    BETWEEN    THEMSELVES.  241 

the  majority  make  the  sale,  deliver  the  cotton,  and  take  notes 
or  money  for  it ;  can  the  buyer  hold  this  cotton  by  good  title  ? 
Certainly,  if  the  minority  express  no  dissent ;  but,  if  they  do 
express  dissent  and  positive  prohibition,  is  the  transaction  then 
valid  ?  It  might  not  be  easy  to  reach  the  question  at  law.  The 
minority  alone,  that  is,  without  the  majority,  would  find  it  diffi- 
cult to  maintain  replevin  or  trover,  or  any  other  action,  for  the 
cotton  or  its  value.  And  it  would  not  seen),  commonly  at  least, 
to  be  a  case  in  which  a  court  would  permit  a  minority  to  use 
the  names  of  the  majority  as  coplaintiffs  against  their  will. 
If  the  minority  sold  the  same  cotton  to  another  customer,  and 
let  the  two  purchasers  contest  the  title  of  each  other,  the  pur- 
chaser from  the  minority  alone  would  certainly  have  no  better 
title  than  the  purchaser  from  the  majority  alone.  If  the  ques- 
tion were  considered  in  equity,  all  the  circumstances  of  the 
case  would  be  duly  regarded,  and,  among  others,  the  right  or 
absence  of  right  of  the  minority  to  dissolve  the  partnership  at 
will,  (c)  For,  if  they  have  this  right,  it  would  seem  that 
*  they  could  exercise  it,  in  case  of  irreconcilable  and  *  221 
material  diHerence  of  view  or  purpose.  And,  if  they  did 
not  exercise  it,  they  might  be  considered  as  yielding  to  the 
majority,  for  the  sake  of  preserving  the  partnership,  and  so 
adopting  the  transaction.  If  they  could  not  dissolve  it,  because 
it  was  established  for  a  time  certain,  and  if  the  conduct  of  the 
majority  was  unreasonable  and  oppressive,  this  would  be  a  good 
ground  for  the  other  partners  asking  of  the  court  a  dissolution 
of  the  partnership  ;  and  generally,  if  they  did  not,  it  would, 

(c)  In  both  the  cases,  Johnston  v.  for   a  specified   term,    as   having   any 

Button,    27     Ala.    245,   and    Western  bearing  on  the  case  under  considera- 

Stage    Co.   V.    Walker,    2    Iowa,    504,  tion.     Conceding  they  are  law,  which 

cited  in  preceding  note,  the  partnership  is  doubtful,    the  decisions   rest  solely 

was,  by  articles,  to  continue  for  a  time  upon  the  ground,  that  the  limitation  of 

certain,  and  in  both  the  actions  were  the  right  of  dissolution  is  incompatible 

at  law.     In   Johnston   v.   Button,  the  with  the  nature  of  the  partnership  cou- 

attention  of  the  court  seems  to  have  tract;     and    this    principle    does    not 

been  called  to  views  similar  to  those  militate  against  the  positions  we  have 

represented   in    the   text.      See   argu-  asserted.     The  dissent,  in  the  present 

ment   of  counsel,    p.   250,   251.      The  case,  cannot  be   regarded  as  a  disso- 

court,  however,  said,  p.  253 :  "  We  do  lution ;  for,  if  effectual,  it  would  not, 

not   consider   the   cases    to   which   we  necessarily,    produce   that    result,   al- 

have  been  referred,  holding  that  one  though  it  might  operate  to  change  the 

partner   has  the  right,  at  pleasure,  to  mode  of  conducting  the  business.     In 

dissolve   a   partnership,   althougli    the  other   words,    it  might  be  carried   on 

articles  provide  that  it  is  to  continue  without  contracting  debts." 

16 


242  THE   LAW    OF   PARTNERSHIP.  [CH.  VII. 

we  think,  be  taken  as  before,  that  by  not  dissolving  tlie  part- 
nersliip  they  acceded  to  the  wishes  of  the  majority.  But  there 
certainly  might  be  cases  in  which  the  act  of  the  majority  would 
be  injurious  to  the  minority,  and  an  immediate  dissolution  even 
more  so,  and  the  majority  would  be  deemed  to  have  no  right  to 
inflict  upon  a  minority  either  of  these  mischiefs.  Then  the 
court  would  decree  such  annulling  of  the  act,  or  compensation, 
or  other  remedy,  as  justice  between  all  the  parties  and  the  power 
of  the  court  should  authorize  and  require.  But  these  consid- 
erations touch  rather  the  rights  and  interests  of  the  partners. 
So  far  as  the  customer,  the  third  party,  is  concerned,  —  always 
supposing  the  transaction  honest  as  to  him,  —  we  should  say 
that  the  question  of  the  power  of  a  majority  would  be  put 
aside  both  in  law  and  in  equity  by  the  general  rule,  that,  if 
the  transaction  were  within  the  business  of  the  firm,  it  bound 
all  the  partners  who  gave  no  notice  to  the  third  party ;  and,  on 
the  other  hand,  that  it  did  not  bind  recusant  and  protesting 
partners  who  gave  sufficient  notice  of  their  dissent ;  (c?)  and 
that,  if  it  was  without  the  business  of  the  partnership,  it  bound 
nobody  but  those  who  authorized  the  act  or  ratified  it. 

If  the  question  of  a  majority  related  only  to  those  things  to 
which  no  person  out  of  the  partnership  was  privy,  it  would  as- 
sume a  somewhat  different  aspect.  Suppose,  for  example,  a 
majority  chose  to  enlarge  or  vary  the  business  importantly,  or 
enter  upon  a  new  business,  which  things  no  partner  can  do  by 
his  implied  authority,  can  the  majority  compel  the  mi- 
*  222  nority  to  acquiesce  in  *  this  ?  We  should  say  that  they 
certainly  could  not.  (e)  And  yet  it  must  generally  be 
the  case,  that  if  the  majority  persisted,  and  the  minority  did 

(d)  See  oH^e,  p.  *218,  note  {b).  wards    altered  by  the  company  so  as 

(e)  Natusch  v.  Irving,  Gow  on  to  allow  a  trade  in  ardent  spirits  to  be 
Part.  App.  p.  398  ;  ante,  p.  *  198,  note  carried  on.  The  court  said  :  "  We  can 
(x).  See  Const  v.  Harris,  Turn.  &  have  no  hesitation  in  holdlm],  that  this 
R.  524 ;  Livingston  v.  Lynch,  4  Johns,  was  such  a  substantial  alteration  as 
Ch.  573.  In  Abbott  v.  Johnson,  32  discharged  the  plaintiffs  from  their 
N.  II.  9,  it  appeared  that  a  number  of  obligation  to  proceed  with  the  part- 
persons,  among  them  the  plaintiffs,  nership,  unless  they  agreed  to  the 
formed  a  written  agreement  of  copart-  change,  and  that  it  gave  them  the 
nership,  for  the  purpose  of  carrying  on  right  to  retire  from  the  firm,  ...  if 
a  retail  trade  in  domestic  and  foreign  they  did  it  under  circumstances  which 
goods.  By  one  of  the  articles  it  was  were  such  as  to  do  no  injury  to  the 
provided  that  there  should  be  "  neither  partners  who  chose  to  go  on  under  the 
purchase  nor  sale  of  ardent  spirits  by  new  arrangement." 

the  concern."    The  articles  were  after- 


CH.  VII.]       RIGHTS    OF   PARTNERS   BETWEEN    THEMSELVES.  243 

not  dissolve  the  partnership  or  seek  relief  from  a  court  of  equity, 
but  did  go  on  with  the  business  in  the  manner  proposed  by  the 
majority,  this  would  be  deemed  evidence  of  their  consent.  Still, 
the  universal  principle  would  apply,  that  waiver  or  consent  are 
implied  by  acquiescence  only  when  that  acquiescence  is  free  and 
voluntary  ;  and  therefore  this  evidence,  or  presumption,  might 
be  rebutted  by  showing  that  circumstances  had  placed  the  mi- 
nority so  far  in  the  power  of  the  majority  that  they  must  go  on 
and  submit  for  a  time,  reserving  all  their  rights  of  dissent,  or- 
suffer  important  injury,  and  then  their  so  going  on  would  not 
be  held  as  necessarily  implying  a  waiver  or  loss  of  any  right. 
These  views  are,  to  some  extent,  only  theoretic ;  and  it  is  perhaps 
a  little  remarkable  that  cases  of  conflict  of  interest  or  wishes 
between  partners  have  not  been  before  the  courts  of  England 
or  this  country  often  enough  to  settle  the  question  by  adjudi- 
cation as  to  the  power  of  a  majority. 

SECTION    VI. 

OF    THE    CONDUCT    WHICH   PARTNERS    MAY   REQUIRE    OF    EACH   OTHER. 

1.    Of  G-ood  Faith. 

The  first  and  highest  duty  which  partners  owe  to  each  other, 
is  that  of  perfect  good  faith,  (eg)  In  the  Roman  civil 
law,  the  "  societas  "  *  of  merchants  for  trade,  and  of  *  223 
husband  and  wife,  were  considered  closely  analogous, 
and  in  many  respects  governed  by  the  same  principles.  (/) 
Indeed,  what  we  have  already  said  indicates  sufficiently  how- 
much  partners  are  in  the  power  or  at  the  mercy  of  each  other, 
and  there  certainly  seems  to  be  no  relation  in  life,  calling,  either 
by  its  own  exigencies  or  by  the  rules  of  law,  for  a  more  abso- 
lute good  faith  than  the  relation  of  partnership,  (g) 

After  this  comes  the  duty  of  having  and  using  the  skill  and 

(ee)  See  Nicholson  v.  Janeway,  1  25  Eng.  L.  &  Eq.  105 ;  Ault  v.  Good- 
Green  (N.  J.),  285.  rich,   4    Russ.    430.     In    some    cases, 

(/)   Vin.  Comm.  lib.  3,  tit.  26,  §  2 ;  however,    the   same  strict   good  faith 

Potliier,  Contr.  de  Soc.  ch.  3.  does  not  seem  to  be  required  between 

(g)  Baker  v.  Charlton,  1  Peake,  80.  partners   as   is  imperative  upon  those 

See    England  v.  Carting,  8  Beav.  129,  who  occupy  the  position  of  fiduciary 

for   an  example  of  bad  faith  between  relations.     Wheeler   v.    Sage,    1    Wal- 

partners,  and  of  the  displeasure  with  lace,  U.  S.  S.  C.  518.     In  some  cases, 

whicli  it  is  viewed  by  the  court.     See  partnership    is    fiduciary.      Brooks   v. 

also   Blissett  v.  Daniel,  11  Hare,  493,  Martin,  2  id.  70. 


244  THE    LAW    OP    PARTNERSHIP.  [CH.  VII. 

knowledge  which  the  partnership  requires;  of  applying  to  all 
its  affairs  due  care  ;  of  devoting  to  them  a  reasonable  measure 
of  time  and  labor  ;  and  of  conducting  all  its  concerns,  private 
or  public,  with  due  economy.  For  the  breach  of  any  one  of 
these  duties,  the  party  is  held  responsible.  (7i)  A  court  of 
equity,  in  particular,  will  always  decree  such  compensation,  in 
form  or  kind  and  amount,  as  shall  be  needed  to  make  good  any 
losses  arising  from  any  violation  or  disregard  of  these  duties,  (i) 

The  rule  would  extend,  by  the  reason  of  it,  to  the  manner  of 
doing  any  thing.  Hence,  as  no  partner  should  do  that  which 
he  has  no  lawful  power  to  do,  so  he  should  do  every  thing  he 
has  power  to  do  either  by  the  general  law  of  partnership  or  by 
special  stipulation  in  the  articles,  —  as,  for  example,  the  assign- 
ing of  his  share,  or  the  giving  of  partnership  security,  —  in 
such  a  way  as  a  due  regard  for  the  interests  of  the  partnership 
would  require,  (y) 

As  every  partner  is  under  an  obligation  to  do  what  he  can  to 
promote  the  prosperity  of  the  partnership,  no  partner  can  charge 
the  firm  or  his  copartner  for  the  extra  value  of  his  services 
over  those  of  his  partner,  without  a  specific  agreement.  (_;)') 

In  every  bargain  which  he  makes,  he  must  remember  a  prin- 
ciple laid  down  emphatically  by  Lord  Eldon,  —  that  it  is  his 
duty  to  use  the  property  for  their  benefit  whose  prop- 

*  224    erty  it  is  ;  (^)  that  is,  for  *the  benefit  of  the  whole  as 

{h)  See  post,  p.  *236,  as  to  how  far  (jj)  Bennett  i'.  Russell,  34  3Io.  524. 

a  partner  may   engage  in  other  busi-  (k)  Crawshay   v.    Collins,    15    Ves. 

ness,  beside  that  of  the  firm ;  post,  note  22G  ;    Honore    v.    Colmesnil,    1    J.   J. 

()■).      See    tlie   remarks    of    Redfield,  Marsh.  507,  541.     Hence,  when  all  the 

C.  J.,  in  Pierce  v.  Daniels,  24  Vt.  624.  proprietors  of  a  morning  paper,  save 

{«')  See  post,  ch.  8,  §§  3,  4,  respect-  one,  were  also  the  owners  of  an  even- 
ing the  remedies  between  partners  ing  paper,  published  in  the  same  place, 
which  courts  of  equity  administer,  an  injunction  was  granted  to  restrain 
See  Lefever  r.  Underwood,  41  Penn.  the  proprietors  of  the  evening  paper 
505.  [If  a  partner  neglects  to  render  from  publishing  therein  any  informa- 
the  personal  services  which  he  ought  tion  obtained  at  the  expense  of  the 
to   render,   he   will   be    charged   with  morning   paper,   until   it    should   first 

•  their  value  in  settlement  of  the  part-  have  been  published  in  the  morning 
nership  account.  Marsh's  Appeal,  69  paper.  Glassington  v.  Thwaites,  1  Sim. 
Penn.  St.  30.]  &  S.  124,  133.     And  if  a  copartnership 

(j)  The     rule     that    each    partner  own  a  dwelling-house  which  is    occu- 

must  do  all  he  can  for  the  benefit  of  pied  exclusively  by  the  family  of  one 

his  firm  has,  of  course,  its  limitation  in  of  the  partners,  this  partner  is  liable 

the  reason  of   the  thing  and   the  cir-  for  rent  to  the  firm,  though  there  be 

cumstances    of    each    particular   case,  no   special   agreement   to    that  effect. 

See  Rowe  v.  Wood,  2  Jac.  &  W.  556.  Holden  v.  Peace,  4  Ired.  Eq.  223.     The 


CH.  VII.]      RIGHTS    OP   PARTNERS    BETWEEN   THEMSELVES.  245 

one  concern,  or  one  body,  for  so  it  is  owned.  So  if  a  partner 
by  any  means  gets  possession  of  a  fund  properly  belonging  to 
the  firm,  lie  must  share  any  profit  or  advantage  arising  from 
it,  with  his  copartners,  (kk') 

If  losses  occur  by  reason  of  a  breach  of  duty  by  a  partner, 
in  any  way  whatever,  whether  through  fraud,  negligence,  ig- 
norance, or  extravagance,  and  w^hether  by  design  or  not,  they 
must  rest  on  the  partner  whose  faulty  conduct  has  caused 
them ;  and  he  cannot  require  the  partnership  to  contribute 
in  any  way  towards  them.  (/)  But  a  partner  is  not  liable 
to  his  copartners  for  a  loss  caused  by  an  honest  mistake 
of  judgment,  unless  it  amounts  to  gross  negligence  or  igno- 
rance. (Jl) 

The  question  may  occur  whether  a  negligence  and  conse- 
quent loss,  in  one  respect,  would  be  made  up,  or  excused,  by 
great  successes  and  profit  in  another.  It  would  perhaps  be 
impossible  to  frame  a  definite  rule  which  would  govern  all  cases 
of  this  kind.  The  general  principle  would  be  something  like 
this:  If  it  were  one  transaction,  quite  indivisible,  and  the 
partner  conducted  it  in  some  respects  with  a  want  of  attention, 
whicli  caused  some  loss,  and  in  others  with  unusual  care  and 

case  of  Beecher   v.  Guilbane,  Mosley,  derit  probable  that  the  solvency  of  the 

3,  is  thus  reported :  "  If  one  copartner  firm  and   the  rights   of  the   creditors 

borrows   money    of  the   other  on    his  depend  upon  the  interference  of  chan- 

note,  he  sliall  pay  interest  for  it,  though  eery,  equity  may  interpose  by  injunc- 

he  had  more  money  in  the  stock  than  tion,  even  though  a  dissolution  of  the 

what   he   borrowed;    for  the   stock  is  firm    be    not    prayed    for.      Miles    r. 

only  to  be  employed  in  augmentation  Thomas,  9  Sim.  607;  Gratz  v.  Bayard, 

of  the  trade,  for  their  mutual  benefit ;  11  S.  &  R.  41,  48.     The  same  princi- 

but  neither  of  them  can  make  use  of  pies  as  to  the  use  of  the  joint  property 

it  for   their  own  private    advantage."  apply  to  partners  who  wind  up  the  af- 

See  Kelley  v.  Greenleaf,  3  Story,  93  ;  fairs  of  the  partnership  after  dissolu- 

Roberts  y.  Totten,  8  Eng.  609;  Pierce  tion.      See  post,   ch.  12,  13,  upon  the 

V.  Daniels,  25  Vt.  624.  dissolution    of    a   partnership   and    its 

If   one  partner  employ  partnership  effects, 
funds  in  a  private  trade  or  adventure,  (kk)  Eason  v.  Cherry,  6  Jones,  Eq. 

he  must  account  not  only  for  the  inter-  261. 

est  on  the  funds  thus  withdrawn  from  (/)  Devall  v.  Burbridge,  6  Watts  & 

the  partnership,  but  also  for  the  profits  S.  529  ;  Jessup  v.  Cook,  1  Halst.  434. 

of    such    separate    trade.      Brown   v.  See  M'llreath  v.   Margetson,  4  Doug. 

Litton,  1   P.  Wnis.  140;  Crawshay  v.  278;  /«  ?e  Webb,  2  J.  B.   Moore,  500; 

Collins,    15   Ves.    218;    Stoughton    v.  Lyles   v.    Styles,  2    Wasli.   C.  C.  224. 

Lynch,    1   Jolms.    Ch.    467;    Solomon  See  Beste  v.  His  Creditors,  15  La.  Ann. 

V.  Solomon,  2  Kelly,  18.     And  if  such  55. 

acts  of  one  partner   threaten    tlie    de-  (//)  Morris  v.  Allen,  1  McCarter,  44  ; 

Btruction  of  the  joint  property,  or  ren-  and  see  Stephens  v.  Orman,  10  Ela.  9. 


246  THE    LAW   OF   PARTNERSHIP.  [CH.  VII. 

skill  and  energy,  which  increased  the  profits,  it  could 
*  225  not  be  deemed  on  the  whole  a  case  of  *  wrong  de- 
manding compensation.  If,  however,  he  had  conducted 
throughout  as  he  should  have  done,  excepting  in  one  or  two 
particulars,  and  his  default  in  these  caused  material  injury, 
he  should  not  be  held  excused  for  thus  lessening  the  profits  of 
the  firm  by  the  fact  that  they  were  still,  on  the  whole  transac- 
tion, very  considerable.  For  the  partnership  is  entitled  to  all 
its  profits,  and  may  ask  compensation  of  any  one  whose  wrong- 
ful act  takes  them  or  a  part  of  them  away,  whether  he  be  a 
partner  or  not,  and  whether  much  or  little  be  left.  And  if 
there  be  many  transactions,  or  one  business  divisible  into  many 
transactions,  that  he  did  his  duty  for  the  most  part  would 
certainly  be  neither  excuse  nor  compensation  for  not  doing 
it  at  all  times.  And  we  should  doubt  whether  equity  would 
find  it  easy  to  regard  him  as  protected  against  all  claims  for 
default  or  violation  of  duty,  because  in  certain  things  he  did 
more  than  his  duty,  (m) 

From  the  requirement  of  perfectly  good  faith,  it  follows  that 
no  partner  must  deceive  his  copartners,  for  his  benefit  and 
their  injury,  either  by  false  representations  or  by  concealments. 
Thus,  if  he  persuades  them  into  any  course  of  business,  or  to  any 
single  transaction,  by  these  means,  and  losses  occur,  he  must 
sustain  them  or  compensate  for  them.  So,  if  he  proposes  to  buy 
of  them  the  whole  or  any  part  of  their  share  of  their  business,  and 
by  any  false  statement  or  intimation  on  his  part,  or  any  conceal- 
ment or  prevarication,  influences  them  to  enter  into  an  arrange- 
ment to  effect  his  wishes,  it  will  not  be  obligatory  on  them,  (n) 

If  he  makes  any  private  bargain  with  third  parties  for  his 
own  benefit,  which  either  inflicts  a  loss  upon  the  partnership, 
or  turns  to  himself  advantages  which  belong  to  all  in  common, 
he  will  be  held  to  make  compensation  for  this,  or  to  restore 
these  advantages  to  the  partnership  in  some  way.  (o)     Thus, 

(m)  See  rothier,  Contr.  de  Soc,  n.  Knight  v.  Marjoribanks,  11  Beav.  322, 

125.  2  Macn.  &  G.  10. 

(?i)  Maddeford  v.  Austvviek,  1  Sim.  (o)  Fawcett  v.  Whitehouse,  1  Russ. 

89,  is  a  leading  case.     Tlie  same  prin-  &  M.   132,   135,   141,    148;    Hicliens  v. 

ciples  are  asserted  and  maintained  in  Congreve,  1  Russ.  &  M.   132,  150,  note 

the  cases  of  Sexton  v.  Sexton,  9  Gratt.  {b),  4  Russ.  562;  also,  Carter  v.  Home, 

204,  and  Hopkins  v.  Watt,  13  III.  298 ;  1  Eq.    Ca.  Abr.  "Account,"  A.,  pi.  13  ; 

Russell  V.  Austwick,  1  Sim.  52. 


CH.  VII.]       RIGHTS   OF   PARTNERS   BETWEEN   THEMSELVES. 


247 


if  the  partnership  have  a  valuable  leasehold  property,  and, 
when  it  is  about  to  expire,  a  partner  privately  gets  a 
renewal  of  it  to  himself,  he  cannot  take  *  advantage  of   *  226 
this  to  impose    hard  terms   on  his   partners,  but  will 
be   held   to   have   obtained  it  for  them  as  well  as  for  him- 
self, (p) 

So,  if  he  obtains  goods  for  the  partnership  by  barter  of  his 
own  goods,  he  cannot  charge  an  extra  price  for  his  goods.  If 
he  is  properly  carrying  on  a  separate  business,  he  may  charge 
a  fair  living  price  ;  so  perhaps  he  may  if  he  has  them  on  hand 
in  any  way.  But  if  he  purchased  them  for  this  bargain  with 
the  partnership  funds  or  credit,  or  if  he  for  the  partnership 
might  have  bought  in  the  same  way,  he  will  be  allowed  to  put 
upon  them  only  the  price  he  paid,  (g)  So  if  he  acts  in  buying 
for  his  firm  a  particular  kind  of  goods  which  he  also  buys  and 
sells  on  his  own  account,  the  firm  are  entitled  to  any  profit  he 
may  make  on  his  own  goods  sold  to  the  firm,  (r)     And  if,  on 


(p)  Featherstonaugh  v.  Fenvvick,  17 
Ves.  298,  310 ;  Dougherty  v.  Van  Nos- 
trand,  1  HofF.  Ch.  68,  09;  Leach  v. 
Leacli,  18  Pick.  08,  76 ;  Anderson  v. 
Lemon,  4  Seld.  230,  4  Sandf.  552.  In 
Featlierstonaugli  v.  Fenwick,  supra,  the 
Master  of  the  Rolls  said  :  "  It  is  clear 
that  one  partner  cannot  treat  pri- 
vately, and  behind  the  backs  of  his  co- 
partners, for  a  lease  of  the  premises, 
where  the  joint  trade  is  carried  on,  for 
his  own  individual  benefit.  If  he  does 
so  treat,  and  obtains  a  lease  in  his  own 
name,  it  is  a  trust  for  the  partnership ; 
and  this  renewal  must  be  held  to  have 
been  so  obtained."  [The  renewal, 
during  a  copartnership,  of  a  lease  held 
by  a  firm,  and  rendered  more  valuable 
by  the  business  of  the  firm,  tliough 
made  by  one  partner  to  himself,  and 
though  it  would  not  have  been  made  to 
the  firm,  inures  to  the  benefit  of  the 
firm.  Mitchell  v.  Reed,  61  N.  Y.  123 ; 
Struthers  v.  Pearce,  51  N.  Y.  357.] 

(7)  Burton  v.  Wookey,  6  Madd.  867. 
The  plaintiff  and  defendant  entered 
into  partnership  together  to  deal  in 
lapis  culuininaris.  The  defendant,  who 
was  a  shopkeeper,  was  to  take  the 
active  part  in  the  concern,  and  to  pur- 
chase the  article  from  the  miners  in 


whose  neighborhood  he  lived.  After 
some  time,  the  defendant  adopted  a 
course  of  dealing,  by  which,  in  place 
of  paying  the  miners  for  the  article 
with  money,  he  paid  them  with  shop- 
goods  ;  and  in  his  account  with  the 
plaintiff  he  charged  him  as  for  cash 
paid,  to  the  amount  of  the  price  of  the 
goods. 

The  question  was,  whether  he  could 
justify  this  charge,  or  whether  he  must 
not  divide  the  profit  made  by  him  on 
the  sale  of  the  goods  with  the  plaintiff. 

The  Vice-Chancellor  said:  "I  must 
decree  an  account  of  the  profit  made 
by  the  defendant  in  his  barter  of  goods, 
and  must  declare  that  the  plaintiff  is 
entitled  to  an  equal  division  of  that 
profit  with  the  defendant." 

(r)  Bentley  v.  Craven,  18  Beav.  75. 
In  this  case  the  firm  carried  on  the 
business  of  sugar-refiners.  One  of  the 
members  was  a  wholesale  grocer,  who 
had  great  knowledge  of  the  proper 
time  for  buying  sugars,  and  who, 
therefore,  was  selected  as  the  buying 
agent  of  the  firm.  lie  bought  sugars 
on  his  own  account,  in  anticipation 
that  the  firm  would  need  them ;  and, 
when  they  were  required,  sold  them  to 
the   firm   at  the   then    market    price. 


248 


THE   LAW   OP   PARTNERSHIP. 


[CH.  VII. 


the  other  hand,  a  partner  gives  the  goods  of  the  partnersliip  in 
barter  for  something  he  buys,  or  otherwise  uses  them  for  his 
own  benefit,  lie  must  allow  the  partnership  the  full  market-price 
for  them,  or  what  any  customer  would  have  paid,  unless  the 
usage  of  the  firm  or  their  stipulations  permit  him  to  make  his 
personal  profit  out  of  them. 


2.  Hoiu  far  a  Partner  may  transact  Independent  Business. 

*  227  *  It  is  quite  well  settled  that  a  partner  has  no  right  to 
carry  away  his  knowledge,  his  skill,  his  capital  or  credit, 
his  care  or  labor,  into  another  business,  whether  only  his  own 
or  that  of  another  firm,  to  the  injury  of  his  first  copartners. 
That  is,  he  may  not  do  this  in  such  a  way  as  to  deprive  them 
of  business,  of  profits  or  advantages,  which  they  had  a  right  to 
expect  from  their  connection  with  him.  (s)  As  there  is  in 
practice  no  such  thing  as  a  universal  partnership,  so  no  part- 
ner is  obliged,  by  the  mere  fact  of  partnership,  to  do  nothing 
else  than  the  business  of  the  partnership.     It  is  probably  not 


Held,  tliat  tlie  firm  was  entitled  to  any 
profit  lie  might  have  made.  [But  when 
a  partnership  is  entered  into  for  the 
purpose  of  transacting  a  commission 
business,  —  one  to  furnish  buildings  and 
fixtures,  and  the  other  to  keep  the 
books  and  give  his  personal  attention  to 
the  management  of  the  business,  —  the 
latter  may,  after  the  houses  furnished 
by  the  former  are  full,  and  the  former 
refuses  to  furnish  further  warehouse- 
room,  put  up  other  warehouses,  and 
extend  the  business,  to  his  own  exclu- 
sive profit,  provided  he  does  not  neg- 
lect the  business  of  the  firm.  Parnell 
V.  Robinson,  Sup.  Ct.  Ga.  1877,  4  L.  & 
Eq.  Reptr.  13.] 

(s)  See  Boulay  Paty,  Cours  de 
Droit,  Com.  tom.  ii.  9i.  Sir  John 
Leach  said,  in  Glassington  v.  Thwaites, 
1  Sim.  &  S.  131,  133,  "The  princi- 
ples of  courts  of  equity  would  not 
permit  that  parties  bound  to  each  other 
by  express  or  implied  contract,  to  pro- 
mote an  undertaking  for  the  common 
benefit,  should  any  of  them  engage  in 
another  concern,  which  necessarily 
gave  them  a  direct  interest  adverse  to 


that  undertaking."  In  Long  v.  Majes- 
tre,  1  Johns.  Ch.  305,  A.  &  B.  carried 
on  trade  as  partners,  the  capital  being 
supplied  by  A.  B.  without  the  consent 
of  A.,  and  without  rendering  any  ac- 
count or  dissolving  the  partnership, 
formed  a  new  partnership  with  C,  and 
carried  into  that  house  all  the  funds 
of  the  original  firm,  and  used  them 
therein  till  his  death.  The  plaintiff 
filed  his  bill  against  the  administratrix 
of  B.,  and  against  C,  his  surviving 
partner,  claiming  to  be  entitled  to  the 
whole  share  of  the  deceased  in  the  last 
partnership,  alleging  that  a  great  part 
of  the  personal  estate  of  the  deceased 
had  come  into  the  hands  of  C. ;  and 
praying  that  C.  might  be  compelled  to 
set  forth  a  full  and  true  account  of  the 
joint  transactions  between  him  and  the 
deceased,  and  of  the  personal  estate  of 
the  latter  in  his  hands.  C.  demurring 
to  so  much  of  the  bill  as  called  for  the 
discovery  and  account  above  stated, 
the  demurrer  was  overruled.  And  see 
Law  V.  Cross,  1  Black  (U.  S.),  583; 
Soules  V.  Burton,  36  Vt.  652. 


CH.  VII.]       RIGHTS   OF   PARTNERS    BETWEEN   THEMSELVES.  249 

true  in  fact  that  the  majority  of  partners  confine  themselves 
absolutely  and  exclusively  to  partnership  business,  or  that  it  is 
expected  or  necessary  that  they  should.  (^)  And  it  may  be 
very  difficult  for  a  court  to  distinguish  between  the  case  of  an 
honest  several  business,  taking  only  its  due  share  of  time,  cap- 
ital, care,  &c.,  and  an  instance  of  unlawful  withdrawing  from 
a  partnership  of  what  belongs  to  the  firm.  But  the  line  must 
be  drawn  somewhere  ;  and  courts  have  sometimes  applied  the 
rule  with  so  much  severity  as  to  avoid  transactions  or  compel 
compensation  where  the  partner  could  not  be  charged  with  any 
thing  more  than  exposing  himself  to  a  bias  in  his  own  favor 
and  prejudicial  to  the  partnership,  (m) 

3.  How  the  Accounts  of  the  Firm  should  be  kept. 

*  As  all  partners  have  these  rights  as  against  each  *  228 
other,  so  they  have  the  right  which  these  rights  imply, 
—  that  of  enforcing  and  protecting  these  rights  ;  and  especially 
of  knowing  whether  they  are  invaded  or  not.  Therefore,  each 
partner  has  a  perfect  right  to  know  all  that  is  done,  and  exam- 
ine all  the  accounts  at  his  own  pleasure,  (v)  So  every  partner 
is  bound  to  enter  upon  the  proper  books  and  in  the  proper  way, 
or  enable  the  clerk  or  other  person  employed  to  make  due 
entry  of,  every  charge  and  every  credit,  all  money  paid  or 

(t)  See  remarks  of  Willard,   Vice-         The  considerations  applicable  to  the 

Chancellor,  in    Caldwell   v.   Lieber,   7  case   of   surviving   partners,  who   are 

Paige,  483,  494,  495;  Ship  "Potomac,"  appointed   executors    of   deceased   co- 

2  Black  (U.  S.),  481.  partners,  will  be  suggested  hereafter. 

(n)  Burton    ?'.    Wookey,    6    Madd.  Posf,  ch.  13,  §  4,  subsection  4. 
367  ;  ante,  p.  *226,  note  {q).     Sir  John  {v)  Rowe  v.  Wood,  2  Jac.  &  W.  558. 

Leach  there  said :  "  It  is  a  maxim  of  It  is  the  duty  of  each  partner  to  keep 

courts   of  equity   that   a  person    who  precise   accounts,   and   to   have   them 

stands  in  a  relation  of  trust  or  confi-  always    ready    for    inspection.      The 

dence   to   another,   shall   not   be    per-  good  faith  of  the  partners  is  pledged 

mitted,  in  pursuit  of  his  private  advan-  mutualh^  to  each  other,  that  the  busi- 

tage,  to  place  himself  in  a  situation  ness  shall   be   conducted   under   their 

which  gives  him  a  bias  against  the  due  actual,   personal    inspection,   enabling 

discliarge  of  that  trust  or  confidence."  each  to  see  that  the  other  is  carrying 

But  the  mere  fact  tliat  partners  are  so  it  on  for  their  mutual  advantage,  and 

situated  as  to  be  under  a  temptation  to  not   destroying  it.      Peacock   r.    Pea- 

improperly  use  tlie  partnersliip  prop-  cock,   16    Ves.    49,    51 ;   Donaldson    v. 

erty  is  not  sufficient  to  induce  equity  Williams,  1  Cromp.  &  M.  345 ;    Rowe 

to  interfere  by  injunction.     See  Glass-  r.  Wood,  2  Jac.  &  W.  553,  556.     See 

ington  V.  Thwaites,  1  Sim.  &  S.  124.  Boynton  v.  Page,  13  Wend.  425. 


250 


THE   LAW    OF   PARTNERSHIP. 


[CH.  VII. 


money  received,  and  all  notes  payable  or  receivable,  and  every 
other  transaction  which  is  usually  put  upon  the  books  of  ac- 
count ;  and  all  this  he  must  do  without  unnecessary  delay,  (w) 
So,  if  any  partner  contemplates  any  important  transaction,  we 
should  regard  it  as  his  duty  to  communicate  what  he 

*  229    *  does,  and  what  he  intends  to  do,  before  he  takes  any 

preliminary  steps  which  might  embarrass  the  firm  if  the 
transaction  should  not  be  carried  into  effect,  in  order  that  the 
firm  may  do  what  they  think  proper.  If,  by  articles  or  arrange- 
ments, any  one  partner  is  intrusted  with  the  accounts,  it  would 
be  a  peculiar  breach  of  duty  on  his  part  to  keep  them  in  such 
way  as  to  mislead  his  partners,  whether  by  misentry  or  by  non- 
entry,  (a;) 

4.   Of  a  Partner^ s  Right  to  extra  Compensation. 

Another  point  seems  to  be  well  settled,  both  at  law  and  in 
equity.     It  is  that  no  partner  shall  receive  any  special  com- 
pensation for  what  he  does,  unless  by  agreement  of  the 

*  230    partnership.  (?/)     *  If  the  articles,  or  an  arrangement 


{lo)  Ex  parte  Yonge,  3  Ves.  &  B.  36; 
Goodman  v.  Whitcomb,  1  Jac.  &  W. 
589,  593.  Every  reasonable  presump- 
tion will  be  made  against  partners 
wliose  fault  it  is  tliat  the  partnership 
books  are  imperfect ;  and  if  they  claim 
to  be  entitled  to  other  credits  than 
those  to  which  the  books,  at  the  close 
of  the  partnership,  entitle  them,  it  is 
usual  to  require  of  them  very  strict 
proof.  Bevans  v.  Sullivan,  4  Gill,  383, 
391.  In  Beacham  v.  Eckford,  2  Sandf. 
Ch.  116,  it  was  held,  that,  on  the  disso- 
lution of  a  partnership  between  persons 
residing  at  different  places,  it  is  the 
duty  of  each  partner  to  furnish  to  the 
other  all  their  accounts,  and  to  en- 
deavor to  adjust  them  to  ascertain  the 
balance ;  that  this  is  especially  the 
duty  of  the  partner  at  the  place 
where  the  principal  business  has  been 
transacted ;  and  that,  upon  the  death 
of  a  copartner,  this  duty  becomes 
imperative  upon  the  survivor ;  and, 
if  he  neglect  it,  he  will  lose  interest 
on    the    balance    which    may    subse- 


quently appear  to  have  been  due   to 
him. 

(x)  See  Maddeford  v.  Austwick,  1 
Sim.  89 ;  Kelley  v.  Greenleaf,  3  Story, 
93,  103.  It  is,  of  course,  improper  to 
blend  the  accounts  of  the  partners  with 
the  firm  with  the  individual  accounts 
of  the  partners  between  themselves. 
Honore  v.  Colmesnil,  1  J.  J.  Marsh. 
506,  517. 

(y)  Thornton  v.  Proctor,  1  Anst.  94 
Whittle  V.  M'Farlane,  1  Knapp,  312 
315;  Holmes  v.  Higgins,  1  B.  &  C.  74 
Franklin  v.  Robinson,  1  Johns.  Ch 
156,  165;  Bradford  v.  Kimberly,  3  id 
431 ;  Caldwell  v.  Lieber,  7  Paige,  483 
Phihps  V.  Turner,  2  Dev.  &  B.  Eq.  123 
Anderson  v.  Taylor,  2  Ired.  Eq.  420 
Reybold  v.  Dodd,  1  Harr.  401,  415 
Dougherty  v.  Nostrand,  1  Hoff.  Ch.  68 
Bevans  v.  Sullivan,  4  Gill,  383 ;  Cour- 
sen  V.  Hamlin,  2  Duer,  513 ;  Roach  v 
Perry,  16  111.  37 ;  King  v.  Hamilton,  id 
190 ;  Bennett  v.  Russell,  34  Mo.  524 
[Drew  V.  Ferson,  22  Wis.  651.]  Upon 
the  same  principle,  no  partner  is  en- 


CH.  VII.]       RIGHTS    OF   PARTNERS   BETWEEN    THEMSELVES.  251 


subsequent  to  them,  provide  that  one  or  another  shall  receive 
any  special  compensation  for  special  service,  this  arrangement 


titled  to  interest  on  moneys  advanced 
to,  or  deposited  witli,  the  firm,  for  its 
use,  unless  there  be  a  special  agree- 
ment to  that  effect.  Lee  v.  Lash- 
brooke,  8  Dana,  214 ;  Day  v.  Lock- 
wood,  24  Conn.  185;  Desha  v.  Sliep- 
ard,  20  Ala.  747.  But  In  re  German 
Mining  Company,  19  Eng.  L.  &  Eq. 
591,  4  De  Gex,  M.  &  G.  19,  Knight 
Bruce,  L.  J.,  said  :  "  I  think  that  mer- 
cantile usage  and  the  general  course 
of  trade  dealings  do,  wliere  a  partner 
in  trade  has  duly  and  properly  ad- 
vanced money  of  his  own  for  the  pur- 
poses of  the  partnership  business,  so 
as  to  become  justly  a  creditor  in  ac- 
count with  the  partnersiiip  for  the 
amount,  raise  an  implied  contract  for 
interest,  so  as  to  entitle  the  partner 
advancing  to  have  his  account  with 
the  firm  credited  with  interest  ac- 
cordingly, although  his  partners  may 
not  have  authorized,  and  may  not 
have  known  of  the  transaction ;  at 
least,  in  the  absence  of  any  express 
contract  to  the  contrary."  See  In  re 
German  Mining  Company,  27  Eng.  L. 
&  Eq.  158.  [There  is  no  established 
rule  as  to  the  allowance  of  interest 
between  partners.  The  circumstances 
of  each  particular  case  must  determine. 
Gyger's  Appeal,  62  Penn.  St.  73; 
Moss  V.  McCall,  75  III.  190.  Interest 
will  not  generall}'  be  allowed,  imless 
on  special  agreement,  Tirrell  v.  Jones, 
30  Cal.  655;  Whitconib  v.  Converse, 
119  Mass.  38 ;  then  with  annual  rests 
before  dissolution,  but  without  rests 
after,  Burfield  v.  Loughborough,  L.  R. 
8  Ch.  1,  disapproving  Pilling  v.  Pilling, 
3  DeG.,  J.  &  S.  162.  But  it  is  elsewhere 
held  that,  in  taking  account  after  dis- 
solution, the  articles  allowing  interest 
on  capital,  interest  from  that  time 
and  during  the  process  of  settlement 
is  not  to  be  allowed  on  each  part- 
ner's capital  contributed,  Watney  v. 
Wells,  L.  R.  2  Ch.  App.  250;  but  other- 
wise, if  there  is  no  agreement  for  inter- 
est, Tutt  V.  Land,  50  Ga.  338.  When 
profits  are  left  in  business,  the  partner 


leaving  them  does  not  draw  interest, 
unless  by  express  agreement.  Dinham 
V.  Bradford,  L.  R.  5  Ch.  App.  519. 
Nor  is  a  partner  chargeable  with  inter- 
est on  overdrawn  profits.  Maymott  v. 
Maymott,  9  Jur.  n.  s.  496.  Where  by 
the  contract  partners  agreed  to  keep 
one  another  in  funds  to  a  specified 
extent,  and,  on  dissolution,  one  was 
found  not  to  have  contributed  to  the 
extent  agreed,  interest  was  allowed  on 
the  difference,  to  the  partner  whose 
advances  were  in  excess  of  the  others. 
Pim  V.  Harris,  Irish  Repts.,  10  Eq.  442. 
Interest  payable  by  the  terms  of  the 
contract  at  a  greater  rate  than  the  law 
permits,  except  by  special  contract,  is 
to  be  reckoned,  after  the  maturity  of 
the  contract,  at  the  rate  fixed  by  the 
law,  in  the  absence  of  express  agree- 
ment. Thus,  where  the  rate  is  six  per 
cent,  unless  otherwise  agreed,  a  note 
payable  in  one  year  at  ten  per  cent 
interest  draws  but  six  per  cent  after 
the  expiration  of  the  year.  Brewster 
V.  Wakefield,  22  How.  (U.  S.)  118; 
Eaton  V.  Boissoncault,  Sup.  Jud.  Ct. 
Me.,  5  Reptr.  270  ;  Burnhisel  i-.  Firman, 
22  Wall.  (U.  S.)  170;  Ludwick  v. 
Huntsenger,  5  W.  &  S.  (Penn.)  51; 
Cook  V.  Fowler,  L.  R.  7  H.  L.  27; 
Pearce  v.  Hennessy,  10  R.  L  223; 
Kitclien  v.  Bank,  14  Ala.  233;  Lash 
V.  Lambert,  15  Minn.  416  ;  Hubbard  v. 
Callahan,  42  Conn.  524 ;  Searle  v. 
Adams,  3  Kan.  315.  In  Cromwell 
V.  County  of  Sac,  in  the  United  States 
Supreme  Court,  February,  1878  (5 
Reptr.  419),  Brewster  v.  Wakefield, 
supra,  is  explained,  if  not  overruled, 
and  the  contrary  doctrine  asserted  to 
be  established  by  the  preponderance  of 
authority.  See  also  contra,  Brannon 
V.  Hursell,  112  Mass.  63;  Hand  v. 
Armstrong,  18  la.  324 ;  Marietta  Iron 
Works  V.  Lattimer,  25  Ohio  St.  621; 
Hopkins  v.  Chittenden,  10  Tex.  189 ; 
McLane  v.  Abrams,  2  Nev.  199;  Koh- 
ler  V.  Smith,  2  Cal.  597;  Pruyn  v. 
Milwaukie,  18  Wis.  367;  Etnyre  v. 
McDaniel,    28    111.    201;     Kilgore    v. 


252 


THE   LAW   OF   PARTNERSHIP. 


[CH,  VII. 


will  be  respected.  (2)     But  if  there  be  no  such  provision,  the 
law  will  not  make  any,  nor  infer  one  from  the  greater  industry- 


Powers,  5  Blackf.  (Ind.)  22.  But 
see  Aj-er  v.  Tiklen,  15  Gray  (Mass.), 
178.]  But,  if  a  partner  be  appointed 
by  the  firm  agent  for  a  special  pur- 
pose, he  is  entitled  as  against  the 
firm  to  the  usual  compensation  in  rela- 
tion to  tlie  subject  of  such  agency. 
Bradford  v.  Kimberly,  3  Johns.  Ch. 
431;  Philips  v.  Turner,  2  Dev.  &  B.  Eq. 
123.  [If,  in  winding  up  their  affairs, 
the  surviving  partner  renders  services, 
not  strictly  in  settlement,  but  in  the 
prosecution  and  execution,  of  contracts 
already  existing,  or  new  ones  entered 
into  with  tlie  consent  of  the  adminis- 
trators of  the  deceased  partner,  for 
the  general  benefit  of  the  partnership 
fund,  he  is  entitled  to  compensation 
for  such  service  as  is  not  in  strict  set- 
tlement. Schenkl  v.  Dana,  118  Mass. 
236;  Willett  v.  Blandford,  1  Hare, 
253.]  And  if  a  partner  sell  half  his 
share  to  another  person,  who  becomes 
the  general  manager  of  the  partner- 
ship business,  such  third  party,  not 
being  a  partner  as  respects  the  partner 
retaining  his  original  interest  in  the 
firm,  is  responsible  to  the  latter  only 
as  agent,  and  as  against  him  may  claim 
a  reasonable  compensation  for  his  ser- 
vices. Newland  r.  Tate,  3  Ired.  Eq. 
226.  A  partner  is,  of  course,  entitled 
to  be  indemnified  for  outlays  made  by 
him,  and  obligations  incurred,  in  the 
service  of  the  partnership,  and  for  the 
successful  conduct  of  its  business, 
though  he  cannot  claim  any  thing  for 
his  management,  time,  and  labor.  Bur- 
den V.  Burden,  1  Ves.  &  B.  170  ;  Brig- 
ham  i;.  Dana,  29  Vt.  1.  And,  it  seems, 
there  may  be  actual  expenditures  of 
money  for  the  firm,  by  one  partner, 
which  partake  so  much  of  the  nature 
of  personal  service  that  the  court  will 
not  allow  the  firm  to  be  charged  with 
them,  especially  if  the  partner  himself 
do  not  appear  to  have  regarded  them 
as  items  of  expense  incurred  on  part- 
nership account.  Thornton  r.  Proctor, 
1  Anst.  94 ;  In  re  The  German  Mining 


Company,  27  Eng.  L.  &  Eq.  158.  And 
if  shareholders,  or  partners  in  such  a 
company,  at  the  request  of  the  direc- 
tors, the  managing  partners,  make  ad- 
vances of  money  for  partnership  pur- 
poses, which  are  so  applied,  and  are 
the  means  of  saving  the  concern  from 
ruin,  and  of  preventing  the  total  loss 
of  the  joint  property,  such  shareholders 
are  creditors  of  the  company  to  the 
amount  of  their  advances  and  interest 
thereon.  In  re  The  German  Mining 
Company,  19  Eng.  L.  &  Eq.  591,  4  De 
Gex,  M.  &  G.  19.  [See  also  post,  p. 
*230,  note  (cc).] 

(z)  Paine  v.  Thacher,  25  Wend.  450  ; 
Desha  v.  Sheppard,  20  Ala.  747;  Pond 
V.  Clark,  24  Conn.  370.  See  Baltyde 
V.  Trump,  1  Md.  Ch.  517.  And  where 
by  the  articles  of  copartnership  one 
partner  is  exempted  from  the  duty  of 
rendering  his  personal  services  to  the 
joint  business,  if  he  afterwards  does 
render  such  services,  at  the  instance 
and  request  of  his  copartners,  he  will 
be  entitled  to  a  reasonable  compensa- 
tion therefor.  The  general  rule,  that 
one  partner  cannot  charge  the  firm  for 
his  services,  is  founded  on  the  principle 
that  each  partner  is  bound  to  devote 
his  skill  and  labor  to  the  promotion  of 
the  common  benefit  of  the  concern, 
and  is  inapplicable  when  the  reason 
for  it  fails.  Lewis  v.  Moffett,  11  111. 
392.  Upon  the  same  ground,  if  part- 
ners agree  to  invest  equal  amounts  of 
capital  in  the  joint  enterprise,  and  one 
partner  advance  more  than  his  share, 
the  partnership  must  allow  him  inter- 
est on  the  excess.  Reynolds  v.  Mardis, 
17  Ala.  32.  If  A.  &  B.  enter  into  part- 
nership under  articles  by  which  "A. 
bargains  and  agrees  to  give  B.  four 
hundred  and  fifty  dollars  to  manage 
the  business,"  B.'s  salary  is  to  be  paid 
not  by  A.  alone,  but  by  the  partner- 
ship, and  out  of  the  partnership  funds. 
Weaver  v.  Upton,  7  Ired.  468.  See 
Reynolds  v.  Mardis,  supra. 


CH.  Vir.]       RIGHTS    OP    PARTNERS    BETWEEN    THEMSELVES.  253 

or  greater  ability  of  any  one  partner,  (a)  The  principle  seems 
to  be,  that  partners  are  considered  as  meeting  on  a  common 
ground,  each  engaging  to  do  all  he  can  do  for  the  common 
good.  (6)  And,  whatever  any  one  does,  he  has  no  claim  for 
any  thing  beyond  his  equal  share  of  the  common  benefit,  with- 
out the  consent  of  his  copartners,  (c)  It  has,  however,  been 
lield  that  a  partner  is  entitled  to  interest  on  advances  made  to 
the  firm,  although  there  was  no  express  agreement  to  that  effect, 
if  it  may  be  inferred  from  circumstances  or  their  usage,  that , 
an  allowance  of  interest  was  intended,  (cc) 

5.  How  far  Partners  are  Trustees. 

*  As  a  general  principle,  which  will  sometimes  be  of  *  231 
much  use  in  determining  the  rights  and  obligations  of 
copartners,  it  may  be  said  that  all  partners  are  regarded  some- 
what as  trustees  for  the  firm.  We  have  already  remarked  that 
the  law  of  partnership  is  a  thing  by  itself;  but,  like  every 
other  branch  of  the  law-merchant,  and  indeed  of  the  law  in 
general,  it  is  connected,  by  many  relations  and  analogies,  and 
many  common  principles,  with  collateral  branches ;  and  these 
it  is  often  useful  to  consider.  Thus  the  law  is  well  settled  in 
regard  to  trustees.  A  wisely  adjusted  system  of  right  and 
obligation  guides  the  trustee,  preserves  the  property  or  interests 
in  his  hands,  and  protects  both  him  and  the  cestui  que  trust; 

(a)  Philips  V.  Turner,  2  Dev.  &  B.  Eq.  [But  if  a  partner  refuses  to  discliarge 

123.     In  this  case,  the  partnership  busi-  the  duties  he  is  bound  to  by  the  arti- 

ness  was  under   tlie  ahnost   exclusive  cles,   he   may   be    charged   with  their 

superintendence  of  the  partner  making  value  in  the  account.    Marsh's  Appeal, 

a  claim  for  extra  compensation.     See  69  Penn.  St.  30.] 

Caldwell  I'.  Lieber,  7  Paige,  483;  ante,  (c)  Beatty  v.  Wray,  19  Penn.  516, 

p.  *  227,  and  Cunliffe  v.   Dyerville,  7  519.     The  rule  is   the  same  after  the 

R.  I.  325.  dissolution   of  the   firm,   by  death   or 

(h)   The   principle  was   very   fully  otherwise.     Partners  who  wind  up  the 

considered  by  Willard,  V.  C,  in  Cald-  concern  are  not  entitled  to  any  extra 

well  V.  Lieber,  7  Paige,  483,  495.     He  compensation  for  their  time  and  labor, 

said:  "  Where  there  is  no  special  agree-  Burden  v.  Burden,  1  Ves.    &  B.  170; 

ment  to  that   eSect,  partners  are  not  Stocken  u.  Dawson,  6  Beav.  371,376; 

entitled  to  charge  each  other  for  their  Beatty  v.  Wray,  19  Penn.  St.  516  ;  Ly- 

services   in   the    management   of    the  man  v.  Lyman,  2  Paine,  C.  C.  11,  52. 
concern;    and    the   law    never   under-  (cr)  Morris  r.  Allen,  1  iMcCarter, 44; 

takes    to   settle    between    them    their  Wood  v.  Scoles,  Law  licp.  1  Ch.  App. 

various   and   unequal   services  in    the  369.     [See  also  anfe,  p.  *  230,  note  (^).] 
transaction   of    their  private   affairs." 


254  THE   LAW   OF   PARTNERSHIP.  [CH.  VII. 

him  from  all  undue  interference  and  molestation  while  faith- 
fully discharging  his  duty,  and  the  cestui  que  trust  from  all 
injurious  breach  of  duty.  Now,  a  copartner  has  powers,  oppor- 
tunities, and  duties,  in  relation  to  the  partnership,  very  similar 
to  those  which  a  trustee  has  in  relation  to  his  cesttd  que  trust. 
And,  so  far  as  they  are  similar,  it  has  been  repeatedly  held  that 
the  same  rules  and  principles  are  applicable  to  them,  both  in 
law  and  in  equity,  (c?) 

SECTION  VII. 

OF    THE   ARTICLES    OF    COPARTNERSHIP. 

1.    Greneral  Principles  of  the   Construction  and  Effect  of 

Articles. 

It  would  be  very  possible  for  persons  to  enter  into  partner- 
ship with  no  articles,  and  no  agreements  whatever,  excepting 
the  bare  agreement  to  become  partners.  Then  the  law  would 
provide  for  them  a  set  of  rules  and  arrangements  which 
*  232  would  cover  nearly  *  the  whole  ground,  and  would  prob- 
ably be  much  the  same  with  those  agreed  upon  by  parties 
in  most  cases.  But  generally,  if  not  always,  the  parties  them- 
selves enter  into  some  definite  and  special  bargains  or  terms, 
which  are  to  be  taken  as  the  foundation  of  their  partnersliip. 
Sometimes  these  are  agreed  upon  only  orally,  and  sometimes 
they  are  expressed  in  writing.  It  does  not  seem  that  there  is 
any  difference  in  their  effect  and  operation,  whether  spoken  or 
written,  if  only  they  are  ascertained  ;  (e)  but  there  is  much 
difference  in  respect  to  the  evidence  of  the  agreement ;  for  the 
only  way  to  be  reasonably  certain  of  the  terms  of  a  bargain  is 
to  reduce  it  to  writing  at  the  time,  and,  as  a  matter  of  precau- 
tion, have  it  verified  by  the  signatures  of  all  who  are  interested 
init.(/) 

{d)  See  the  remarks  of  Story,  J.,  in  action  of  covenant  can  be  maintained 

Kelley  v.  Greenleaf,  3  Story,  93,  101.  for  a  breach  of  the  stipulations  in  it, 

Surviving  partners  are  trustees  for  cer-  wiiich  would  be  binding  on  the  repre- 

tain    purposes.      See    ante,   p.    *  227,  sentatives  of  the  contracting  parties  in 

note  (u).  the  same  manner  and  to  tlie  same  ex- 

(e)  It  miglit  be   one  advantage  of  tent  as  other  specialty  obligations. 

having  a  deed  of  partnership,  that  an  (/)  The  importance  of  written  arti 


CH.  VII.]       RIGHTS   OF   PARTNERS   BETWEEN   THEMSELVES.  255 

In  regard  to  the  articles  of  copartnersliip,  the  two  most  gen- 
eral principles  liave  already  been  stated.  They  are,  first,  that 
the  law  permits  partners  to  enter  into  any  arrangements  or 
engagements  between  themselves  which  are  not  void  as  against 
statutory  provisions  or  the  general  principles  of  law.  These 
may  conflict  with  any  or  all  of  the  especial  rules  of  the  law 
of  partnership,  but  will  be  none  the  less  binding  upon  the 
parties  themselves.  Thus,  if  A.,  B.,  &  C.  choose  to  enter 
into  partnership,  and  agree  that  A.  shall  keep  all  the  accounts, 
and  that  neither  B.  nor  C.  shall  ever  see  them  without  his 
permission  ;  or  that  A.  alone  shall  sign  the  name  of  the  firm ; 
or  that  he  shall  share  the  profits,  but  not  share  any  loss :  (^)  any 
or  all  of  these  agreements  would  be  binding  on  the  parties. 

The  second  general  rule  is,  as  already  stated,  that  these 
special  arrangements  or  bargains  are  not  binding  or  operative 
upon  any  third  parties  who  are  not  especially  informed  of  them, 
and  subsequently  enter  into  transactions  in  acknowledg- 
ment of  them.  (A)  *  The  general  rules  of  law,  and  the  *  233 
special  rules  of  the  law  of  partnership,  every  person  is 
presumed  to  know,  and  cannot  ground  a  right  or  a  defence 
upon  his  ignorance  of  them.  But  no  one  is  presumed  to  know 
those  private  arrangements,  and  no  one  is  therefore  affected  by 
them  until  they  are  brought  home  to  his  knowledge. 

cles,  by  which  the  courts  may  be  some  one  or  more  of  the  partners  shall 
guided  in  determining  all  questions  in  not  have  the  power  of  putting  the  firm 
which  the  partnership  or  the  several  name  to  negotiable  paper.  If,  notwith- 
partners  are  interested,  and  especially  standing  such  stipulation,  the  prohib- 
as  to  the  method  of  winding  up  the  ited  partners  do  exercise  this  power, 
affairs  of  the  joint  concern  upon  a  the  partnership  is  bound,  unless  knowl- 
dissolution,  is  strongly  enforced  by  edge  of  such  prohibition,  actual  or  con- 
Lord  Eldon  in  Crawshay  v.  Collins,  2  structive,  can  be  fixed  upon  the  party 
Russ.  3il-o43.  taking   the   paper ;   and   it  makes   no 

{(/)  See  North  British  Bank  v.  Col-  difference  that  the  stipulation  be  made 

lins,  28  Eng.  L.  &  Eq.  7.  in  favor  of  a  dormant  partner.     Win- 

(/i)  Sandilands  v.  Marsh,  2  B.  &  Aid.  ship  v.  Bank  of  United  States,  5  Mason, 
697;  Smith  v.  Jameson,  5  T.  R.  601,  176,5  Pet.  529;  Grant  v.  Hawkes,  Chit- 
603;  Craven  v.  Widdows,  2  Ch.  Ca.  ty  on  Bills,  42;  South  Carolina  Bank  r. 
139;  Hawken  v.  Bourne,  8  M.  &  W.  Case,  8  B.  &  C.  427  ;  Smith  v.  Lusher, 
703,710;  Tradesmen's  Bank  f.  Astor,  5  Cow.  689, 710  ;  Walden  ?•.  Slierburne, 
11  Wend.  87,  90  ;  Tilher  v.  Whitehead,  15  Johns.  409  ;  Whitaker  v.  Brown,  16 
1  iJallas,  269;  Devin  v.  Harris,  3  G.  Wend.  605,  508;  Bank  of  liochester  v. 
Greene,  186  ;  Nichols  v.  Cheairs,  4  Monteath,  1  Denio,  402,  406  ;  Gano  v. 
Sneed,  229.  The  proposition  of  the  Samuel,  14  Ohio,  592  ;  Bank  of  Ken- 
text  is  frequently  illustrated  by  cases  tucky  v.  Brooking,  2  Litt.  41;  ante,  ch. 
in  which  it  has  been  stipulated  that  6,  §  3. 


256 


THE    LAW    OF    PARTNERSHIP. 


[CH. 


VII. 


There  remain  to  be  considered  the  rules  and  princij)Ies 
which  courts  ajiply  to  the  construction  of  partnership  articles. 
In  the  first  place,  so  far  as  the  articles  contain  provisions 
which  the  law  would  create  between  the  partners  if  the  articles 
did  not,  they  might  be  regarded  as  surplusage.  But  if  any 
question  arose  as  to  the  bearing,  application,  or  exact  effect 
of  these  rules,  great  regard  would  be  paid  to  the  intention  of 
the  parties  as  it  was  expressed  in  their  articles,  (i) 


(i)  Gainsborough  v.  Stork,  Barnard 
Ch.  312.  General  language  used  in 
one  place  will  sometimes  be  construed 
to  run  tlirough  and  pervade  the  whole 
body  of  the  articles.  Thus,  the  words 
of  covenant,  generally  occurring  at  the 
commencement  of  a  partnership  deed, 
usually  declare  the  covenant  to  be 
joint  and  several ;  and  words  of  cove- 
nant subsequently  occurring  in  the 
instrument  are  on  that  account  usu- 
ally construed  to  be  intended  to  be  also 
joint  and  several.  But  it  is  to  be 
borne  in  mind  that,  whatever  may  be 
the  form  of  a  covenant,  if  the  interest 
and  cause  of  action  be  joint,  the  action 
must  be  by  all  the  covenantees ;  and, 
on  the  other  hand,  if  the  interest  and 
cause  of  action  be  several,  the  action 
may  be  by  one.  Hence,  notwithstand- 
ing the  rule  of  construction  we  have 
just  stated,  where  the  covenant,  in- 
troductory to  a  partnership  deed,  is 
declared  to  be  joint  and  several,  some 
of  the  covenants  in  the  instrument 
may  be  such  that  the  partner  com- 
mitting a  breach  can  be  sued  only  by 
all  the  rest  jointly,  while  for  the  breacii 
of  others  a  several  action  by  one  of  the 
partners  may  be  maintainable.  Ec- 
cleston  V.  Clipsham,  1  Saun.  153. 
See  Owston  v.  Ogle,  13  East,  538 ; 
Servante  v.  James,  10  B.  &  C.  410. 

There  may  be  single  and  particular 
provisions  in  partnership  articles, 
which,'from  change  of  circumstances, 
lapse  of  time,  or  in  other  ways,  have 
come  to  be  entirely  inconsistent  with 
and  contradictory  to  the  whole  scheme 
and  tenor  of  the  agreement.  In  such 
case,  a  court  of  equity  regarding  the 
general  object  and  purpose  of  the 
parties  as  superior  to  and   controlling 


any  lesser  and  subordinate  intent,  will 
refuse  to  carry  into  effect  the  minor 
and  inconsistent  stipulation.  See  this 
illustrated  vvitii  respect  to  the  clause 
giving  to  two-thirds  of  the  partners 
the  power  to  expel  a  member  of  the 
firm.  Blisset  v.  Daniel,  11  Hare,  493, 
•25  Eng.  L.  &  Eq.  105.  See  also  Ex 
parte  Croxton,  11  Eng.  L.  &  Eq.  227, 
1  De  Gex,  M.  &  G.  600,  as  to  the 
construction  of  apparently  inconsistent 
stipulations  respecting  the  liabilities 
of  a  retiring  partner. 

When  a  partnership  consists  of  very 
many  partners,  as  in  a  joint-stock 
company,  the  partners  are  to  be  held, 
as  strictly  as  may  be,  to  the  terms  of 
association.  Ex  parte  Lawes,  De  G., 
M.  &  G.  421,  10  Eng.  L.  &,  Eq. 
162. 

In  the  construction  of  partnership 
articles,  Lord  Eldon  said,  in  Greddes 
V.  Wallace,  2  Bligh,  295 :  "  You  are 
to  take  the  whole  instrument  together, 
and  you  are  not  only  to  look  at  the 
whole  of  the  instrument  together,  but 
you  are  to  look  at  the  transactions  of 
the  parties  ;  for,  whatever  may  be  the 
language  of  a  partnership  deed,  the 
dealings  and  transactions  among  the 
partners  may  be  such  as  to  amount  to 
distinct  evidence  that  some  of  the  arti- 
cles in  that  partnership  deed  were 
waived  by  all  parties,  and  that  some 
of  the  articles  in  that  deed  were  not  to 
be  considered  as  rules  which  should 
regulate  the  rights  and  duties  of  the 
partners."  And  partnership  articles 
are  read  in  a  court  of  equity  as  not 
containing  the  clauses  on  which  the 
parties  have  not  acted.  Lord  Eldon 
in  Jackson  v.  Sedgwick,  1  Swanst.  469. 
But  the  topic  of  the  waiver  of  partner- 


CH.  VII,]       RIGHTS   OF   PARTNERS    BETWEEN    THEMSELVES.  257 

*  If  any  of  the  rules  of  partnership  law  are  not  inter-  *  234 
fered  with  by  the  articles, — that  is,  if  the  articles  are  silent 
on  any  points  established  by  the  law,  —  it  will  be  presumed  that 
the  parties  intended  that  tlie  right  given  and  the  duties  imposed 
by  the  law  in  these  respects,  suited  them  perfectly,  and  all  such 
rules  of  law  will  be  enforced  in  the  same  manner  as  if  they 
entered  into  the  articles,  (j?') 

2.  Bill  in  Equity  for  Specific  Performance  of  Articles. 

Most  of  the  questions  litigated  under  articles  of  partnership 
come  before  courts  of  equity  ;  nor  is  there  any  doubt  as  to  the 
full  jurisdiction  of  equity  over  these  articles,  or  any  general 
difference  between  the  principles  which  equity  applies  to  ques- 
tions of  partnership  and  those  applicable  to  other  questions  of 
an  analogous  character,  {kk) 

A  very  frequent  prayer  of  a  complainant  in  equity  is 
for  a  *  decree  for  a  specific  performance.  This  prayer  *  235 
the  court  will  hear  in  some  form,  whether  the  act  re- 
quired is  demanded  by  the  articles,  or  is  a  legal  obligation 
created  by  the  law ;  and  will  grant,  as  in  ordinary  cases,  pro- 
vided the  contract  or  duty  be  clearly  made  out,  and  there  is  no 
waiver  on  the  complainant's  side,  or  no  breach  on  his  part 
justifying  that  of  which  he  complains  ;  and  provided  the  per- 
formance prayed  for  is  practicable,  remedial,  and  just  as  between 

ship  articles  will  be  separatelj'  con-  when  the  partnership  is  contin- 
sidered  hereafter.  Post,  subsection  3,  ued  beyond  the  term  limited  by  the 
p.  *  245.  articles.  Gillett  v.  Thornton,  L.  li. 
(j)  In  Crawshay  v.  Collins,  15  Ves.  19  Eq.  599  ;  Parsons  v.  Haywood,  31 
218,226,  Lord  Eldon  said:  "Partner-  Beav.  199.  But  special  and  unusual 
ships  are  regulated  either  by  the  e.x-  provisions  of  a  penal  nature  will  not 
press  contract,  or  by  the  contract  be  considered  as  in  force  after  the 
implied  by  law  from  the  relation  of  expiration  of  the  term.  Clark  v. 
the  parties.  The  duties  and  obligations  Leach,  8  L.  T.  n.  s.  40.  A  stipulation, 
arising  from  that  relation  are  regulated,  in  partnership  articles,  that  neither 
as  far  as  they  are  touched  by  the  e.v-  shall  sell  his  interest  without  the  con- 
press  contract;  if  it  does  not  reach  all  sent  of  the  others,  has  no  api)lication 
those  duties  and  obligations,  they  are  after  a  dissolution,  and  the  appointment 
implied  and  enforced  by  the  law.  of  a  receiver.  Noonan  v.  McNab,  30 
Smith  V.  Jeges,  4  Beav.  508,  505.     See  Wis.  277.] 

Jackson  v.  Sedgwick,    1   Swanst.  469.  (kk)  Whitman  v.  Robinson,  21  Md. 

[The    written   articles   of  partnership,  30;  Homfray  v.  Fothergill,  Law  Hep. 

including  the   arbitration    clause,  con-  1  Eq.  Cas.  5G7;  Ibbotson  v.  Elam,  id. 

tinue   in   force,    so   far   as   applicable,  188. 

17 


258  THE   LAW   OP   PARTNERSHIP.  [CH.  VII. 

the  parties,  and  not  injurious  to  third  parties.  But  one  prin- 
ciple, which  often  prevents  this  decree  in  ordinary  cases,  is 
frequently  applicable  in  partnerships.  It  is  this :  A  partner 
may  bind  himself  by  articles,  to  be  honest,  diligent,  skilful,  <fec., 
and  is  bound  by  law  to  be  the  first  perfectly,  and  the  others  as 
far  as  the  exigencies  of  the  partnership  require  and  his  capacity 
permits.  And  any  breach  of  these  obligations,  actual  or  in- 
tended, equity  will  prevent  by  injunction,  if  that  suits  the  case, 
or  apply  any  other  proper  remedy.  But  no  specific  performance 
can  be  decreed  ;  for  an  order  of  the  court  to  be  honest,  or 
faithful,  or  diligent,  or  skilful,  would  only  require  of  him  to  do 
what  the  law  and  his  promise  already  require.  And  there  is 
the  further  objection,  that  it  is  difficult,  not  to  say  impossible, 
to  draw  an  exact  defining  line,  and  say  how  industrious  or 
skilful  a  partner  shall  be,  or  how  he  shall  prove  his  honesty. 
But  if  his  fraud,  his  negligence,  or  his  ignorance  threaten  an 
actual  mischief  which  the  court  can  prevent,  or  have  caused 
one  for  which  he  can  make  compensation,  the  aid  of  the  court 
will  then  be  given.  We  have  mentioned  this  subject  here,  as 
it  seemed  necessary  to  notice  it  in  connection  with  the  articles 
of  copartnership ;  but  shall  treat  of  it  more  fully  hereafter, 
when  considering  the  general  subject  of  the  equitable  processes 
and  remedies  between  partners,  {k) 

Equity  is  sometimes  called  upon  to  decree  a  performance  of 
an  agreement  to  enter  into  partnership.  There  can  be  no  doubt 
whatever  of  the  perfect  competence  of  the  court  to  make  such 

a  decree,  if  they  see  fit.  (Z)  But  there  are  so  many 
*  236    possible  objections  *  to  it,  that,  in  point  of  fact,  it  very 

seldom  is  made  or  asked  for.  If  the  agreement  is  for  a 
term  of  time,  a  court  would  hesitate  before  it  compelled  parties 
to  enter  a  relation  of  long  endurance,  in  which  it  is,  above  all 

{k)  Post,  ch.  8,  §§  3  and  4.  execute  the  proper  partnership   deed. 

(/)  Buxton   V.   Lister,  3   Atk.   383;  Hibbert  v.   Hibbert,    Coilyer  on  Part. 

Anonymous,  2  Ves.  Sen.  630  ;  Birchett  §  203 ;    England   v.   CurHng,   8  Beav. 

V.   BoUing,  5  Munf.  442;  2  Story  Eq.  129.     So  a  court  of  equity  may  compel 

§  718;  Adderly  v.  Dixon,  1  Sim.  &  S.  a  partner  to  contribute  the  sum  stipu- 

610,  611.     See  further  the  opinion  of  lated  as  capital,  or  to  restore  it  to  the 

Wilde,  J.,  Clark  v.  Flint,  22  Pick.  231,  common   fund,  if  he  have  witlidrawn 

239.     The  specific  performance  of  an  it  before  the  debts  are  paid.     Robinson 

agreement   for   a   partnership  may  be  v.  Mcintosh,  3  E.  D.  Smith,  221. 
enforced  by  compelling  the  parties  to 


CH.  VIT.]       RIGHTS    OF    PARTNERS    BETWEEN    THEMSELVES.  259 

tilings,  necessary  tliat  there  exist  entire  mutnal  confidence  and 
the  most  unembarrassed  co-operation  ;  although  there  are,  un- 
doubtedly, instances  of  this,  enough  perhaps  to  constitute  a 
general  rule,  (m)  If,  on  the  other  hand,  no  term  of  time  is 
fixed  by  the  agreement,  it  would  be  merely  nugatory  for  equity 
to  decree  a  partnership  which  the  reluctant  partner  might  ter- 
minate the  moment  after,  (w)  It  is  easy,  however,  to  suppose 
cases  where  a  person  had  made  arrangements  with  a  view  to  a 
partnership  distinctly  agreed  upon,  which  would  now  bring 
upon  him  great  loss  and  mischief,  if  that  partnership  did  not 
at  least  begin  to  be.  There  may  have  been  an  actual  partner- 
ship for  a  time,  and  then  one  of  the  partners  refuse  to  consider 
himself  partner  under  the  articles,  or  to  allow  them  any  force, 
to  the  great  detriment  of  the  other.  In  any  such  case,  there 
can  be  no  reason  why  a  court  of  equity  should  not  decree  a 
partnership.  And  we  apprehend  that  a  partnership  might  thus 
be  formed  by  order  of  court,  to  be  dissolved  at  once  at  the 
pleasure  of  one  party,  but  yet  substantial  justice  be  done  by 
clothing  the  parties  with  the  obligations  and  the  rights  which 
result  from  a  partnership,  however  brief  it  may  be.  (o)     If 

(m)  See  cases  cited  in  last  note  ;  3  Atk.  383,  and  Anon.,  2  Ves.  Sen. 
Anonymous,  1  Madd.  Cii.  (Sd  ed.)  525.  629,  no  difference,  in  tiiis  particular. 
See  Van  Sandan  v.  Moore,  1  Russ.  441,  between  partnerships  for  a  term  and 
463;  Birchett  v.  Boiling,  5  Munf  442;  those  without  limitation  of  time,  seems 
England  v.  Curling,  8  Beav.  129 ;  Man-  to  liave  been  adverted  to. 
ning  V.  Wadsworth,  4  Md.  59.  (o)  Mr.  Swanston,  in  his  note  to 
Though  the  court  decree  the  specific  Crawshay  v.  Maule,  1  Swanst.  513, 
performance  of  an  agreement  to  let  alluding  to  the  distinction  taken  be- 
the  plaintiff  into  a  trade,  it  seems,  it  twcen  executory  contracts  of  partner- 
will  not  direct  an  account  of  the  profits  ships  to  last  for  a  term,  and  those 
from  the  time  the  plaintiff  ought  to  without  such  limitation  of  time,  with 
have  been  admitted ;  his  remedy,  in  reference  to  their  being  specifically 
that  respect,  being  complete  at  law.  enforced,  remarks :  "  This  distinction, 
Anon.,  2  Ves.  Sen.  630.  Sed  qu.  however,  must  be  received,  it  is  pre- 
(n)  In  Hercy  v.  Birch,  9  Ves.  357  ;  sumed,  not  without  qualification.  In 
2  Hov.  Supp.  174,  Lord  Eldon  refused  many  such  cases,  thougii  the  partner- 
to  enforce  specifically  an  agreement  ship  could  be  immediately  dissolved, 
for  a  partnership  without  limitation  of  the  performance  of  the  agreement 
time,  observing:  "No  one  ever  heard  (like  the  execution  of  a  lease  after  the 
of  this  court  executing  an  agree-  expiration  of  the  term,  see  Wilkinson 
ment  for  a  partnership,  when  the  par-  v.  Torkington,  2  You.  &  Col.  726) 
ties  might  dissolve  it  immediately  might  be  important,  as  investing  the 
afterwards."  It  has  been  said,  that  party  with  tlie  legal  rights  for  which 
Lord  Eldon  was  not  quite  satisfied  he  had  contracted."  See  Downham 
with  this  decision.  1  Madd.  Ch.  (3d  v.  Matthews,  cited  in  1  Ves.  Sen.  497, 
ed.)  525,  n.   1.      In   Buxton  v.  Lister,  499.     [If  justice  require  it,  under  spe- 


260  THE    LAW    OF   PARTNERSHIP.  [CH.  VII. 

*  237  it  were  necessary,  *  we  know  not  why  equity  may  not 
decree  a  partnership  as  of  a  past  day,  if  justice  required 
this,  by  the  application  of  that  familiar  principle,  that  equity 
will  consider  that  as  actually  done  which  certainly  ought  to 
have  been  done. 

Another  general  objection  to  a  decree  that  certain  persons 
should  become  partners  is,  that  it  can  seldom  be  necessary. 
Damages  may  be  recovered  at  law  for  a  breach  of  the  contract, 
in  an  action  of  assumpsit,  which  is  itself  a  kind  of  equitable  ac- 
tion ;  and,  generally,  these  may  be  estimated  on  principles  which 
would  make  them  fully  compensative.  Indeed,  they  may  be 
recovered  at  law  in  some  cases  in  which  equity  would  refuse 
a  specific  performance,  on  the  ground  that  it  would  be  ineffec- 
tive and  useless,  (p)  It  must  be  remembered,  however,  that 
this  action  is  not  maintainable  at  law,  unless  the  particulars  of 
the  agreement  on  the  one  hand,  and  of  the  breach  on  the  other, 
can  be  distinctly  proved,  (g)  If  the  agreement  is  under  seal, 
then  covenant  will  lie.  'Here,  however,  as  appears  by  the  only 
case  of  the  kind  that  we  are  aware  of,  the  question  of  priority 
of  covenants  and  priority  of  breach  may  be  very  material. 
For  if  the  plaintiff  has  failed  to  do  something  obligatory  on  his 
part  and  tending  towards  the  partnership,  this  may  furnish  an 
adequate  excuse  to  the  defendant,  (r) 

3.    Of  Waiver  of  Provisions  in  the  Articles. 

*  238        *  The  provisions  agreed  upon  by  the  parties,  whether 

orally  or  in  writing,  may  be  waived  by  them,  or  modified 

in  any  way  they  please.     And  courts  of  equity  will  sometimes 

imply  such  waiver  or  modification  from  facts.     Thus,  it  is  an 

cial  circumstances,  the  court  will  de-  {q)  Figes  v.  Cutler,  3   Stark.  139. 

cree   a   specific    performance,    tliough  Compare  this  with  M'Neil  v.   Reid,  9 

generally  not.      Scott  v.  Raynient,  L.  Bing.  68.    See  Gale  v.  Leckie,  2  Stark. 

R.  7  Eq.  112.]  107,    108;    Vance    v.   Blair,    18   Ohio, 

A   court  of  equity,  in  some  cases,  532.     It   is   a    sufficient   consideration 

may  inhibit  a  partner  from  dissolving  for  a  promise  to  admit  a  stranger  into 

the  firm.     Chavany   v.  Van    Sommer,  a  firm,  that  the  latter  will  become  a 

cited  in  3  Wood.  Lee.  416,  n. ;  also,  in  partner.     Byrd  v.  Fo.x,  8  Mo.  574. 
Crawshay   v.   Maule,    1    Swanst.    511,  (r)  Walker  v.  Harris,  1   Anst.   245. 

note;  Ramsbottom  1-.  Parker, 6Madd.5.  See  1   Wms.  Saund.  320,  n.  4;  Glover 

(p)  M'Xeil  V.   Reid,  9   Bing.  68,  2  v.   Tuck,  24  Wend.    153;    Morrow    v. 

Moore  &  S.  89.    See  Manning  v.  Wads-  Saunders,  1  Brod.  &  B.  318. 
worth,  4  Md.  59. 


CH.  VII.]       RIGHTS    OF    PARTNERS    BETWEEN    THEMSELVES.  261 

established  rule  that  provisions  in  the  articles  which  the  part- 
ners have  never  acted  upon,  but,  for  a  sufficiently  long  time, 
have  wholly  disregarded,  will  be  considered  as  expunged.  (5) 
If  there  is  only  silence  and  neglect  from  which  to  infer  this, 
they  must  be  long  continued,  and  such  as  not  to  be  fairly  open 
to  any  other  explanation  than  that  the  parties  understood  the 
provision  thus  disregarded  to  have  no  force.  If  the  silence  or 
non-observance  be  brief,  but  these  are  strengthened  by  acts  of 
the  partners  opposite  in  their  nature  and  effect  to  those  pro- 
visions, and  not  to  be  reconciled  with  any  regard  to  them,  the 
same  inference  will  be  made,  (i)  It  is  equally  true  that  no 
one  partner  has  a  right  to  violate  the  provisions,  and  that  all 
the  partners  together  have  a  right  to  annul  or  amend  tliem. 
And  if  one  partner  violate  them  and  the  rest  follow  his  exam- 
ple, or,  without  doing  the  same  thing,  approve  by  word  or  act 
of  what  he  does,  or,  perhaps,  if  they  do  not  oppose  it,  here 
would  be  evidence  of  a  new  agreement. 

On   one  point  the  courts    seem   to  construe    articles   quite 
strictly ;    and   that  is  in  relation  to  any  material  change  or 
enlargement  of  the  business  ;  for  this  they  require  an 
unanimous   consent.     We  *  apprehend   that    no  courts    *  239 
would  now  give  this  power  to  a  mere  majority,  (w) 

4.    Of  Reneical  of  a  Partnership. 

It  happens  quite   often  that  a  partnership,  limited  by  the 
articles  to  a  certain  time,  continues  after  that  time,  and  is  car- 

(s)  Partners,  if  they  please,  may,  this,  that  although  partners  enter  into 
in  the  course  of  the  partnership,  come  a  written  agreement,  stating  the  terms 
to  any  new  arrangement,  for  the  pur-  upon  which  the  joint  concern  is  to  be 
pose  of  having  some  addition  or  alter-  carried  on,  yet,  if  there  be  a  long 
ation  in  the  terms  on  wliicii  they  carry  course  of  dealing,  or  a  course  of  dealing 
on  business,  provided  those  additions  not  long,  but  still  so  long  as  to  demon- 
or  alterations  be  made  with  the  unani-  strate  that  they  have  all  agreed  to 
mous  concurrence  of  all  the  partners,  change  the  terms  of  the  original  writ- 
England  V.  Curling,  8  Beav.  129,  132.  ten  agreement,  they  may  be  held  to 
See  Solomon  v.  Solomon,  2  Kelley,  18 ;  have  changed  those  terms  by  conduct." 
Lord  Eldon  in  Jackson  v.  Sedgwick,  1  Jackson  r.  Sedgwick,  1  Svvanst.  460, 
Swanst.  460,  469  ;  Boyd  v.  Mynatt,  4  469.  See  McGraw  v.  Pulling,  1  Free- 
Ala.  79.  See  Smith  v.  Chandos,  Bar-  man  Ch.  357,  371. 
nard.  Ch.  419 ;  ante,  p.  *  233,  note  ((').  (u)  Natusch  v.  Irving,  Gow  on  Part. 

(t)  In  Const  V.  Harris,  Turner  &  II.  App.  308 ;  ante,  p.  *  197.     Respecting 

623,  Lord  Eldon   said:    "In  ordinary  the  rights  of  a  majority,  see  a;i<e,  p. 

partnerships,  nothing  is  more  clear  than  *  218,  et  seq. 


262  THE   LAW    OF    PARTNERSHIP.  [CH.  VII. 

ried  on  by  the  same  parties  in  much  the  same  way,  with  no 
new  articles,  and  no  formal  notice  or  renewal  of  the  old  ones. 
The  question  may  then  arise,  as  to  the  effect  of  the  articles 
upon  the  new  firm  under  these  circumstances.  We  should  say 
that  the  answer  must  depend  mainly  on  the  conduct  of  the 
parties.  If  they  go  on  precisely  as  before,  or  in  such  a  way  as 
to  indicate  no  intentional  departure  from  such  a  course,  the 
former  articles  would  have  much  influence  in  determining  the 
terms  of  their  present  association,  and  probably  their  provisions 
would  be  held  to  be  those  of  the  present  partnership,  except- 
ing such,  if  any  there  were,  as  were  plainly  ina))plicable  to  the 
present  state  of  things,  (v)  On  the  other  hand,  if  the  firm 
varied  or  departed  from  these  provisions,  or  appeared  to  adopt 
new  ones,  they  would  be  considered  as  making,  so  far,  a  different 
bargain  from  the  old  ones.  In  every  case,  the  former  articles 
could  be  considered  as  a  guide  only  to  the  meaning  of  the  par- 
ties, and  not  as  obligatory  upon  either  of  them,  unless  some 
one   of  the   partners  had  acted   so  far   on   the    presumption 

that  the  articles  remained  in  force,  with  the  knowledge 
*  240    *  and  implied  assent  of  the  other  partner,  that  those 

articles  could  not  be  set  aside  without  doing  him  a 
wrong.  It  should  be  noticed,  however,  that  a  partnership, 
silently  continued  upon  old  articles,  is  dissolvable  at  the  will 
of  either  partner,  although  those  articles  contain  a  distinct 
limitation  of  time,  (if)  The  renewal  of  this  limitation  of  time 
would  seldom  be  presumed  from  acts,  or  sustained  by  the  law 

(v)  "  We  know,  that  after  the  ex-  limitation,  in  two  years;  and  had  force 
piration  of  the  time  at  first  agreed  no  longer,  unless  the  parties  elected  to 
upon,  partnerships  frequently  continue  continue  the  partnership  on  the  same 
without  a  new  agreement;  and  the  terms.  Tliat  is  matter  of  evidence 
effect  of  that  is,  that  the  partners,  upon  the  whole  facts.  The  natural 
after  the  expiration  of  the  partnership  presumption  is,  that,  as  the  partner- 
term,  continuing  to  carry  on  the  trade  ship  was  continued  in  fact,  it  was  con- 
witliout  a  new  deed,  all  the  old  cove-  tinned  on  tlie  same  terms  as  hefore, 
nants  are  infused  into  the  new  series  unless  that  presumption  is  rehutted  by 
of  transactions."  Per  Sir  Anthony  the  other  circumstances  in  the  case. 
Hart,  in  Booth  v.  Parks,  1  MoUoy,  4G6  ;  Tliere  is  no  written  agreement  respect- 
Crawshay  v.  Collins,  15  Ves.  218,  228  ;  ing  the  extension  of  tlie  copartnership, 
Bradley  v.  Chamherlin,  16  Vt.  613;  and  therefore  it  is  open  for  inquiry 
Mifflin  V.  Smith,  17  S.  &  R.  165.  In  upon  all  the  evidence." 
"United  States  Bank  v.  Binney,  5  Ma-  (w)  Booth  ;;.  Parks,  1  Molloy,  466; 
son,  176,  185,  Mr.  Justice  Story,  stat-  Featherstonaugh  v.  Fenwick,  17  Ves. 
ing  the  doctrine  on  this  point,  said  :  298. 
"  Tlie  articles   expired   by  their  own 


CH.  VII.]       RIGHTS    OP   PARTNERS   BETWEEN  THEMSELVES. 


263 


as  a  part  of  a  new  bargain,  on  any  thing  less  than  proof  that 
the  parties  had  expressly  so  agreed,  (x^ 

The  articles  sometimes  provide  for  a  continuance  of  the  part- 
nership after  the  death  of  one  or  more  partners.  This  is  much 
more  common  in  England  than  here  ;  but  is  not  unknown 
here,  and  such  provisions  may  give  rise  to  difficult  questions. 
These,  however,  we  shall  consider  when  we  treat  of  dissolution 
by  the  death  of  a  partner. 


5.    Of  Provisions  for  Advances  hy  a  Partner. 

Tlie  articles  of  partnership  not  unfrequently  contain  agree- 
ments that  one  or  all  of  the  partners  should  pay  into  the  capital 
stock  of  the  firm  certain  moneys,  at  certain  times  and  on  certain 
terms.  Any  partner  is  considered,  as  to  any  such  obligation, 
merely  as  a  debtor  to  the  firm  ;  and  his  rights  and  his  responsi- 
bilities are  the  same  with  those  of  any  other  debtor,  (y)     This 


(x)  The  original  articles  of  a  co- 
partnership provided  that  it  should 
last  seven  years.  At  the  end  of  that 
time,  the  defendants,  who  resided  in 
this  country,  transmitted  to  tlie  com- 
plainant in  London  (wiiere  he  resided) 
the  partnersliip  articles,  with  an  in- 
dorsement of  a  renewal  of  them  for 
another  term  of  seven  years,  to  com- 
mence from  the  expiration  of  the  last. 
The  complainant,  in  liis  answer  to  the 
defendants'  letter,  enclosing  the  re- 
newal, said  that  lie  would  agree  to  it 
if  he  were  relieved  from  his  difficulties 
on  the  arrival  of  the  sliip  "  Carolina." 
The  "  Carolina  "  did  arrive,  and  both 
complainant  and  defendants  went  on 
with  the  business  in  the  same  manner 
as  had  been  done  while  the  original 
articles  were  in  force.  But  the  com- 
plainant never  made  any  formal  re- 
newal of  the  articles.  The  defendants 
therefore  contended  that  the  partner- 
ship which  continued  was  not  for 
seven  years,  but  was  determinable  at 
will.  The  court  held  otherwise,  and 
considered  that  the  complainant's  re- 
sumption of  his  duties  as  a  partner  on 
the  original  terms  was  a  substantial 
renewal  of  the  articles  on  his  part, 
and  was  such  an  assent  to  the  written 


renewal  of  tliem  by  the  defendants 
as  would  be  binding  on  him,  if  the 
defendants  had  insisted  upon  it.  Dick- 
inson V.  Bold,  3  Desaus.  501. 

{y)  A  partner,  by  failing  to  con- 
tribute his  share  of  the  partnership 
fund,  does  not  in  ordinary  cases  forfeit 
the  interest  which  he  already  has  in 
the  firm,  especially  if  no  extraordinary 
emergency  require  the  payment.  Pratt 
V.  Oliver,  3  McLean,  27.  See  Patter- 
son V.  Ware,  10  Ala.  444 ;  Turnipseed 
V.  Goodwin,  9  id.  372.  And  one  part- 
ner, after  accepting  the  money  and 
services  of  another,  shall  not,  when 
called  upon  to  carry  out  the  partner- 
ship, be  permitted  to  deny  that  any 
joint  interest  ever  existed,  because 
the  other  partner  has  failed  to  furnish 
as  much  money  for  partnership  pur- 
poses as  he  agreed  to.  Stein  v. 
Robertson,  30  Ala.  286.  The  means 
which  partners  may  employ  to  en- 
force their  rights,  when  any  one  part- 
ner neglects  to  contribute  his  proper 
quota  to  the  joint  fund  and  the  launch- 
ing of  the  partnership,  will  be  more 
appropriately  considered  when  we 
treat  of  the  remedies  of  partners  be- 
tween themselves.     Post,  cli.  8,  §  2. 


264  THE   LAW    OF   PARTNERSHIP.  [CH.  VH. 

*  2-il    is  *  carried  so  far,  that,  where  two  had  agreed  to  pay 

large  sums,  through  a  considerable  period,  to  one,  in 
consideration  that  he  would  take  them  into  partnership,  and  this 
one  became  bankrupt  soon  and  before  most  of  the  sums  were 
paid,  it  was  held  that  his  assignees  were  entitled  to  those  in- 
stalments, (z)  If,  however,  a  partner  owes  money  to  the  firm, 
on  any  ground,  he  may  refuse  to  pay  it  if  the  other  partners, 
also  owing  money  to  the  firm,  refuse  to  pay.  Tiie  reason  of 
this  is  simply,  that  the  first  partner  claims  in  substance  that 
a  balance  is  due  to  him,  or  would  be  due  if  all  the  partners 
paid  the  charges  against  them,  or  that  his  debt  would  be  dimin- 
ished ;  and,  where  such  a  claim  is  made  in  good  faith,  he  cannot 
be  compelled  to  pay,  unless  they  pay.  (a) 

In  general,  where  a  sum  of  money  is  advanced  to  a  partner, 
or  a  partner  is  permitted  to  take  it  as  a  loan,  and  there  are  no 
express  terms  agreed  on,  his  profits  are  in  the  first  place  an- 
swerable ;  and,  if  they  are  insufficient,  his  share  of  the  stock 
goes  to  discharge  this  balance  ;  and,  if  that  be  insufficient,  he 
becomes  a  personal  debtor  for  the  balance.  (5) 

6.    Of  Provisio7is  as  to  the  Accounts. 

*  242        *The  articles  sometimes  contain  provisions  as  to  the 

accounts,  how  they  shall  be  kept,  or  how  settled  ;  and 
these  provisions  also  are  protected  by  law,  but  only  so  far  as 
justice  will  permit,  (c)    Thus,  it  may  be  provided  that  accounts 

(2)  Ackhurst  v.  Jackson,  1  Swanst.  became,  according  to  the  terms  of  tlie 

85,  89.     Per  The  Master  of  the  Rolls:  agreement,  £/e6(7((rn  in /jroEse?//*,  although 

"In   almost    all    partnerships,    a    loss  soLvendum  in  future.     In  equity,  as  well 

follows  the  bankruptcy  of  any  of  tlie  as  at  law,  the  contract  has  been  per- 

partners ;   a  thousand   instances   must  formed,  and  the  consideration  must  be 

have  occurred    of  loss  by  bankruptcy  paid." 

in  circumstances  similar  to  the  present,  (a)  Foster  v.  Donald,  1  Jac.  &  W. 

yet  no   precedent  is  produced   of  the  252 ;  Richardson  v.  Bank  of  England, 

interposition  of  a  court  of  equity.     The  4  Myl.  &  C.  171. 

reason  is  evident.  The  loss  is  not  a  (h)  Crawshay  i-.  Collins,  2  Russ. 
breach  of  the  contract,  but  a  contin-  325,  347,  per  Lord  Eldon. 
gency  subject  to  which  the  parties  (c)  In  the  absence  of  special  stipu- 
purchased.  The  defendants  bought  lations,  the  rule  is  that  the  accounts 
the  riglit  of  becoming  partners ;  they  must  be  taken  in  the  usual  way. 
became  partners  ;  the  partnership  Jackson  v.  Sedgwick,  1  Swanst.  469. 
ended  by  an  event  by  which  it  was.  The  duty  of  each  and  all  of  the  part- 
in  its  nature,  liable  to  be  determined,  ners  to  keep  proper  books  of  account, 
.  .  .  Upon  a  division,  the  whole  price  always  ready  for  inspection,  we  have 


CH.  VII.]       RIGHTS    OF   PARTNERS   BETWEEN   THEMSELVES. 


265 


once  settled  shall  not  be  reopened  but  for  fraud  discovered  ; 
and  yet  a  material  error,  through  gross  negligence,  would  un- 
doubtedly be  corrected  in  equity.  It  is  prudent  to  guard  settled 
accounts  from  too  easy  or  too  hasty  reconsideration  ;  and  not 
only  will  the  courts  enforce  reasonable  provisions  made  for  this 
purpose,  but  equity  would  not  permit  settled  accounts  to  be 
reopened  without  good  and  certain  cause,  even  where  there 
was  no  such  provision,  (c?)  On  the  other  hand,  if  it  be  agreed 
that  no  accounts  between  the  partners  which  have  once  been 
closed  shall  be  reopened  after  the  death  of  any  party  to  them, 
it  is  clear  that  equity  would  reopen  them  on  proof  of  fraud, 
either  by  the  deceased  partner  or  against  him.  (e')  The 
articles  *  may  also  provide  a  method  of  closing  the  ac-  *  243 
counts  and  dividing  the  property  at  dissolution.  These 
provisions,  however,  will  be  considered  when  we  speak  of  the 
dissolution  of  a  partnership. 


already  considered.  We  have  also 
seen  tliat  partners  may  waive  any  of 
the  provisions  of  the  partnership  deed, 
and  tliat  they  may  do  this  not  only 
by  express  agreement,  but  by  conduct 
in  opposition,  or  without  regard  to,  the 
articles.  Tiie  doctrine  is  as  applicable 
to  stipulations  respecting  the  joint 
accounts,  the  mode  and  time  of  bal- 
ancing them,  &c.,  as  to  any  other. 
Pettyt  V.  Janeson,  6  Madd.  146 ;  Jack- 
son I'.  Sedgwick,  1  Swanst.  460. 
[When  a  new  partnership  is  formed, 
for  the  purpose  of  transferring  property 
to  it,  so  that  it  cannot  be  attached  by 
the  creditors  of  a  former  firm,  a  part- 
ner in  the  new  firm  may  maintain  a 
bill  for  an  account,  notwithstanding  one 
of  the  objects  of  the  formation  of  the 
firm  was  to  delay,  hinder,  and  defraud 
creditors.  Harvey  v.  Varney,  98  Mass. 
118.] 

(d)  Gainsborough  i-.  Stork,  Barnard. 
312.  See  Stoughton  v.  Lynch,  2  Johns. 
Ch.  218;  Roberts  v.  Totten,  8  Eng. 
609.  If  it  be  stipulated  that  one  part- 
ner shall  make  up  and  state  the  joint 
accounts,  and  he  do  so  in  tlie  absence 
of  his  copartner,  ex  jiarte,  it  is  the  duty 
of  the  latter  to  look  into  them  within 
a  reasonable  time,  and  to  point  out  the 
errors,  if  any  exist;  or  he  will  be  con- 
sidered as  having  acquiesced  in  the 


correctness  of  tlie  accounts  as  stated 
on  the  books  of  the  firm.  In  stating 
the  accounts  of  partners,  as  between 
themselves,  the  entries  on  the  part- 
nership books,  to  which  both  parties 
have  had  access  at  the  time  when 
those  entries  were  made,  or  immedi- 
ately afterwards,  are  to  be  taken, 
prima  facie,  as  correct ;  subject,  how- 
ever, to  the  right  of  either  party  to 
show  a  mistake  or  error  in  the  charge 
or  credit.  Heartt  i-.  Corning,  3  Paige, 
566,  572.  And  see  Lynch  v.  Bitting,  6 
Jones  Eq.  238.     Posf,\.  *  514. 

(e)  By  articles  of  partnership,  it 
was  agreed  that  just  and  true  accounts 
should  be  made  out  half-yearly,  and 
signed  by  the  partners  ;  and  that  such 
accounts  should  not  afterwards  be 
called  in  question,  except  for  errors 
discovered  in  the  lifetime  of  all  the 
partners.  The  accounts  were  made 
out  by  one  of  the  partners ;  and,  after 
the  death  of  two  of  the  other  partners, 
it  was  discovered  that  the  accounts 
were  fraudulent.  Held,  by  Sir  Lan- 
celot Shadwell,  Vice-Chancellor,  tiiat 
the  fourth  partner  was  entitled  to  have 
the  accounts  of  the  partnership  taken 
from  the  date  of  the  articles.  Oldaker 
I'.  Lavender,  6  Sim.  239.  See  North 
British  Bank  i;.  Collins,  28  Eng.  L.  & 
Eq.  7. 


266 


THE   LAW   OF   PARTNERSHIP. 


[CH.  VII. 


7.    Provisions  for  giving   Care  and  Skill  and  Time  to  the 
Partnership. 

The  general  law  of  partnership  requires  of  each  partner,  as 
we  have  already  seen,  due  devotion  of  his  time  and  care  to  the 
concerns  of  the  firm,  and  entire  absence  from  all  business  on 
his  own  account  which  can  interfere  with  this  duty  to  the 
firm.  (/)  Sometimes  the  articles  of  partnership  contain  pro- 
visions on  this  point ;  (^)  and  they  may  have  the  effect  of 
enlarging  the  power  of  a  partner  to  engage  in  other  and  in- 
dependent employments.  For  if  they  provide  that  no  partner 
shall  engage  in  this  or  that  business,  specifying  them  particu- 
larly, the  maxim,  that  the  expression  of  one  thing  excludes 
what  is  not  expressed,  might  leave  each  partner  at  liberty  to  en- 
gage in  other  branches  of  business,  not  enumerated. (A)  But  this 


(/)  [American  Bank-Note  Co.  v. 
Edson,  56  Barb.  (N.  Y.)  84.]  Where 
tliere  are  no  covenants,  a  man  may 
engage  in  as  many  partnersliips  as  he 
pleases,  provided  he  does  not  violate 
the  principle  stated  in  the  text.  Cald- 
well V.  Lieber,  7  Paige,  483,  494,  per 
Willard,  V.  C.  [If  justice  require  it, 
one  partner  will  be  enjoined  from 
engaging  in  any  business  prejudicial 
to  the  firm,  whether  there  be  a  cove- 
nant against  it  or  not.  Marshall  v. 
Johnson,  33  Ga.  500.]  The  right  of  a 
partner  who  withdraws  from  the  tirm 
to  engage  in  the  same  business  which 
the  remaining  partners  are  prosecuting, 
or  in  any  rival  or  hostile  business,  will 
be  considered  when  we  come  to  treat 
of  the  consequences  of  dissolution,  and 
therein  of  retiring  partners. 

(g)  "In  partnership  engagements, 
a  covenant,  that  the  partners  shall  not 
carry  on  for  their  private  benefit  that 
particular  commercial  concern  in  which 
they  are  jointly  engaged,  is  not  only 
permitted,  but  is  the  constant  course." 
Morris  r.  Colman,  18  Vcs.  438  ;  Uni- 
versities of  Oxford  and  Cambridge  v. 
Richardson,  6  id.  706.  And,  in  such 
case,  if  one  of  the  partners  violate  this 
covenant,  the  rest  may  join  in  suing 
him  for  the  breach  ;  he  being  in  that 


respect  several  from  them  all,  and  they 
all  joint  against  him.  Thimblethorp 
V.  Hardesty,  7  Mod.  116 ;  Eccleston 
V.  Clipsham,  1  Saund.  153 ;  Spencer  v. 
Durant,  Comb.  115  ;  Saunders  v. 
Johnson,  Skin.  401. 

[h)  In  Glassington  v.  Thwaites,  1 
Sim.  &  S.  132,  Sir  John  Leach  said  : 
"  If  some  of  the  proprietors  of  a  morn- 
ing paper  are  also  the  proprietors  of 
an  evening  paper,  they  may  have  a 
stronger  interest  to  promote  the  suc- 
cess of  the  evening  paper  than  of  the 
morning  paper,  and  a  strong  temptation 
to  use  the  information  obtained  at  the 
expense  of  the  morning  paper  for  the 
benefit  of  the  evening  paper.  This 
temptation  forms  a  powerful  objection 
in  all  cases  to  the  partner  in  the  con- 
cern of  one  newspaper  being  permitted 
to  be  a  partner  in  the  concern  of  any 
other  newspaper.  But  it  is  an  objec- 
tion founded  on  the  principle  of  policy 
and  discretion,  against  which  parties 
may  protect  themselves  by  their  con- 
tracts ;  and,  accordingly,  it  is  a  com- 
mon covenant,  in  such  partnership 
articles,  that  no  partner  shall  be  the 
proprietor  of  any  other  newspaper. 
In  the  present  case,  there  is  actually 
a  covenant  that  the  proprietors  will 
not  be  concerned  in  any  other  morning 


CH.  VII.]       RIGHTS   OP   PARTNERS   BETWEEN   THEMSELVES.  267 

would  not  1)6  pressed  too  far.  No  such  *  maxim  or  prin-  *  244 
ciple  would  countervail  the  general  principle  requiring 
good  faith  and  mutual  co-operation  between  the  partners.  And, 
therefore,  it  would  not  permit  a  partner  to  injure  his  firm,  for 
his  own  benefit,  by  allowing  any  mere  implication  to  give  him 
power  to  do  so.  (i)  But,  on  the  other  hand,  any  agreement 
respecting  the  business  would  be  extended  by  construction 
far  enough  to  give  to  partners  the  protection  it  was  intended  to 
afford.  (/ )  It  seems,  however,  that  an  agreement  not  to  engage 
in  the  same  business,  on  the  partner's  own  account,  does  not 
prevent  him  from  canvassing  for  future  business  when  he  shall 
be  by  himself.  (A;)  But  if  a  partner,  under  such  agreement, 
violate  it  by  engaging  in  independent  business,  equity  may 
require  of  him  to  admit  his  partners  as  partners  also  in  that 
business.  (/)  If,  however,  a  partner  under  such  agreement, 
with  the  consent  of  his  partners,  enters  into  or  forms  a  new 
copartnership  for  the  same  business,  this  will  not  make  the 
partners  of  the  new  firm  copartners  in  the  old  firm.  (??«) 

8.    Of  Provisions  for  a  Dissolution. 

Equity  has  in  general  full  power  to  decree  dissolution,  and  to 
remove  a  copartner  for  sufficient  reasons ;  but,  if  this  subject 
enters  into  the  articles,  all  provisions  respecting  it  —  as  to  the 
cause,  the  time,  the  manner,  and  consequences  —  will  be 
respected,  so  far  as  *  they  do  not  conflict  with  justice ;  *  245 
and  an  equitable  construction  will  be  given  to  any  Ian- 
paper,  which,  by  implication,  affords  party  should  be  at  liberty  to  continue 
the  conclusion  that  it  was  the  intention  the  trade  on  his  own  account,"  it  was 
of  the  parties  tiiat  they  might  engage  held,  that  the  party  giving  notice  could 
in  the  concern  of  any  evening  paper."  not  carry  on  the  trade  elsewhere  on 
See  also  Caldwell  v.  Lieber,  7  Paige,  his  own  account ;  but  that  he  must 
483,  496.  either    continiie    the    partnership,    or 

(i)  This   is    well  illustrated  by  the     give  up  such  trade  altogether.    Cooper 
case  from  which  we  have  just  quoted,     v.  Watlington,  2  Chitty,  451,  3  Doug. 
Glassington  v.  Thwaites,  1  Sim.  &  S.     413. 
124.  (k)  Coates  v.  Coates,  6  Madd.  287. 

{j)  Where   two   entered   into   part-  (/)  Somerville    n.  Mackay,  16  Ves. 

nership  for  eleven  years,  in  the  trade  382.  See  Caldwell  v.  Lieber,  7  Paige, 
of  brewers,  and  agreed  that,  "if  during  482  ;  Moritz  v.  Peebles,  4  E.  D.  Smith, 
the  term  either  should  desire  to  quit     135. 

the    said   art   or  mystery,   he   should  (m)  Bosanquet   v.  Wray,  6  Taunt, 

give  six  months'  notice  of  his  inten-     597. 
tion,  at  the  end  of  which   the   other 


268 


THE    LAW    OP    PARTNERSHIP. 


[CH.  VII. 


guage  on  tlie  subject,  (w)    Thus,  if  insolvency  be  named 
*  246    as  a  cause  for  which  a  partner  may  be  removed,  *  this 


(n)  A  recent  case  decided  in  the 
Englisli  Court  of  Chancery,  by  the 
Vice-Ciiancellor,  Sir  William  P.  Wood, 
exemplifies  the  view  in  whicli  courts 
of  equity  refjard  clauses  of  expulsion 
in  deeds  of  copartnership,  and  the 
manner  in  which  such  provisions  are 
construed,  and  their  operation  con- 
trolled, so  as  to  prevent  their  working 
injustice  or  oppression.  Blisset  v. 
Daniel,  11  Hare,  493,  25  Eng.  L.  & 
Eq.  105.  The  firm  of  John  Freeman 
&  Copper  Company  had  carried  on  a 
very  large  business  for  more  than  a 
century,  when,  in  1844,  the  tlien  part- 
ners, including  the  plaintiff,  Blisset, 
and  six  other  persons,  executed  new 
articles,  though  in  the  form  which  had 
always  been  used  by  the  ancient  firm. 
By  these  articles,  the  firm  was  to  con- 
tinue fourteen  years  from  the  30th 
June,  1843.  The  joint  efl^ects  were 
estimated  at  72,000/.,  the  whole  capital 
being  put  at  112,500/.,  divided  into 
twenty-five  shares  of  4,500/.  each,  only 
sixteen  of  which  (equal  to  72,000/.) 
were  to  be  considered  as  occupied,  the 
other  nine  shares  being  held  in  sus- 
pense for  any  persons  who  miglit 
thereafter  be  admitted  by  partners 
holding  two-thirds  of  the  occupied 
shares.  With  respect  to  the  accounts 
of  the  firm,  the  articles  provided  that, 
within  sixty  days  after  the  30th  of 
June  in  each  year,  all  the  accounts  of 
the  partnership,  both  with  those  with 
whom  they  dealt  and  with  each  and 
every  one  of  the  partners,  should  be 
settled  and  brought  to  a  balance,  so 
that  the  true  state  and  conchtion  of 
the  partnership  or  joint  trade,  and  the 
respective  shares  and  interests  of  the 
parties  therein,  might  clearly  and 
plainly  appear.  Such  settlement,  when 
made  and  signed  by  the  partners,  to 
be  binding,  unless  some  error  to  the 
extent  of  1,000/.  should  be  detected 
within  six  months.  If  any  partner 
refused  or  neglected  for  three  months 
to  sign  the  accounts,  any  other  partner 
might    sign    for    him.      If  a    partner 


retired  (as  he  might,  by  the  consent 
of  a  majority  of  his  copartners),  the 
remaim'ng  partners  to  take  his  share  at 
the  last  annual  estimate. 

Then  followed  the  clause  of  expul- 
sion, which  luid  always  been  inserted 
in  the  various  partnership  deeds,  and 
which  it  was  now  attempted  to  enforce 
against  the  present  plaintiff:  "  That  it 
shall  be  lawful  for  the  holders  of  two- 
thirds  or  more  of  the  shares  for  tiie 
time  being,  from  time  to  time  to  expel 
any  partner,  by  giving  to  or  leaving 
for  him,  at  his  then  or  last  place  of 
abode  in  England  or  Wales,  a  notice 
in  writing,  under  their  hands,  of  such 
expulsion ;  which,  in  that  event,  shall 
operate  from  and  at  the  time  of  the 
giving  or  leaving  such  notice,  and 
shall  be  in  the  following  form,  namely  : 
'  We  do  hereby  give  you  notice  that 
you  are  expelled  from  the  partnership 
carried  on  under  the  firm  of  John 
PVeeman  &  Copper  Company.  Wit- 
ness our  hands  this  day  of 

in  the  year  of  our  Lord  18 — .'  "  No- 
tice of  the  dissolution  of  the  firm  as  to 
the  expelled  partner,  drawn  in  a  pre- 
scribed manner,  and  signed  by  the 
remaining  partners,  was  to  be  pub- 
lished in  certain  papers.  It  was  then 
farther  provided,  that,  upon  the  bank- 
ruptcy, insolvency,  or  expulsion  of  a 
partner,  the  same  arrangement  should 
be  adopted  for  ascertaining  the  amount 
of  his  share,  and  for  the  payment 
thereof,  &c.,  as  would  have  been  ap- 
plicable in  the  event  of  his  decease. 
But,  though  three-fourths  of  the  part- 
ners might  dissolve  the  firm,  the  re- 
tirement, death,  bankruptcy,  insol- 
vency, or  expulsion  of  any  one  or 
more  of  the  partners,  should  not  have 
this  effect  as  to  the  remaining  part- 
ners ;  but  the  shares  of  the  partners 
deceased,  expelled,  &c.,  should  be  dis- 
posed of  at  the  pleasure  of  a  majority 
of  the  holder  of  shares. 

The  above  are  all  of  the  articles 
between  the  parties  bearing  directly 
on  the  present  question.     Under  them, 


CH.  VII.]      RIGHTS   OF   PARTNERS   BETWEEN   THEMSELVES. 


269 


will  be  held  to  mean  any  actual  inability  to  pay  one's  debts, 
through  inadequacy  of  means,  and  not  be  limited  to  a  formal 


the  joint  business  was  harmoniously 
conducted  lor  some  years.  Various 
changes  in  tlie  partnership  took  place. 
Two  of  the  partners  died,  and  their 
shares  were  taken  by  the  survivors, 
according  to  the  provisions  of  the 
deed.  At  a  meeting  of  the  then  part- 
ners, on  the  2bth  August,  1850, 
Vaughan,  one  of  the  defendants,  and 
the  manager  of  the  joint  business, 
proposed  that  his  son,  who  had  just 
come  of  age  and  been  admitted  as  a 
partner  for  one  share,  should  be  joined 
with  him  as  assistant  managing  part- 
ner. The  plaintiff  objected,  and  the 
plaintiff  lett  the  meeting  without  any 
thing  being  fixed.  Vaughan  com- 
plained much  of  the  conduct  of  the 
plaintiff,  said  that  either  the  plaintiff 
must  leave  the  concern,  or  he  himself 
would,  and  pointed  out  to  the  other 
partners  the  long-forgotten  clause  of 
expulsion.  But  nothing  of  this  was 
communicated  to  the  plaintiff;  and  on 
the  2yih  of  August,  at  their  usual 
meeting,  all  the  partners  signed  the 
balance-sheet  of  the  oUth  June  then 
last.  As  soon  as  this  had  been  done, 
the  resolution  of  Vaughan  was  an- 
nounced to  the  plaintiff;  but,  even  then, 
nothing  was  said  to  him  about  acting 
upon  the  clause  of  expulsion.  Un  the 
evening  of  that  day,  however,  the 
plaintiff  received  a  notice  that  he  was 
expelled  from  the  firm,  drawn  accord- 
ing to  the  terms  of  the  partnership 
deed ;  and  the  prescribed  notice  of  dis- 
solution was,  as  far  as  practicable, 
published  in  the  specified  papers. 
The  plaintiff,  however,  refused  to 
sign  the  notice  of  dissolution.  It 
farther  appeared  that  none  of  the 
partners,  except  Vaughan,  desired 
their  connection  with  the  plaintiff 
to  cease,  and  that  they  had  been 
induced  to  sign  the  notices  of  expul- 
sion and  dissolution  by  the  suggestions 
and  arguments  of  Vaughan,  and  his 
threats  to  leave  the  management  of 
the  business  if  they  did  not. 

Upon  these  facts,  the  Vice-Chancel- 


lor  said  that,  among  other  questions, 
this  arose,  viz.:  Whether  the  power 
of  expulsion,  in  the  articles  of  partner- 
ship, could  be  exercised,  without  any 
cause  assigned,  by  partners  holding 
two-thirds  of  the  occupied  shares,  by 
their  signing  a  note  in  the  form  pre- 
scribed by  tlie  articles,  without  any 
previous  meeting  in  committee  with 
each  other.  And  it  was  htld,  that  no 
previous  meeting  of  the  partners  was 
necessary,  and  that  no  cause  for  giving 
the  notice  of  expulsion  was  necessary 
to  be  assigned  or  established. 

The  court  then  considered  the  ques- 
tion, whether,  assuming  this  power  of 
expulsion  to  exist,  it  had  been  so  ex- 
ercised that  the  court  would  give 
eflect  to  it,  and  declare  that  the  plain- 
titt'  had  ceased  to  be  a  partner.  The 
Vice-Chancellor  said,  that  all  the  part- 
nership stipulations  must  rest  upon  a 
basis  of  good  faith  ;  that  the  principles 
of  good  faith,  as  applied  to  partnership, 
had  settled  that  a  partnership  cannot 
be  dissolved  by  any  partner  for  his 
own  benefit ;  that,  therefore,  the  literal 
construction  of  the  present  articles 
could  not,  in  all  cases,  be  enforced ; 
that  the  power  of  expulsion,  given  by 
the  articles  in  the  present  suit,  to  two- 
thirds  of  the  partners,  was  never 
created  with  the  view  that  it  might  be 
exercised  by  them  for  their  own  pri- 
vate benefit ;  that  it  was  inserted  in 
the  deed  to  be  used,  not  for  the  benefit 
of  the  two-tlnrds  exercising  the  power, 
but  on  behalf  of  the  whole  partnership. 
Applying  these  principles  to  the  case 
at  bar,  his  Honor  held,  that,  consider- 
ing the  concealment  from  tlie  plaintiff 
of  any  intention  on  the  part  of  the 
partners  to  act  on  the  clause  of  expul- 
sion until  after  he  had  signed  the 
annual  balance-sheet,  and  in  view  of 
the  fact  that  Vaughan  had  procured 
the  concurrence  of  the  other  partners 
to  the  expulsion,  for  his  own  benefit, 
and  by  the  use  of  threats,  and  by  the 
undue  exercise,  in  other  ways,  of  his 
influence  upon  the  mhids  of  his  copart- 


270 


THE   LAW   OF    PARTNERSHIP. 


[CH.  VII. 


*  247  *  insolvency  under  the  statute,  (o)  In  general,  how- 
ever, it  would  be  held,  that  a  partner  should  not  be 
liable  to  removal  for  the  first  steps  towards,  or  imperfect  doing 
of,  an  act  which  it  is  agreed  shall  give  the  right  of  removal,  but 
only  for  its  completion,  (^j*) 

9,  Of  Provisions  for  the  Determination  of  Differences  by  Ar- 
bitration ;  for  the  Powers  of  a  Majority  ;  or  for  Division  of 
Profits. 

Not  unfrequently,  articles  of  partnership  contain  a  clause, 
that  all  disputes  between  the  partners,  or  all  questions  arising 
at  dissolution,  or  certain  other  questions,  shall  be  submitted 
to  arbitration,  {q)  But  the  same  rule  will  doubtless  be  ap- 
plied to  this  provision  in  the  articles  as  to  a  similar  one  in 
policies  of  insurance,  or  indeed  any  other  instrument.  Upon 
this  subject,  the  law  has  changed,  somewhat  suddenly,  but 
decidedly,  in  England,  both  by  statute  (r)  and  by  adjudica- 


ners,  there  being  no  proof  of  any  mis- 
conduct on  tlie  part  of  the  plaintiff,  the 
power  of  expulsion  given  by  the  arti- 
cles had  not,  in  the  present  instance, 
been  exercised  bond  fide.  See,  also, 
as  an  interesting  case  of  the  expulsion 
of  a  partner,  under  provisions  in  the 
articles  of  copartnership,  Patterson  v. 
Silliman,  28  Penn.  St.  ^04. 

(o)  Parker  v.  Gossage,  2  C,  M.  & 
R.  617 ;  Biddlecombe  v.  Bond,  4  Ad. 
&  El.  332. 

(p)  By  articles  of  copartnership,  it 
was  provided,  that  it  should  be  lawful 
for  tiie  partners  to  dissolve  the  part- 
nership as  to  any  partner  who  should 
make  any  mortgage,  pledge,  sale,  as- 
signment, or  other  disposition  of  his 
share  of  the  partnership  stock  and  ef- 
fects, or  who  should  become  bankrupt 
or  insolvent,  or  should  permit  any  part 
of  the  partnership  property  to  be  taken 
in  execution  for  his  separate  debt. 
Held,  that  a  partner  was  not  debarred, 
by  the  said  articles,  from  giving  a 
warrant  of  attorne}',  and  that  it  was 
only  in  case  it  produced  a  certain 
effect,  that  his  copartners  were  em- 
powered to  determine  the  partnership. 
Mills  V.  Osborne,  7  Sim.  37. 


[q)  Where  one  partner  gave  his 
son  a  power  of  attorney  "  to  act  on 
his  behalf  in  dissolving  the  partnership, 
with  authority  to  appoint  any  other 
person,  as  he  might  see  fit,"  it  was  lield, 
that  this  gave  the  son  power  to  submit 
the  account  to  arbitration.  Henley  v. 
Soper,  8  B.  &  C.  16.  [Such  an  agree- 
ment to  refer  will  be  strictly  confined 
to  the  special  matters  of  reference. 
De  Pusey  v.  Du  Pont,  1  Del.  Ch.  82.] 

(r)  By  section  11th  of  the  Common- 
Law  Procedure  Act,  1854  (17  &  18 
Vict.  ch.  125),  if  the  parties  to  an  in- 
strument, in  writing,  have  agreed  to 
refer  to  arbitration  any  existing  or 
future  differences  between  tliem,  a 
court  or  judge  may,  at  discretion, 
upon  application  of  the  defendants  or 
any  of  them,  stay  proceedings  in  an 
action  commenced  by  any  of  the  par- 
ties, against  any  or  all  the  rest,  in  re- 
spect of  the  matters  so  agreed  to  be 
referred,  if  there  is  no  sufficient  reason 
why  such  matters  should  not  be  re- 
ferred according  to  the  agreement. 
See  Russell  v.  Pellegrini,  6  Ellis  &  B. 
(Q.  B.)  (88  Eng.  Com.  L.)  1020,  38 
Eng.  L.  &  Eq.  99 ;  Wallis  v.  Hirsch,  1 
C.  B.  N.  s.  (87  Eng.  Com.  L.)  416,  38 


CH.  VII.]       RIGHTS    OF    PARTNERS    BETWEEN    THEMSELVES.  271 

tion,  (s)   and   for  reasons  which  may  *   operate   upon    *  248 
the   courts   of  this   country  when    the   question   shall 


Eng.  L.  &  Eq.  210.  It  is  to  be  ob- 
served, that  tliis  statute  does  not  have 
the  effect  of  making  a  covenant  to 
refer  a  good  plea  in  bar  in  an  action- at 
law  upon  the  subject-matter  agreed  to 
be  referred.  See  Livingston  v.  Ralli, 
supra. 

(s)  The  general  principle,  appHcable 
to  provisions  of  tliis  cliaracter,  has  cer- 
tainly been,  until  quite  recently,  that 
no  mere  agreement  to  refer  a  contro- 
versy to  arbitration  will  be  allowed  to 
oust  the  proper  courts  of  their  juris- 
diction. Tliompson  v.  Charnock,  8 
T.  R.  139;  Contee  v.  Dawson,  2  Bland, 
264;  Hill  v.  HoUister,  1  Wilson,  129. 
See  Allegre  v.  Insurance  Company,  G 
Harris  &  J.  413 ;  Kandel  v.  Chesa- 
peake, &c.,  Canal  Co.,  1  Harring.  (Del.) 
233,  275;  Gray  v.  Wilson,  4  Watts, 
39 ;  Stone  v.  Dennis,  3  Port.  231 ; 
Thomas  v.  Fredericks,  10  Q.  B.  775 ; 
Haggart  v.  Morgan,  4  Sandf.  198  ;  Frink 
V.  Ilyan,  3  Scam.  324.  Hence,  it  has 
been  considered  very  doubtful  whether 
an  action  would  lie  between  partners 
for  the  breach  of  a  covenant  to  refer 
partnership  disputes  to  arbitration. 
Tattersall  v.  Croote,  2  B.  &  P.  131 ; 
Gray  v.  Wilson,  4  Watts,  41. 

But  this  doubt  may  be  considered 
as  to  a  great  extent  removed  (at  least 
as  far  as  the  English  courts  are  con- 
cerned) by  a  late  decision  in  the  Court 
of  Queen's  Bench,  Livingston  v.  Ralli, 
5  Ellis  &  B.  (Q.  B.)  (85  Eng.  Com.  L.) 
132,  30  Eng.  L.  &  Eq.  279.  Lord 
Campbell,  C.  J.,  there  said:  "It  is 
clear,  on  principle,  that  an  action  will 
lie  for  the  breach  of  an  agreement 
to  refer.  There  is  an  express  promise, 
and  abundant  consideration  for  the 
promise.  Such  an  action  is  not  con- 
trary to  any  principle  of  law  or  to 
public  policy  ;  it  is  most  reasonable 
and  just  that  parties  should  be  at  lib- 
erty to  introduce  into  their  contract  a 
stipulation  that,  if  any  difference  arises, 
it  should  be  referred  to  arbitration.  It 
would  be  a  great  infringement  on  the 
liberty  of  the  subject,  if  he  were  not  to 


be  permitted  to  refer  a  question  to  a 
domestic  tribunal.  Then,  what  author- 
ity is  there  to  the  contrary  1  Lord 
Eldon,  one  of  the  greatest  of  judges, 
seems  to  have  entertained  a  doubt, 
though  I  do  not  find  any  decision  by 
him  upon  the  point.  But  since  I  have 
known  Westminster  Hall,  the  opinion 
has  been  that  such  an  action  is  main- 
tainable." The  distinction  is  between 
bringing  an  action  upon  the  agreement 
to  reler,  and  pleading  that  agreement 
in  bar  to  an  action  upon  tlie  subject 
agreed  to  be  referred.  In  this  latter 
case  (though  not  in  the  former),  the 
doctrine  applies,  that  the  courts  of  law 
cannot  be  divested  of  their  jurisdiction 
by  an  agreement  to  refer;  and  hence 
such  a  plea  is  not  a  good  plea  in  bar  to 
the  action.  Wood  v.  The  Copper 
Miners'  Co.,  17  C.  B.  (84  Eng.  Com. 
L.)  561,  34  Engr.  L.  &  Eq.  405,  per 
Williams,  J. ;  Scott  v.  Avery,  5  House 
of  Lords  Cases,  811,  36  Eng.  L.  &  Eq. 
18,  per  Lord  Chancellor  Canworth ; 
Thompson  v.  Charnock,  supra.  In 
Livingston  v.  Ralli,  supra,  Coleridge,  J., 
said  :  "  We  should  be  ousting  the  court 
of  its  jurisdiction,  if,  where  a  party 
complains  that  an  agreement  is  broken, 
the  defendant  was  allowed  to  answer: 
'  You  cannot  go  to  the  court,  because 
it  is  an  agreement  to  refer,  and  the 
court  will  not  enforce  such  an  agree- 
ment.' The  fallacy  seems  to  be  in 
confounding  the  distinction  between 
an  action  for  refusing  to  concur  in 
referring  a  difference,  and  an  action 
upon  the  subject  agreed  to  be  referred. 
Setting  up  an  agreement  to  refer,  as 
a  defence,  is  very  different  in  effect 
from  bringing  an  action  upon  the 
subject  itself." 

Another  reason  generally  given 
why,  for  breach  of  covenant  to  refer, 
no  action  can  be  maintained,  is  the 
difficulty  of  directing  a  jury  how  to 
assess  the  damages;  which  in  most 
instances,  at  least,  would  necessarily 
be  merely  nominal.  Tattersall  v. 
Groote,  supra;  Street  v.  Rigby,  6  Ves. 


272 


THE   LAW    OF   PARTNERSHIP. 


[CH.  VII. 


come  before  tliem  hereafter.  At  present,  we  are  not 
*  249    aware  of  any  *  distinct  adjudication  which  adopts  and 

approves  the  recent  English  adjudication.  If  the  par- 
ties choose  to  agree  to  an  arbitration,  then  questions  may  arise 
as  to  the  effect  of  an  award  ;  and  these  will  be  considered 
in  a  subsequent  chapter. 

The  general  powers  of  a  majority  of  the  partners  we  have 
already  considered.  If  the  articles  give  to  a  majority  a  power 
to  bind  the  rest,  this  power  may  be  protected  so  far  as  it  is 
expressed,  but  will  not  be  extended  by  implication  or  construc- 
tion. It  is  necessarily  confined  to  matters  which  occur  in  the 
conduct  of  the  partnership  business  or  interests.  (0  A  majority 
acting  under  such  articles,  may  have  no  power,  in  case  of  diffi- 
culties, to  sell  out  the  whole  concern,  against  tbe  will  of  the 
minority,  (m)  But,  in  accordance  with  principles  which  we 
have  already  considered,  the  parties  may,  by  long-continued 
acquiescence  and  recognition,  justify  a  court  of  equity  in  sus- 
taining a  course  of  conduct  on  the  part  of  the  majority  not 
authorized  by  the  articles,  and  even  perhaps  prohibited  by 
them,  (v) 


818  ;  Mitchell  v.  Harris,  2  Ves.  Jun. 
134.  "  But  that  is  not  a  reason  why 
the  action  should  not  be  maintained  ; 
because,  tiiough  the  damages  may  not 
be  substantial,  the  matter  in  question 
may  be  very  important."  Coleridge, 
J ,  in  Livingston  v.  Ralli,  supra.  It 
seems,  moreover,  that  this  objection  as 
to  the  difficulty  of  calculating  the 
damages  would  be  of  no  force  where 
the  covenant  to  refer  contained  a  clause 


respecting  provisions  for  damages  in 
partnership  articles. 

(t)  Glassington  v.  Tiiwaites,  1  Sim. 
&S.  131. 

{u)  Hence,  where  a  partnership  ex- 
isted among  a  large  number  of  persons 
in  certain  newspapers,  under  an  agree- 
ment that  it  should  be  managed  by  a 
committee  of  live,  and  by  general 
meetings,  at  which  the  vote  of  the 
majority    was   to   be   binding,   with  a 


fixing  upon  a  certain  sum,  by  way  of  provision  that  any  one  wishing  to  re- 
liquidated  damages  for  tlie  breach,  as  tire  should  first  otfer  his  share  to  the 
was  the  usual  course  adopted  in  refer-  committee  at  a  certain  price,  and,  if 
ences  to  arbitration  under  the  civil  tliey  declined  to  buy,  might  sell  it  to 
law.  2  Story  Eq.  §  1461.  Thus,  in  any  other  person,  —  it  was  AeW,  tliat  the 
Street  v.  Rigby,  6  Ves.  818,  Lord  majority  were  not  able  to  sell  the 
Eldon  said :  "  There  are  prudential  whole  concern  without  the  consent  of 
ways  of  drawing  these  articles.  There  all ;  but  that,  where  all  but  two  were 
miglit  have  been  an  agreement  for  desirous  of  retiring,  they  might  sell 
liquidated  damages  to  enforce  a  specific  their  own  shares,  without  making  an 
performance,  if  an  action  could  not  offer  of  tliem  to  tlie  committee.  Chap- 
produce  sufficient  damages,  or  equity  pie  v.  Cadell,  Jac.  637. 
would  not  entertain  a  bill  for  a  specific  (v)  Glassington  v.  Thwaites,  1  Sim. 
performance."  Stone  t>.  Dennis,  3  &  S.  124,  131. 
Fort.    23y.      See   following  subsection 


CH.  VII.]        RIGHTS   OP    PARTNERS    BETWEEN    THEMSELVES.  273 

Very  frequently  the  articles  provide  for  the  division  of  profits, 
and  determine  the  proportion  in  which  each  partner  takes  his 
share.  There  is  nothing  to  prevent  their  making  any  bargain 
on  tliis  subject  that  they  see  fit  to  make.  Where  they  make 
none,  it  is  certainly  the  general  rule,  both  in  law  and  equity, 
that  the  profits  shall  be  shared  equally  among  the  partners,  (w) 
But  we  should  say  that  where,  from  inequality  of  shares 
in  the  concern,  *  or  of  contribution  to  it,  coupled  with  ^250 
other  circumstances  of  a  similar  indication,  it  must  be 
obvious  that  a  different  distribution  was  expected  and  intended, 
a  court  of  equity  might  be  expected  to  so  order,  (a;) 

10.    Of  Provision  for  Dama<jesfor  Misconduct  of  a  Partner. 

Sometimes  the  articles  provide  that  for  some  specified  mis- 
conduct, or  breach  of  agreement,  the  offending  partner  shall 
pay  a  certain  defined  sum,  by  way  of  liquidated  damages.  And 
this  may  bring  up  questions  which  belong  not  so  much  to  the 
law  of  partnership  as  to  the  law  of  contracts.  Whatsoever  is, 
in  fact,  a  penalty  for  wrong-doing,  or  default  of  any  kind, 
whether  it  be  called  penalty  or  any  thing  else,  is,  both  in  law 
and  in  equity,  cut  down  to  an  adequacy  with  the  wrong  done, 
so  that  it  shall  afford  full  compensation,  and  nothing  more.  At 
the  same  time,  there  may  be  wrongs  anticipated,  or  at  least 
provided  for,  of  which  it  is  difficult  or  impossible  to  determine, 
even  when  they  occur,  with  any  exactness,  the  amount  of  dam- 
age they  cause.  In  such  a  case,  parties  may  agree  beforehand 
as  to  what  shall  be  taken  for  the  amount  of  damages,  if  that 
thing  happens.  This  is  to  agree  upon  liquidated  damages ; 
and  in  such  a  case  courts  will  support  the  agreement,  provided 

(w)  Robinson  y.  Anderson,  20  Beav.  had  been  incorporated  witli  the  privi- 

98,  7  De  G.,  M.  &  G.  239;  Webster  f.  lege  of  creating  a  stock  not  less  tlian 

Bray,  7  Hare,  159.     See  Gill  v.  Geyer,  one   sum,   nor   greater   than    another. 

15  Ohio,  399.  The    company    commenced    business 

(x)  "  Wlienever  a  partnership  adopts  with    tlie   smaller   capital,    but    after- 

a  project,  within  the  principles  ot'tlieir  wards  voted  to  increase  it  to  tlie  larg- 

agreement,  for  tlie  purpose  of  profit,  it  est.     Held,   that   those   who   lield  the 

must  be  for  the  benefit  of  all  the  part-  stock  in  the  capital  first  raised  iiad  a 

ners,  in  proportion  to  tlieir  respective  right  to  subscribe  for  and  hold  the  new 

interests  in  the  concern."     Per  Sedg-  stock   in    proportion   to  their    respective 

wiick,  .1.,  in  Gray  v.  Portland  Bank,  3  shares   in    the   old.      See   Raymond   v. 

Mass.  364.     There  a  banking  company  Putnam,  44  N.  H.  160. 

18 


274  THE    LAW    OF    PARTNERSHIP.  [CH.  VII. 

it  is  made  in  good  faith,  is  reasonable  and  not  oppressive  in  its 
nature,  and  the  damages  are  not,  in  point  of  fact,  excessive,  or 
out  of  all  due  proportion  to  the  damage  actually  sustained.  (^) 
If,  however,  liquidated  damages  are  agreed  on  even  under  that 
name,  and  the  default  to  which  they  apply  causes  damages 
of  an  exact  amount,  or  of  an  amount  which  can  be 
*  251  *  exactly  ascertained,  the  courts  will  often  disregard 
^  the  agreement,  and,  in  some  form,  give  only  adequate 
compensation.  (2) 

If  the  agreement  be  one  which,  in  fact  and  substance,  deter- 
mines beforehand  damages  for  a  default,  of  that  kind  that  these 
damages  ought  to  be  so  liquidated ;  and  if,  on  the  other  hand, 
the  sum  is  a  reasonable  one, — the  court  will  sustain  it  as  liqui- 
dated damages,  even  though  these  damages  are  called  a  penalty, 
or  by  no  name  whatever,  (a)  So,  at  least,  a  court  of  equity 
would  decide.  (6)  And  if  courts  of  law  were  constrained  to 
treat  as  a  penalty  what  the  parties  so  called,  the  effect  would 
be  the  same ;  because  this  penalty  would  need  no  cutting  down 
to  make  it  adequate. 

There  is  one  rule  on  the  subject  of  liquidated  damages  ap- 
plicable to  articles  of  partnership,  and  to  all  other  contracts. 

(.(/)  See  tlie  principles  upon  this  sub-  son  v.  Williams,  26  id.  630;  Heard  v. 

ject  stated,  and  the  cases  collected,  in  Bowers,  23   Pick.  455,  463 ;  Mead   v. 

3  Pars,  on  Cont.  156-163,  5th  ed.  Wheeler,  18  N.  H.  351.     "  Whether  the 

(s)  Orr  V.  Churchill,  1  H.   Bl.  227,  sum  mentioned  in  an  agreement  to  be 

232;  Kemble  v.  Farren,  6  Bing.  141;  paid  for  breach  is  to  be  treated  as  a 

Boys   V.  Ancell,  7   Scott,  364;   Heard  penalty,   or   as   liquidated   and   ascer- 

i:  Bowers,  23  Pick.  455,  462  ;  Gray  v.  tained  damages,  is  a  question  of  law, 

Crosby,  18  Johns.  219,  226 ;    Hoag  v.  to  be  decided  by  tlie  judge  upon  a  con- 

McGinnis,  22   Wend.    163  ;   Bagley    i'.  sideration  of  the    whole   instrument." 

Peddle,  5  Sandf.  l'J2  ;  Sessions  v.  Rich-  Per  Wilde,  C.  J.,  in  Sainter  v.  Fergu- 

mond,  1  R.  I.  298,  303  ;  Jordan  v.  Lewis,  son,  7  C.  B.  727. 

2    Stew.   426;    Mead   v.    Wheeler,    13  (i)  If  liquidated  damages  are  legally 

N.  H.  353.  due,   equity    will   not   relieve    against 

(a)  See  Lowe  v.  Peers,  4  Burr.  2225;  them.     East  India  Co.  v.  Blake,  Finch, 

Farrant  v.   Olmius,  3  B.  &  Aid.  692;  117;  Small  v.  Fitzwilliams,  Prec.  Ch. 

Fletcherr.  Dyche,  2  T.R.  32,36;  Birch  102;  Rolfe  v.  Peterson,  2  Bro.  P.  C. 

V.  Stephenson,  3  Taunt.  469;  Denton  436  (Dublin  ed.)  ;  6  id.   470.     And  if 

V.   Richmond,    1    Cromp.    &   M.   734  ;  a  lessee  of  land  covenant  that  he  will 

Duckworth  v.  Alison,  1  M.  &  W.  412;  not  plough   a  certain  part  of  it,  and 

Leighton  v.  Wales,  3  id.  645 ;  Crisdee  that,  if  he  do  so,  he  will  pay  a  certain 

V.  Bolton,  3  Car.  &  P.  239  ;  Legge  v.  sum  per  acre,  equity  will  neither  en- 

Harlock,    12    Q.    B.    1015  ;    Price    v.  join  the  covenantor  from  violating  his 

Green,  16  M.  &  W.  346  ;  Galsworthy  covenant,   nor   relieve   him   from    the 

V.  Strutt,  1  Exch.  659 ;  Dakin  v.  Wil-  agreed    penalty,   if   he   do   violate   it. 

Uams,  17  Wend.  447,  22  id.  201 ;  Pear-  Woodward  v.  Gyles,  2  Vern.  119. 


CH.  VII.]        RIGHTS   OF   PARTNERS   BETWEEN   THEMSELVES.  275 

No  one  bargain  for  liquidated  damages  is  enforced  by  tbe 
courts,  unless  tbe  damages  agreed  upon  are  for  one  distinct 
breacb  only ;  or,  if  for  many,  are  payable  only  wben  all  tbese 
breaches  are  committed,  and  tbey  are  such  that  the  actual 
amount  of  damages  thence  resulting  cannot  be  ascertained. 
If,  for  example,  the  articles  enumerate  many  duties  and  many 
agreements,  and  it  is  agreed  that,  for  any  breach  thereof,  the 
offending  party  shall  pay  a  certain  sum  of  money,  such  a 
bargain  would  seldom  or  never  be  enforced.  It  puts 
all  *  the  breaches  on  the  same  footing  ;  it  puts  a  breach  *  252 
of  all  on  the  same  footing  as  a  breach  of  any  one ;  and 
it  brings  together  breaches  of  which  some  may  cause  damages 
as  ascertainable  as  the  withholding  a  certain  debt,  while  some 
are  as  incapable  of  exact  estimate  as  the  violation  of  a  general 
promise  of  good  conduct,  (c) 

11.    Of  Provisions  for  Appropriations  of  Property  to  a  Partner. 

If  the  partners  choose  to  agree  that  certain  items  of  property 
used  by  the  firm,  as  the  house  or  store  occupied  by  them,  or  the 
fixtures,  or  implements,  or  other  chattels  which  are  not  for  sale 
or  use,  or  even  certain  specified  parts  or  portions  of  the  goods 
or  merchandise  bought  and  sold,  shall  not  belong  to  the  com- 
mon stock,  but  be  owned  by  one  or  more  of  the  partners,  or  by 
the  whole  of  them,  in  severalty,  —  there  is  nothing  to  prevent 
such  a  bargain,  and  nothing  to  interfere  with  its  force  or  oper- 
ation among  the  partners  themselves,  (c?)      The  agreement 

(c)  Astley  v.  Weklon,  2  B.  &  P.  346  ;  this  subject ;  and  for  the  difference,  if 

Kenible  v.  Farren,  6  Bing.  141 ;  Char-  any,   between   them,    see   3    Pars,   on 

rington  v.  Laing,  id.  242;  Boys  r.  An-  Cont.  157,  159,  and  notes,  5th  ed. 
cell,  7  Scott,  364  ;  Davies  i-.  Penton,  6  (d)  We  have  already  seen  that  tlie 

B.  &  C.  216  ;  Galsworthy  v.  Strutt,  1  contribution  of  one  partner  to  the  cora- 

Exch.  659  ;  Atkyns  V.  Kinnier,  4  id.  776  ;  mon  stock,  or  even  the  contributions 

Shute  V.  Taylor,  5  Mete.  67  ;  Baglie  v.  of  all  the  partners,  and  thus  the  entire 

Peddle,  5  Sandf.  192 ;  Beale  v.  Hayes,  capital  of  the  partnersliip,  may  consist 

id.  640;    Gower  v.   Saltniarsh,   11  Mo.  exclusively    of   the    use   of    property. 

271  ;    Carpenter  v.   Lockhart,  1   Cart.  The   questions   which  arise    upon   the 

(Ind.)434;  Briglit  w.  Rowland,  3  How.  retirement,  bankruptcy,  &c.,   of  part- 

(Miss.)398;  Cheddick  ^'.  Marsli,  1  N.  J.  ners,  respecting  the  transmutation  or 

463  ;  Curry  v.  Larer,  7  Barr,  470.     See  conversion  of  joint  property  into  sep- 

particularly  Galsworthy  v.  Strutt,  At-  arate  property,  and  vice  versa,  will  be 

kyns  V.  Kinnier,  and  Baglie  v.  Peddie,  considered   hereafter,   when   we   treat 

supra,  us  cases  well  exhibiting  the  mod-  of  the  dissolution  of  a  firm  by  those 

em  English  and  American  doctrines  on  means. 


276  THE   LAW   OF   PARTNERSHIP.  [CH.  VII. 

mitiht  give  rise  to  conflicting  rights,  and  to  difficult  questions 
of  fact ;  but  there  is  no  rule  which  prevents  their  making  it. 
When,  however,  such  a  bargain  is  considered  with  reference  to 
the  creditors  of  the  firm,  a  dilferent  state  of  things  arises.     In 
case  of  the  insolvency  of  such  a  firm,  or  of  any  firm,  there  are 
usually  two  classes  of  creditors :  those  to  whom  the  copartner- 
ship, as  such,  is  indebted ;  and  those  to  whom  the  several 
*  253    partners,  or  some  of  *  them,  are  indebted.     We  shall 
presently  see  that,  by  an   universal  rule,  founded   on 
obvious  justice,  the  creditors  of  the  firm  are  exclusively  entitled 
to  all  the  assets  of  the  firm,  until  their  debts  are  paid,  and  that 
the  law  is  tending  to  give  the  creditors  of  the  separate  partners 
an  equally  exclusive  right  to  the  separate  or  private  property 
of  the  indebted  partner.     Now,  can  the  respective  rights  of 
these  classes  of  creditors  be  made  dependent  upon  the  pleasure 
or  the  bargains  of  the  partnership  ?     To  a  certain  extent,  this 
may  be  so ;  but  it  is  not  easy  to  draw  the  line  exactly,  and  say 
where  the  power  of  the  partners,  in  this  respect,  terminates. 
If  by  the  original  articles,  or  by  any  subsequent  agreement, 
three  men  who  enter  into  partnership,  and  transact  business  as 
A.,  B.,  &  Co.,  contract  with  each  that  no  part  of  their  mer- 
chandise shall  be  or  form  a  part  of  the  common  property  of  the 
firm,  but  that  each  partner  shall  own  in  severalty  one-third 
part  of  every  thing  bought,  and  one-third  of  the  proceeds  of 
every  thing  sold  ;  and  if  this  firm  should  become  insolvent, 
and  the  several  and  private  creditors  claim  all  the  merchandise 
of  the  firm  as  liable  to  their  processes  under  this  contract, 
leaving  nothing  for  the  creditors  of  the  firm,  —  no  court  would 
ever  look  with  favor  on  such  a  claim.     This  is  so  obvious,  that 
precisely  this  arrangement  probably  never  was  made,  nor  will 
be.    But  if,  on  the  other  hand,  the  partners  agree  that  the  house 
which  one  of  them  owns,  and  the  whole  firm  use,  shall  remain 
the  property  of  that  one  partner ;  or  if  they  agree  that  this 
piece  of  property  bought  and  paid  for  by  the  firm,  and  used  by 
them,  shall  belong  to  one  partner  alone,  and  be  charged  to  him, 
and  that  piece  of  property  to  another, —  such  arrangements,  made 
in  good  faith,  and  when  no  insolvency  was  apprehended,  and 
in  themselves  reasonable,  would  in  all  probability  be  sustained 
by  the  courts.     But  they  would  hesitate,  we  think,  in  going 


CH.  VII.]        RIGHTS   OP   PARTNERS   BETWEEN   THEMSELVES.  277 

farther.  It  is  said  by  Justice  Story,  that  "  In  ])artnership  arti- 
cles it  is  sometimes  agreed  that  the  real  estate  and  fixtures 
belonging  to  the  firm  shall  not  be  treated  as  partnership  prop- 
erty, as  between  the  partners ;  but  that  all  the  partners  shall 
have  a  several  and  individual  interest  therein.  In  such  cases, 
the  interests  of  the  partners  will  be  treated  throughout  as  their 
several  and  separate  estate  ;  and,  of  course,  in  cases  of  bank- 
ruptcy of  the  partners,  it  will  be  distributable  to  and 
among  their  separate  creditors  respectively,  in  *  prefer-  *  254 
ence  to  their  joint  creditors."  (e)  A  similar  statement 
is  made  by  Collyer.  (/)  The  authorities  cited  go  no  farther 
than  that  real  property,  bought  and  paid  for  from  the  partner- 
ship funds,  may  be  ajjpropriated  to  one  partner,  and  the  price 
charged  to  him,  and  that  a  subsequent  insolvency  of  the  firm 
will  not  divest  his  separate  title ;  or  that  real  property,  origi- 
nally owned  and  held  by  one  partner  alone,  may  be,  by  agree- 
ment, used  by  the  partnership,  without  becoming  partnership 
property.  (_(/)  But  we  apprehend  that  the  practical  rule  now 
would  be,  certainly  in  England,  and  probably  in  this  country, 
that  property,  whether  real  or  personal,  which  was  bought  by 
partnership  funds,  or  put  l)y  a  partner  into  partnership  stock, 
either  formally  and  technically,  or  actually  and  substantially, 
and  in  such  a  way  that  it  is  held  forth  to  persons  dealing  with 
them  as  partnership  property,  could  not  be  divested  of  this 
character  and  made  private  and  several  property,  merely  by  an 
agreement  of  the  partners ;  at  least,  not  in  respect  to  any 
parties  who  are  not  made  acquainted  with  the  agreement 
before  trusting  the  firm. 

12.    Of  Provisions  respecting  the  Name  of  the  Firm. 

Articles  almost  always  provide  what  shall  be  the  name  of  the 
firm ;  this  name  and  style  may  be,  as  we  have  seen,  whatever 
the  partners  wish  ;  (^//)  and  it  should  always  be  adhered  to. 

(e)  Story  on  Part.  §  205.  we  come  to  treat  of  the  real  estate  of  a 

(/)  Collyer  on  Part.  §  217.  firm,  and   of  the   rights  of  joint  and 

(9)  Smith  V.  Smitli,  5  Ves.  189 ;  Ex  separate  creditors  upon  the  dissolution 

■parte   Smith,   3   Madd.   63.     We   shall  of  a  firm  by  bankruptcy.    (See^ws^,  ch. 

have  occasion   to   consider  these  and  11,  and  ch.  15,  §  4.) 

other  analogous  cases   at  large  when  (r/^)  Crawfordy.  Collins,  45  Barb.  269. 


278  THE    LAW    OF    PARTNERSHIP.  [CH.  VII. 

If  any  partner  uses  any  other  name  to  designate  the  firm,  it  is, 
in  fact,  a  breach  of  this  contract ;  and,  if  any  injury  results  from 
it,  he  would  be  responsible  to  those  who  suffered,  whether  they 

were  his  copartners  or  other  persons. (/t)  It  is,  however, 
*  255    not  very  *  unusual,  in  this  country,  to  find  the  long  name 

of  a  firm  shortened  in  practice  ;  Christian  names  are 
dropped,  or  other  changes  introduced,  to  make  the  name  of  the 
firm  easier  to  write  or  to  speak.  Such  a  change  being  made  so 
often,  so  publicly,  and  by  such  persons,  that  the  sanction  of  the 
firm  may  be  implied,  becomes  their  legal  name  ;  and  the  firm  is 
bound  by  it,  as  they  are  not  by  any  name  that  is  not  strictly 
their  own,  unless  it  be  so  sanctioned.  (^)  If  the  firm  have 
adopted,  as  its  proper  name  and  style,  John  Smith  &  Thomas 
Brown,  neither  Smith  &  Brown,  nor  John  Smith  &  Co.,  nor 
John  Smith  for  self  and  partner,  bind  the  firm,  nor  create  a 
partnership  debt  which  is  to  be  paid  from  partnership  assets, 
unless  the  peculiar  circumstances  of  the  case,  in  some  way, 
make  that  another  name  of  the  firm.  For  a  firm  may  have  two 
names.  It  is  not  very  uncommon  for  a  partnership  to  use  one 
name  in  one  place  and  another  name  in  another ;  or  one  name 
in  one  branch  of  business,  or  one  class  of  transactions,  as  in 
buying  or  selling,  or  conveying,  and  another  in  a  different  class, 
as  for  excepting,  signing,  or  indorsing  negotiable  paper,  (y) 
But  it  would  be  a  lax  and  dangerous  practice  to  use  two  or 
more  ways  of  naming  the  firm,  indiscriminately,  in  all  business. 

(k)  Marshall  v.  Colman,  2  Jac.  &  W.  praying  for  an  injunction  to  restrain 
268.  In  this  case,  Lord  Eldon  said:  "  I  them  from  so  doing,  the  Lord  Clian- 
have  no  difficulty  in  saying,  that  where  cellor,  tliough  he  refused  the  motion, 
the  members  of  a  partnership  contract  said :  "  These  gentlemen  will  do  well 
by  covenant  that  the  firm  shall  be  A.,  (if  they  mean  to  protect  themselves 
B.,  C,  &  D.,  that  it  is  a  breach  of  that  from  the  interference  of  this  court)  to 
covenant  for  A.  to  sign  those  instru-  use  all  the  names  in  the  concern :  they 
ments  to  which  the  covenant  refers  in  must  do  that,  or  the  court  will  be  under 
the  name  of  A.  &  Co.  ;  but  it  is  no  less  the  necessity  of  awarding  an  injunc- 
a  breach  of  that  covenant  for  D.  to  sign  tion,  or  dissolving  the  partnership." 
his  own  name,  adding  'for  self  and  We  have  already  had  occasion  to  con- 
partners,'  because  by  these  words  it  sider  at  large  the  name  which  a  firm 
can  no  more  be  known  who  are  his  may  adopt,  and  by  which  one  partner 
partners  than  by  the  word  '  Co.'  "  may  bind  it.  The  right  of  a  surviving 
And  the  plaintifTs  bill  complaining  that  partner  to  use  the  name  of  the  old  firm 
certain  of  his  partners  (defendants)  had  will  be  treated  of  hereafter, 
entered  into  contracts  and  engagements  (/)  See  ante,  p.  *  125,  et  seq. 
for  the  firm  by  a  name  shorter  than  {j)  Williamson  i'.  Johnson,  1  B.  &  C. 
that  provided  for  in  the  articles,  and  146;  an^e,  p.  *  125,  et  seq. 


CH.  Vn.]        RIGHTS   OF    PARTNERS   BETWEEN   THEMSELVES.  279 

In  New  York,  the  use  of  fictitious  names  is  prohil)ited  by 
statute  ;  and  the  designation  "  &  Company,"  or  "  &  Co.," 
must  represent  an  actual  partner  or  partners,  other  than 
those  whose  names  are  stated.  (Jc) 

Where  the  partnership  name  is  not  agreed  upon  in  articles, 
and  is  written,  that  which  is  used  in  keeping  books  and  ac- 
counts, upon  bills  of  parcels,  or  on  negotiable  paper,  espe- 
cially if  it  is  generally  known,  becomes  the  partnership 
name.  (Q 

SECTION    VIII. 

OF  THE  RIGHTS  OF  PROrERTY  OF  THE  PARTNERS  INTER  SE. 

1.    WJiat  constitutes  Partnership  Property. 

*  It  may  be  well  to  determine,  in  the  first  place,  wliat  *  256 
is  partnership  property.  In  general,  by  this  phrase  is 
understood  whatever  belongs  to  the  partnership.  This  may  be 
real  property  ;  but  the  law  of  partnership,  in  respect  to  real 
property,  is  so  much  affected  by  the  difference,  both  at  common 
and  statute  law,  between  that  property  and  personal  property, 
and  the  system  of  rules,  springing  in  part  from  their  conflict  and 
in  part  from  their  combination,  is  so  peculiar,  that  it  is  thought 
best  to  consider  the  whole  subject  of  the  real  property  of  part- 
ners in  a  separate  chapter. 

The  personal  property  of  a  partnership  consists  mainly  of 
the  goods  and  merchandise  which  it  buys  and  sells,  or  makes 
and  sells.  The  question  may  arise,  at  what  time  property  be- 
comes partnership  property.  If  it  be  sold  to  a  partner  in  the 
firm,  acting  for  the  firm,  it  is,  of  course,  partnership  property 
as  soon  as  the  sale  is  complete ;  for  by  the  sale  it  passes  from 
the  seller  to  the  buyer,  and  there  is  no  other  buyer  than  the 
firm.  But  if  goods  are  sold  and  delivered  to  one  partner, 
without  any  knowledge  on  the  part  of  the  seller  that  he  buys 
for  the  firm,  and  without  any  act  of  his  indicating  that  he  so 
buys,  and  the  firm  becomes  insolvent  before  the  goods  are  actu- 
ally mingled  with  the   partnership  goods,  the  question  may 

{k)  .3  Rev.  Stat.  N.  Y.  (ed.  1859)  978 ;  (/)  Le  Roy  v.  Jolinson,  2  Pet.  176  ; 

Acts  of  1833,  ch.  281,  §§  1,  2.  ante,  p  *  125,  et  scq. 


280  THE  LAW   OF   PARTNERSHIP.  [CH.  VII. 

arise,  whether  tlie  partnership  creditors,  or  the  several  creditors 
of  that  partner,  take  the  goods.  We  apprehend  this  question 
must  be  answered  by  ascertaining,  from  all  the  circumstances, 
to  whom  the  sale  was  actually  made  ;  for  if  the  partner  bought, 
in  fact,  as  agent,  although  his  agency  was  unknown,  and  even 
if  it  were,  and  continued  to  be,  purposely  concealed,  we  do  not 
see  that  this  circumstance  should  affect  the  rights  of -the  creditors 

of  either  class.(wi)  Nor  do  we  see  how  any  presumption 
*  257    of  law  that  the  goods  were  bought  for  the  firm  *  can 

arise  ;  although  if  the  goods  were  such  as  the  firm  dealt 
with,  and  such  as  that  partner  bought  at  other  times  for  the 
firm,  here  would  be  good  ground  for  argument  that  he  so  bought 
these  goods.  Still,  as  he  might  lawfully  have  bought  them  for 
himself,  we  should  say  that  the  burden  of  proof  must  be  upon 
the  creditors  —  whether  of  the  firm  or  of  a  partner — who,  in 
order  to  obtain  the  goods  for  their  own  benefit,  must  maintain 
an  affirmative  in  respect  to  the  title  ;  and  this  may  dej)end 
upon  the  form  of  the  action,  and  the  parties  between  whom  it 
arises.  Such  questions  are  not  very  unfrequent  in  practice, 
but  we  do  not  know  that  they  have  often  passed  into  adjudica- 
tion ;  the  reason  being,  that  they  are  questions  of  fact  rather 
than  of  law. 

Not  only  all  the  goods  and  merchandise  properly  so  called, 
but  all  chattels  bought  by  the  partnership,  or  otherwise  coming 
to  them,  as  their  furniture,  books,  <fec.,  are  partnership  prop- 
erty ;  and  so  also  all  bills  of  exchange  and  notes,  or  other 
evidence  of  debts,  and  all  debts  or  accounts  or  balances,  or 
other  claims ;  and  all  shares  in  companies,  or  scrip,  bought 
with  partnership  funds,  or  otherwise  assigned  to  the  partnership, 
and  not  transferred  to  the  individual  partners  and  charged  in 
their  accounts,  would  be  regarded  as  partnership  property. 

It  may  be  well  to  remark,  that  a  gift  or  devise  of  property  to 
a  part  of  the  partners  in  a  firm,  even  if  it  be  on  account  of  a 

{m)  Saville  v.  Robertson,  4  T.  R.  in  great  measure,  upon  the  answer  to 
720;  Post  V.  Kimberly,  9  Johns.  470  ;  the  question  whether,  at  the  time  of 
Gouthwaite  v.  Duckwortli,  12  East,  their  purchase,  the  partnership  was 
421;  Everitt  v.  Cliapman,  6  Conn.  347.  actuahy  in  being,  and  capable  of  own- 
In  these  cases,  and  otlier  analogous  ing  property,  or  whether  it  was  only 
ones,  the  question  when  goods  pur-  agreed  upon,  and  dependent  for  its 
chased  by  one  partner  become  the  actual  existence  upon  the  happening 
property  of  tlie  partnership,  depends,  of  some  future  event. 


CH.  VII.]        RIGHTS   OF   PARTNERS   BETWEEN   THEMSELVES. 


281 


loss  sustained  by  the  firm,  or  be  otherwise  a  consequence  of  the 
partnership  connection,  does  not  make  the  property  given  or 
devised  partnership  property,  or  give  any  right  to  it  or  interest 
in  it  to  the  otlier  partners,  (w) 

*  Partners  may  agree  to  own  the  stock,  as  they  may  to  *  258 
share  the  profits,  in  any  proportions  that  they  please. 
And,  if  they  make  no  agreement,  there  is  a  presum|»tion  of  law 
in  favor  of  an  equality  of  interest  in  the  case  of  the  property, 
as  there  is  of  the  profits.  The  authorities  cited  in  the  note  will" 
show  that  this  presumption,  though  very  general,  is  not 
quite  universal ;  (o)  and  it  may  be  *  rebutted,  both  in    *  259 


(n)  2  Swanst.  571,  572.  And  wliere 
two  American  citizens  residing  at  Bal- 
timore, and  a  Frencii  subject  residing 
at  St.  Domingo,  were  in  partnership 
and  owners  of  certain  sliips  captured 
by  British  cruisers,  and  the  commis- 
sioners, appointed  under  the  7th  article 
of  the  treaty  of  commerce  of  1794, 
between  Great  Britain  and  America, 
for  awarding  compensation  to  Ameri- 
can subjects  who  had  suffered  losses 
by  capture  for  which  they  could  ob- 
tain no  redress  in  the  ordinary  tribu- 
nals, awarded,  in  compensation  of  the 
ships  of  the  partnership  captured,  cer- 
tain sums  to  the  two  Americans,  with 
express  exclusion  of  the  French  citizen 
as  an  alien  enemy,  —  it  was  hid,  that 
the  sums  so  awarded  were  not  partner- 
ship property,  and  tiiat  the  creditors 
of  the  partnersliip  had  no  claim  on 
them,  as  against  the  separate  creditors 
of  the  Americans.  Campbell  v.  Mul- 
lett,  2  Swanst.  551.  But  it  seems,  that, 
if  in  a  similar  case  of  the  seizure  of 
partnership  effects,  instead  of  compen- 
sation made  to  one  partner,  his  propor- 
tion of  the  joint  property  be  restored 
to  him,  in  specie,  the  goods  so  restored 
will  be  held  never  to  have  lost  their 
character  of  partnership  property,  and 
■will  therefore  be  divisible  among  the 
several  partners  according  to  their 
respective  interests.  Thompson  v. 
Ryan,  id.  555.  See  Rowley  *'.  Adams, 
8  Jur.  994,  1000;  Clarke  v.  Richards, 
1  Younge  &  C.  351,  383.  In  this  last 
case,  it  was  held,  that  where  a  personal 


office  or  employment  is  purchased  with 
the  partnership  funds  for  the  benefit 
of  the  partnership,  the  partner  in  whose 
name  it  is  purchased  is  not  necessarily 
a  trustee  of  the  profits  of  the  office  for 
the  other  partners,  after  the  term  of 
the  partnership  had  expired. 

(o)  Farr  v.  Johnson,  25  111.  522. 
The  existence  of  this  presumption  has 
not,  however,  been  uniformly  ad- 
mitted in  the  English  law.  See  Pea- 
cock V.  Peacock,  2  Camp.  45,  and  the 
opinion  of  Lords  Brougham  and  Wyn- 
ford,  in  Thompson  v.  Williamson,  7 
Bligh,  N.  s.  432,  5  Wils.  &  Sh.  16. 
This  case  was  heard  on  appeal  to  the 
House  of  Lords  from  the  Scottish 
Court  of  Session,  and  was  decided 
mainly  with  reference  to  the  law  of 
Scotland.  But  the  Lords,  whose  opin- 
ions are  reported,  took  occasion  to 
examine  the  law  of  England  on  the 
point,  and,  mainly  upon  the  authority 
of  Peacock  v.  Peacock,  came  to  the 
conclusion  that  it  was  not  at  variance 
with  what  they  adjudged  to  be  the 
law  of  Scotland.  Their  opinion  was, 
that  where  parties  are  in  partnership 
without  agreement,  it  is  not  a  neces- 
sary presumption  of  law  that  the  prof- 
its are  to  be  divided  in  equal  shares. 
Lord  Wynford  said :  "  If  I  was  to 
direct  a  jury,  or  was  sitting  in  a  situa- 
tion to  exercise  an  opinion  both  upon 
the  law  and  tlie  fact,  I  should  say,  if 
there  be  no  evidence  to  guide  my  judg- 
ment, I  will  divide  it  equally ;  but  I 
will  not  be  content  with  merely  written 


282 


THE   LAW   OF   PARTNERSHIP. 


[CH.  VII. 


relation  to  the  property  and  to  the  profits ;  and,  as  we 
should  say,  more  easily  in  respect  to  the  property  than  as  to 
the  profits.  (;>)     For   if  A.,    B.,    &    C.    combine   their  prop- 


evidence,  I  will  look  at  the  circum- 
stances, ami    I  will   infer  as   strongly 
from  the  circumstances  the  intentions 
ot  the  parties  as  from  tlie  written  evi- 
dence."    And  Lord  Brougham  :  "  If  I 
was   trying  at  nisi  prius  the  question 
what  proportion  the  partners  in  a  con- 
cern   were     severally    entitled     to,    I 
should  be  disposed  to  advise  the  jury, 
leaving  tlie  matter  to  them,  that   an 
equal  division  would  be  a  convenient 
doctrine  of  fact,  and  form  the  ground 
for  a  convenient  inference  to  be  drawn, 
in  the  absence  of  other  evidence  :  but 
that   would    only   be    supposing   that 
there    was   no   other  evidence   in  the 
cause  ;  if  tliere  was  any  other  evidence 
that  could  be  found  to  alter  the  pro- 
portions, that   evidence    must  furnish 
the  rule,  and  that  would  be  an  addi- 
tional ground  for  saying,  that  it  must 
be  a  presumption  of  fact  and  not  of 
law."      And  even  where  there  was  no 
evidence.   Lord   Brougham   stated,  as 
the  opinion  of  Lord  Wynford,  of  one 
of  the  Chief  Justices,  and  of  himself, 
that  a  jury  should  in  all  cases  be  di- 
rected to  take  into  consideration  "  the 
fairness  of  an  equal  division ;  but  not 
discountenancing      evidence,      rather 
courting    evidence,   rather    regretting 
that  there  was  no  evidence,  and  only 
having   recourse   to   that  presumption 
in  the  last  resort,  for  want  of  evidence." 
See  also  the  opinion  of  the  Master  of 
the    Rolls,   in    Lake  v.  Gibson,  1  Eq. 
Cas.  Abr.  291 ;  Sliarpe  v.  Cummins,  2 
Dow.  &  L.  504.      These  are  the  prin- 
cipal,   if   not    the    only,   common-law 
authorities,  which  are  clearly  at  vari- 
ance with   the   doctrine    of  the  text. 
]\Ir.  Justice  Story,  indeed,  says  [Story 
on  Part.  §  24,  n.  (3)]  :  "  It  is  true,  that, 
in  the  case  of  Thompson  v.  Williamson, 
a  doubt  was  thrown  upon  this  doctrine 
[the   presumed   equality  of  the  shares 
of  partners],  as  a  doctrine  of  the  com- 
mon law,  by  Lord  Wynford  and  Lord 
Brougham  ;  but  I  cannot  think  that  it 
is  successfully  maintained  by  the  rea- 


soning   contained    in    their    opinions. 
Each  of  these  learned  judges  admitted 
on  that  occasion,  that,  if  there  is  noth- 
ing to  guide  the  judgment  of  the  court 
to  give  unequal  shares,  there  is  no  rule 
for  them  to  go  by,  but  to  give  in  equal 
shares.     What   is   this   but    affirming, 
that,  in  the  absence  of  all  controlling 
circumstances   leading  to    a  diiferent 
conclusion,  the  presumption  of  law  is, 
tliat  the  partners  are  to  take  in  equal 
shares  ?  "    We  conceive,  however,  that 
a  consideration  of  the  entire  opinions 
of   the   two  Lords  in  that  case  shows 
that,  in  their  view,  the  question  what 
proportions  the  partners  in  a  concern 
are  severally  entitled  to,  is  never,  in 
the  absence  of  special  agreement,  any 
thing   but   a    question   of    fact   to   be 
passed  upon  by  the  jury.     They  both 
admit  that  there  may  be  instances  in 
which  the  inference  may  be  made  that 
the  partners  in  a  concern  have  equal 
shares.     But,  if  we   understand  their 
views,  this  inference  is  not  to  be  made 
by  the  court,  but  can  only  be  drawn 
by  the  jury.     That  is,  the  presumption 
of  equality  of  shares  among  partners 
is  not  a  presumption  of  law,  but  a  pre- 
sumption of  fact.     And  the   question 
must  always  be  submitted  to  the  jury. 
And   it    is   obvious,   from    the   whole 
tendency  and  scope  of  the  opinions  of 
the  two  Lords,  that,  unless  the  question 
of   the    distribution   of    interest   were 
presented  in  this  simple  form,  "  Given 
that  A.  &  B.   are  partners  ;  what  are 
their  shares  1 "  they   did  not  contem- 
plate  that   the   presumption   of  equal 
shares    among    partners,   which    they 
allowed  to  exist,  could  have  any  opera- 
tion.    "  It   is   scarcely  possible,"  says 
Lord  Wynford,  "  for  a  case  to  occur 
in    which    there   will   not  be   circum- 
stances which  it  is  fit  to  submit  to  the 
consideration   of    a  jury,    and   which 
would  induce  a  jury  to  give  in  unequal 
shares." 

ip)  The  presumption  of  equality  of 
interest  may  be  rebutted,  not  only  by 


CH.  VII.]        RIGHTS    OF   PARTNERS   BETWEEN   THEMSELVES. 


283 


erty  *  in  very  different  proportions,  it  is  still  very  possi-  *  260 
ble,  and  indeed  very  frequent,  in  fact,  that  he  who  brings 
less  capital  brings  more  skill  or  more  labor,  and  that  the  profits 
are  therefore  equalized.  But  while  the  profits  resulting  from  this 
mingling  of  money  and  labor  and  skill  are  equal,  so  far  as  refers 
to  the  stock  alone,  Ave  should  say  that  the  law  would  listen  favor- 
ably to  all  evidence  and  all  circumstances  which  tended  to 
preserve  the  same  proportions  of  interest  in  the  capital  stock 
which  originally  existed.  Practically,  this  question  cannot  often- 
arise.  If  the  firm  be  insolvent,  its  stock  is  all  gone,  and  all 
questions  of  ownership  disappear  when  there  is  nothing  to  own. 
Such  questions,  in  practice,  come  only  at  dissolution,  by  death 
or  otherwise  ;  or  when  some  withdrawal  or  diminution  of  stock 
is  proposed.  Then  they  will  generally  be  determined  by  the 
articles ;  for  they  are  seldom  omitted  when  there  is  great  ine- 
quality in  the  contributions  to  be  made  by  the  different  part- 
ners. If  not  so  determined,  it  might  be  that  law  or  equity 
would  presume  that  the  same  proportions  of  ownership  and 


proof  of  an  express  agreement  between 
the  parties  to  share  unequally,  but  by 
evidence  of  any  modes  of  dealing,  or 
of  any  transactions,  from  wliich  such 
a  contract  can  be  implied.  See  Stew- 
art V.  Forbes,  1  Mac.  &  G.  137, 146,  the 
Lord  Chancellor  said :  "  The  plain- 
tiff's bill  rests  upon  the  supposition 
that,  from  1830  to  1840,  Sir  Charles 
Forbes  and  the  plaintiff  were  equal 
partners ;  and  Peacock  i".  Peacock,  2 
Camp.  45,  16  Ves.  55,  56,  was  relied 
on  as  a  foundation  for  that  assumption. 
In  that  case,  it  was  properly  held,  that, 
in  the  absence  of  any  contract  between 
the  parties,  or  any  dealing  from  which 
a  contract  might  be  inferred,  it  would 
be  assumed  that  the  parties  had  car- 
ried on  their  business  on  terms  of  an 
equal  partnership.  That  case  has  no 
application  to  the  present,  because 
there  is,  in  this  case,  conclusive  evi- 
dence, not  from  any  form  of  contract, 
but  from  the  books  of  the  business  and 
the  dealings  between  the  parties,  that 
such  were  not  the  terms  on  which  the 
parties  carried  on  their  business.  An 
equal  partnership  implies  not  only  an 


equal  participation  de  facto  in  profits 
and  loss,  but  a  right  in  each  partner  to 
claim  and  insist  on  sucli  participation. 
This  is  what  tlie  law  has  implied  in 
the  absence  of  all  evidence  of  a  con- 
trary intention  of  the  parties.  But 
what  would  have  been  the  decision  in 
Peacock  v.  Peacock,  if  the  books  and 
accounts,  instead  of  absolute  silence  as 
to  the  shares  of  the  partners  in  each 
year,  had  described  the  shares  to  which 
the  partners  were  entitled  in  the  busi- 
ness, and  had  attributed  to  the  plain- 
tiff four-sixteenths  only  of  the  shares 
of  the  business  ?  These  entries  are  as 
conclusive  of  the  rights  of  the  parties 
as  if  they  had  been  found  prescribed 
in  a  regular  contract."  See  Webster 
V.  Bray,  7  Hare,  159.  It  is  not  to  be  as- 
sumed, however,  that  the  annual  stock 
taken  by  a  partnership  necessarily 
represents  the  interests  of  the  several 
partners  in  the  firm  ;  but  it  may  or 
may  not  do  so,  according  to  the  pur- 
pose for  which,  and  the  mode  in  which, 
it  is  made  up.  Travis  v.  Milne,  9 
Hare,  153. 


284 


THE   LAW    OF    PARTNERSHIP. 


[CH.  VII. 


interest  continue  which  originally  existed  ;  and,  certainly, 
comparatively  slight  evidence  would  suffice  to  establish  this. 
Whether,  in  the  absence  of  special  agreement  upon  the  point, 
any  presumption  exists,  and  what  it  is,  and  whether  of  law  or 
of  fact,  and  what  are  its  grounds,  and  what  its  strength,  must 
depend,  not  oii  the  law  of  partnership  alone,  but  on  that  law  in 
connection  with  the  principles  of  evidence.  But  notwithstand- 
ing some  conflict,  as  indicated  in  the  cases  cited  in  the  previous 
note,  we  are  of  opinion  that  the  prevailing  rule  of  law  that 
partners  are  interested  in  stock  and  profits  in  equal  propor- 
tions, in  the  absence  of  any  evidence  to  the  contrary,  may  be 
considered  as  pretty  well  settled  both  in  England  and  this 
country.  (</) 

ever  different  or  unequal  their  contri- 
butions to  tlie  joint  concern.  Gould  v. 
Gould,  6  Wend.  2G3 ;  Taylor  v.  Taylor, 
2  Murph.  70  ;  Conwell  v.  Sandidge,  5 
Dana,  210,  211  ;  Lee  v.  Lashbrooke,  8 
id.  214  ;  Jones  v.  Jones,  1  Ired.  Eq. 
832 ;  Honore  v.  Colmesnil,  1  J.  J. 
Marsh.  506  ;  Turnipseed  v.  Goodwin,  9 
Ala.  872;  Donelson  v.  Posey,  18  id. 
752,  772 ;  Stein  v.  Robertson,  30  id. 
286,  292;  Roach  v.  Perry,  16  111.  87. 
So,  if  a  shipment  is  made  to  partners, 
they  are  held  by  tlie  Prize  Court  to 
take  in  equal  moieties,  unless  upon  the 
original  papers  a  different  proportion 
appears.  The  San  Jose  Indiano,  2 
Gallis.  268,  303. 

It  is  to  be  observed  that,  in  the 
above  cases,  no  distinction  is  taken 
between  the  property  and  the  profits 
of  a  firm,  as  regards  the  application  of 
the  presumption  of  an  equality  of  inter- 
est between  the  partners.  In  Farrar 
V.  Beswick,  1  Moody  &  II.  527,  tlie 
presumption  that  the  several  partners 
were  equally  interested,  was  applied 
as  to  the  stock  only  ;  so  also,  in  Gould 
V.  Gould,  supra ;  Donelson  v.  Posey, 
13  Ala.  772.  See  Penny  v.  Black,  9 
Bosw.  310. 


(q)  Thompson  v.  Williamson,  cited 
in  preceding  note,  although  the  dicta 
respecting  the  English  law,  which  it 
contains,  are  entitled  to  great  respect, 
as  the  opinions  of  eminent  judges,  is 
yet  expressly  said  by  Lord  Brougham 
to  be  decided  as  a  question  of  Scottish 
law.  And  even  as  an  adjudication 
under  the  law  of  Scotland,  wiiich  is 
founded  upon  the  civil  law,  it  has  been 
thought  open  to  question.  See  Story 
on  Part.  §  24,  and  note.  Of  Peacock  v. 
Peacock,  which  stands  alone  among  the 
common-law  authorities.  Lord  Eldon, 
who  had  directed  the  issue,  said  :  "  The 
result  of  the  issue  that  was  directed, 
appears  to  be  extraordinary.  The  pro- 
position being  that  the  son  was  inter- 
ested in  some  share,  not  exceeding  a 
moiety,  the  jury  in  some  way,  upon 
the  footing  of  a  quuntum  meruit,  held 
him  entitled  to  a  quarter.  I  have  no 
conception  how  that  principle  can  be 
applied  to  a  partnership."  Stewart  v. 
Forbes,  1  Mac.  &  G.  137  ;  Webster  v. 
Bray,  7  Hare,  159 ;  M'Gregor  v.  Bain- 
brigge,  7  id.  164,  n.  In  this  country,  it 
never  seems  to  have  been  controverted, 
that  in  the  absence  of  any  contract 
upon  the  subject,  the  partners  were 
interested  in  equal  proportions,  how- 


CH.  VII.]  RIGHTS    OF   PARTNERS   BETWEEN   THEMSELVES.         285 

2.    Of  the   Good -Will,  and  of  Trade-Marks,   Copyrights,  and 
Patent- Rights. 

*  There  is  yet  aiiotlier  thing  which  is  certainly,  in  *  261 
some  respects,  partnership  property,  but  which  it  is  not 
so  easy  to  define  ;  and  this  is  the  good-will  of  the  firm.  A  dis- 
tinction has  been  taken,  in  this  respect,  between  the  interest  of 
a  partnership  resting  on  the  contracts  of  the  firm  with  a  third 
party,  and  that  which  has  no  such  foundation,  (r)  We  have 
much  doubt,  however,  whether  this  distinction  rests  on  good 
authority,  or  good  reason.  The  claims  or  interests  of  the 
partnership  arising  from  contracts  made  with  them,  or  on 
their  vested  and  exclusive  rights,  however  acquired,  seem  to 
be  excluded  from  the  meaning  of  "good-will;"  for  the  only 
proper  signification  of  the  word  must  be,  that  benefit  or  ad- 
vantage which  rests  only  on  the  good-will,  or  kind  and  friendly 
feeling  of  others,  and  which,  of  course,  can  be  wholly  lost 
without  giving  rise  to  any  legal  right,  or  ground  of  complaint. 
This  simple  meaning  of  "  good-will "  we  take  to  be  the  true 
technical  and  legal  meaning  of  the  word.  Lord  Eldon 
defined  *  this  about  as  well  as  it  can  be  defined,  when  *  262 
he  said,  that  "  the  good-will  of  a  trade  is  nothing  more 
than  the  probability  that  the  old  customers  will  resort  to  the 
old  place;"  although  this  definition  is  open  to  the  objection 

(;■)  Lord  Eklon  has  thus  stated  and  would  not  possess.  In  that  sense,  there- 
explained  this  distinction  :  "  Where  two  fore,  the  good-will  of  a  trade  follows 
persons  are  jointly  interested  in  trade,  from  and  is  connected  with  the  fact  of 
and  one,  by  purchase,  becomes  sole  sole  ownership.  There  is  another  way 
owner  of  the  partnership  property,  the  in  which  the  good-will  of  a  trade  may 
very  circumstance  of  sole  ownership  be  rendered  still  more  valuable:  as 
gives  him  an  advantage  beyond  the  bj-  certain  stipulations  entered  into  be- 
actual  value  of  the  property,  and  which  tween  the  parties  at  the  time  of  the  one 
may  be  pointed  out  as  a  distinct  bene-  relinquishing  his  share  in  the  business  ; 
fit  essentially  connected  with  the  sole  as  by  inserting  a  condition  that  the 
ownership.  In  the  case  of  the  trade  withdrawing  partner  shall  not  carry  on 
of  a  nursery-man,  for  instance,  the  mere  the  same  trade  any  longer,  or  that  he 
knowledge  of  the  fact  that  he  is  sole  shall  not  carry  it  on  within  a  certain 
owner  of  the  property,  and  in  the  sole  distance  of  the  place  where  the  part- 
and  exclusive  management  of  the  con-  nership  trade  was  carried  on,  and  where 
cern,  gives  him  an  advantage  which  the  continuing  partner  is  to  carry  it  on 
the  other  partner,  supposing  him  to  upon  his  own  sole  and  separate  ac- 
carry  on  the  same  trade,  with  other  count."  Kennedy  v.  Lee,  3  Mer.  452. 
property  not  the  partnership  property, 


286  THE    LAW    OF    PARTNERSHIP.  [CH.  VII. 

that  it  localizes  that  interest  which  we  call  good-will,  and 
makes  it  altogether  dependent  upon  place,  and  wholly  inde- 
pendent of  persons,  (s)  This  is,  nevertheless,  an  exact 
statement  of  the  legal  meaning  of  good-will.  It  is  a  hope  or 
expectation,  which  may  be  reasonable  and  strong,  and  may 
rest  upon  a  state  of  things  that  has  grown  up  through  a  long 
period,  and  been  promoted  by  large  expenditures  of  money. 
And  it  may  be  worth  all  the  money  it  has  cost,  and  a  great  deal 
more  ;  but  it  is,  after  all,  nothing  more  than  a  hope,  grounded 
upon  a  probability.  There  is  some  dilificulty,  no  doubt,  in 
treating  this  hope  as  property ;  but  if  that  which  is,  in  fact,  a 
valuable  interest,  were  not  treated  as  one,  injustice  would  be 
done,  and  therefore  both  law  and  equity  treat  the  good-will  of 
a  business  as  a  valuable  pecuniary  interest,  (^)  although  it 
differs  in  important  respects  from  tangible  property,  or  legal 
choses  in  action.  Thus,  it  cannot  be  valued  as  a  separate 
property,  or,  at  least,  is  not  by  the  law,  although  it  often  is  by 
parties  themselves,  (m)  and  might  be  so  valued  without  diffi- 
culty in  equity,  although  it  is  said  that  a  contract  for  the 

sale  of  a  good-will  will  not  be  enforced  in  equity,  (f) 
*  263    *  The  executor  of  a  deceased  partner  can  realize  the 

share  of  the  deceased  in  the  good-will,  only  when  he  can 
compel  a  sale  of  the  stock  and  premises,  and  then  the  good- 
will goes  with  them,  {tv)    For,  as  a  general  rule,  by  the  convey- 

(s)  Cruttwell  v.  Lye,  17  Ves.  335,  treated  as  of  the  nature  of  good-will, 

346.     Tills  definition,  as  we  have  above  see  post. 

intimated,  makes  good-will  local,  and  («)  Harrison r.  Gardner, 2  Madd.  198. 
an  incident  of  the  place  where  business  (v)  In  Baxter  i'.  Connoly,  1  Jac  & 
has  been  carried  on,  and  not  of  the  W.  580,  Lord  Eldon  said  :  "  The  court 
persons  by  u-Jiom  it  has  been  conducted,  certainly  will  not  execute  a  contract 
It  is  in  this  sense,  only,  that  good-will  for  the  sale  of  a  good-will :  at  the  same 
is  recognized  by  the  law  as  a  pecuniary  time,  it  will  not  enjoin  against  any  pro- 
interest.  Hence  the  sale  of  a  trade  ceeding  at  law  under  such  an  agree- 
witli  the  good- will  leaves  the  vendor  at  ment.  Suppose,  for  instance,  there  is 
liberty  to  set  up  the  same  trade  in  any  a  contract  for  the  good-will  of  a  shop ; 
other  situation.  Shackle  v.  Baker,  14  it  cannot  be  conveyed,  and  the  court 
Ves.  468  ;  Harrison  v.  Gardner,  2  Madd.  would  say.  Go  and  make  what  you  can 
198,  219 ;  Cruttwell  t-.  Lye,  1  Rose,  123 ;  of  it  at  law  ;  if  you  can  recover,  very 
16  Am.  Jur.  87,  92.  well,  we   won't  prevent  you ;   if  you 

(t)  Dougherty  v.    Van   Nostrand,   1  cannot,    very    well    again,    we    won't 

HofT.    Ch.  68 ;    Williams  i;.    Wilson,  4  assist  you."     Coslake  v.  Till,  1   Russ. 

Sandf  Ch.  379.     As  to  how  far  a  name  376,  378;  Bozon  v.  Farlow,  1  Mer.  459. 

which  the  firm  have  used  in  their  busi-  See  Shackle  v.  Baker,  14  Ves.  468. 

ness,  and  have  made  valuable,  may  be  (w)  Crawshay  v.  Collins,  15  Ves.  224, 


CH.  VII,]        RIGHTS    OF   PARTNERS    BETWEEN    THEMSELVES. 


287 


ance  of  a  shop  or  store,  the  good-will  of  the  business  carried  on 
in  it  passes,  although  nothing  is  said  about  the  good-will,  {x) 
And  if  an  executor  cannot  compel  a  sale  of  the  premises,  or, 
as  it  seems,  if  the  premises  are  not,  in  fact,  sold,  the  executor 
gets  no  advantage  from  the  good-will,  for  that  remains  entirely 
with  the  surviving  partners  who  carry  on  the  same  business  in 
the  same  place.  And  if  the  executor  attempts  to  use  the  name 
of  the  old  firm  in  such  wise  as  to  secure  to  himself  a  portion  of 
the  good-will,  it  is  said  that  he  will  be  restrained  by  injunc- 
tion, (y)  But  this  can  only  apply  so  far  as  to  prevent  fraud  on 
his  part.  If  he  continues  the  same  business  in  another  place, 
and  advertise  the  fact  that  he  is  the  executor  of  a  partner,  and 
carries  it  on  with  the  same  facilities  and  the  same  advantage  to 
customers  as  was  done  by  the  old  partnership,  there  is  certainly 
no  right  in  the  surviving  partners,  who  have  paid  nothing  for 
the  good-will,  to  prevent  his  doing  so. 

From  these  and  similar  difficulties,  it  has  been  said  by  high 
authorities  that  the  good-will  of  a  business  is  not  partnership 
property,  and  remains  wholly  with  the  surviving  partners.  (2) 
We  cannot  but  think,  however,  that  an  American  decision 
affirming  it  to  be  partnership  property,  and  capable  of 
division,  *  rests  on  better  reason,  (a)  And  it  would  *  264 
always  be  in  the  power  of  equity  to  ascertain  its  value, 


227;  Featherstonhaugh  v.  Fenwick,  17 
id.  309,  312;  Dougherty  v.  Van  Nos- 
trand,  1  Hoff.  Ch.  70. 

(x)  Chissam  v.  Dewes,  5  Euss.  29. 
See  Kennedy  i-.  Lee,  3  Meriv.  441,  452. 

(y)  Lewis  v.  Langdon,  7  Sim.  421. 
See  Staats  v.  Hewlett,  4  Denio,  559. 
[A  retired  partner,  wlio  sets  up  in  busi- 
ness on  his  own  account,  will  not  be 
allowed  so  to  advertise  his  former  con- 
nection as  to  lead  the  public  to  believe 
that  he  is  carrying  on  the  business  of 
the  old  firm.  Hookham  v.  Pottage,  L. 
R.  8  Ch.  91.  Nor  will  a  partner  con- 
tinuing the  business  be  allowed  to  use 
the  old  firm  name,  to  the  prejudice  of 
the  retiring  partner.  McGowan  v. 
McGowan,  22  Ohio  St.  370.  See  also, 
as  to  use  of  firm  name  after  disso- 
lution, Benninger  v.  Clarke,  10  Abb. 
(N.  Y.)  Pr.  K.  s.  264.] 


(2)  In  Hammond  v.  Douglas,  5  Ves. 
539,  the  Lord  Chancellor,  Loughbor- 
ough, "  was  clearl}'  of  opinion,  that 
upon  a  partnership  without  articles  the 
good-will  survives ;  and  a  sale  of  it 
cannot  be  compelled  by  the  representa- 
tives of  the  deceased  partner,  being 
the  right  of  the  survivor,  which  the 
law  gives  him  to  carry  on  the  trade. 
It  is  not  partnership  stock  of  which 
the  executor  may  compel  a  division." 
See  Lewis  v.  Langdon,  7  Sim.  421. 
Chancellor  Kent  gives  his  sanction  to 
this  doctrine ;  3  Kent  Comm.  [64]  ; 
and  though  it  was  doubted  by  Lord 
Eldon  in  Crawshay  r.  Collins,  15  Ves. 
224,  227,  yet  tliis  doubt  has  been  con- 
sidered overruled  by  the  case  of  Lewis 
V.  Langdon,  supra. 

(a)  Dougherty  v.  Van  Nostrand,  1 
Hoff.  Ch.  68. 


288  THE   LAW   OF   PARTNERSHIP.  [CH.  VII. 

by  evidence  offered  to  a  Master  ;  or,  at  least,  if  there  can  be  no 
agreement,  by  a  sale  of  the  good-will,  and  if  that  be  inseparable 
from  the  shop  or  store,  then  that  might  be  sold  also,  for  this,  if 
for  no  other  reason.  It  has  been  held,  in  another  American 
case,  that  a  receiver  of  a  partnership  may  be  directed  by  the 
court  to  carry  the  business  on,  in  order  to  preserve  a  valuable 
good-will.  (&) 

A  distinction  has  been  taken  in  this  respect  between  the 
good-will  of  a  partnership  in  trade,  and  that  of  a  professional 
partnersliip.  Lawyers  or  physicians  may  become  partners  ; 
but  the  good-will  attached  to  such  a  firm  must  be  considered 
more  as  a  personal  than  as  a  local  thing,  (c)  It  is  not  a  prob- 
ability that  the  old  customers  will  go  to  the  old  place,  but  to 
the  same  persons,  wherever  they  may  be.  And,  if  one  died,  it 
would  be  very  hard  —  as  has  been  said  by  an  English  equity 
judge  —  to  require  the  other  to  give  up  his  business  and  sell 
out,  in  order  to  determine  the  value  of  the  good- will,  {d}  And 
probably  the  business-office  which  successful  lawyers  or  phy- 
sicians had  occupied  would  bring  but  little  more  for  their  oc- 
cupancy. There  are  instances  which  might  fall  between  these 
in  this  respect.  The  business  of  an  apothecary,  in  this  coun- 
try, is  almost  altogether  commercial.  In  England,  it  is, 
*  265    in  great  proportion,  the  business  of  a  medical  *  prac- 

(6)  Marten  v.  Van  Schaick,  4  Paige,  enforce   them.      Candler    v.    Candler, 

479.     The  court  directed  the  receiver  Jac.  231  ;  Whittaker  v.  Howe,  3  Beav. 

to  carry  on  the  l)usiness  in  this  case  ;  389,  393  ;   Bozon  v.  Farlow,   1  Meriv. 

the  very  thing  which   was  considered  459. 

by  the  Vice-Chancellor  in  7  Sim.  421,  (d)   Farr  v.    Pearce,    3   Madd.   78. 

to  be  beyond  the  power  of  equity,  and  Here,  Farr  &  Pearce  had  been  partners 

therefore  to  show  that  the  good-will  of  in  the  business  of  surgeon,  apothecary, 

a  business  could  not  belong  to  the  firm,  &c.,  under  articles.     Sir  John  Leach, 

but   remained   to   the   survivor.      See  V.  C,  said  :  "  When  such  partnerships 

Williams  v.  Wilson,  4  Sandf  Ch.  379.  determine,  unless  there  be  stipulations 

(c)  Though,  for  the  reason  stated  to  the  contrary,  each  must  be  at  lib- 
in  the  text,  there  is  properly  speaking  erty  to  continue  his  own  exertions  ; 
no  goodwill  belonging  to  professional  and,  where  the  determination  is  by  the 
partnerships,  yet  it  is  very  common  for  death  of  one,  the  right  of  the  survivor 
attorneys,  solicitors,  physicians,  &c.,  to  cannot  be  affected.  Such  partnerships 
agree,  upon  selling  out,  to  secure  their  are  very  different  from  commercial  part- 
customers  to  those  who  succeed  them,  nerships."  Another  case  is  mentioned 
The  policy  of  sanctioning  agreements  by  Collyer  as  having  been  decided  on 
of  this  character  has  been  doubted.  But  the  same  principle.  Spicer  w.  James, 
their  validity  is  not  questioned  ;  though  Kolls,  M.  T.  1830;  Collyer  on  Part, 
equity,  it  seems,  will  not  specifically  §  164. 


CH.  VII.]        RIGHTS   OF   PARTNERS   BETWEEN   THEMSELVES.  289 

titioner.     Here,  therefore,  the  good-will  might  be  treated  as 
a  commercial  one  ;  there,  as  a  professional  one.  (e) 

3.    Of  the   Trade  Name. 

The  question  of  the  right  to  use  a  trade  name  has  come  be- 
fore the  courts,  and  it  would  seem  that  this  could  not  be  treated 
as  of  the  nature  of  good-will,  or  as  a  valuable  interest  which 
the  court  could  recognize  and  protect,  mainly  from  the  want  of 
adequate  power  in  a  court.  (/)  But  of  late  years  new  and 
excellent  principles  and  rules  have  been  adopted  in  England 
and  in  this  country  in  respect  to  trade-marks.  They  are  con- 
sidered property,  so  far  that  parties  using  them  falsely  and 
injuriously  are  now  certainly  liable  in  damages  to  those  who 
have  a  right  to  them,  and  equity  will  restrain  this  unlawful 
use.  (^)  We  cannot  but  think  that  this  right  partakes  so 
much  of  the  nature  of  good-will  that  it  will  be  included  within 
that  term,  or  otlierwise  recognized  and  protected  by  courts,  if 
they  have  power  to  do  so.  (A)  Of  copyrights  and  patent-rights 
no  question  is  made :  they  often  form  a  valuable  portion  of  the 
stock  of  bookselling  and  other  commercial  partnerships,  (i) 


It  is  said  in  some  cases,  and  in  text-books  of  high  author- 
ity, that  each   partner  has  a  lien  on  the  common    property, 

(e)  See  Farr  v.  Pearce,  in  preceding  Spear,  2  Sandf.  599;  Coats  v.  Holbrook, 

note.  In  16  Am.  Jur.  87,  the  good-will  of  2  Sandf.  Ch.  586;  Knott  v.  Morgan,  2 

a  newspaper  establishment  is  considered  Keene,  213  ;  Rodgers  v.  Nowell,  5  C.  B. 

to  stand  on  the  same  footing  as   the  109,  17  Eng.  L.  &  Eq.  83,  145 ;  Farina 

good-will   of    a   professional   business,  v.  Silverlock,  39  Eng.  L.   &  Eq.  514. 

See  Keene  v.  Harris,  cited  in  17  Ves.  The  cases  are  well  collected  and  exam- 

338,  342.     And  in  Holden  v.  M'Makin,  ined  in  note  to  2  Kent  (9th  ed.),  [372]. 

1  Pars.  Sel.  Cas.  270,  282,  it  is  held  that  See  also  6  West.  L.  J.  337. 
a  newspaper  is  subject  to  the  same  rule  {h)  In  Hine  v.  Lart,  10  Jur.  106,  it 

as  a  commercial  partnership.  seems  to  have  been  considered  by  the 

(/)  See  Lewis  r.  Langdon,  7  Sim.  court  that  a  trade-mark  was  partner- 

421 ;  Webster  v.  Webster,   3  Swanst.  ship  property.     See  Lewis  v.  Langdon, 

490.  7  Sim.  421  ;   ante,  p.  *  265  and  notes. 

((])  The  right  and  property  of  a  firm  [Equity  will  not  decree  the  sale  of  a 

to  and  in  a  trade-mark  are  of  course  partner's  interest   in   a  firm  brand  or 

the  same  as  that  of  an  individual.    The  trade-mark,  its  value  being  too  insub- 

following  recent  cases  upon  the  general  stantial  upon  which  to  set  a  value.   Tay- 

subject  may  be  consulted  as  exempli-  lor  v.  Bemis,4  Biss.  U.  S.  C.  Ct.  406.] 
fying  the  proposition  of  the  text.     Tay-  (0  Parkhurst  v.  Kinsman,  1  Blatchf. 

lor  V.  Carpenter,  2  Woodb.  &  M.  1,  11  C.  C.  488,  495;    Penniman  v.  Munson, 

Paige,  292,  2  Sandf.  Ch.  m?>,  3  Story,  26  Vt.  164;  Lovell  v.  Hicks,  2  Younge 

458 ;  Amoskeag  Manufacturing  Co  .v.  &  C.  481. 

19 


290  THE   LAW   OF   PARTNERSHIP.  [CH.  VII. 

*  2G6  first,  to  *  secure  the  payment  of  the  common  debts,  for 
wliich  each  partner  is  liable  m  solido,  and  then  to  secure 
to  him  his  own  share  in  the  partnership  property,  after  the 
debts  are  all  paid.  And  it  is  also  said  that  this  lien  may  be 
followed  out,  and  made  to  attach,  in  some  cases,  to  the  pro- 
ceeds of  partnership  property,  which  has  been  wrongfully  sold. 
We  should  consider  this  topic  here,  but  it  is  closely  connected 
with  another  principle  generally  stated  with  it  ;  namely,  that 
it  is  through  this  lien  that  the  right  of  creditors  of  the  partner- 
ship to  the  property  of  the  partnership,  as  pledged  to  the  pay- 
ment of  their  debts,  is  to  be  worked  out. 

This  is  much  the  most  important  aspect  of  this  topic  of  lien, 
in  a  practical  point  of  view  ;  and,  regarding  the  doctrine  of 
lien  as  of  more  moment  to  the  creditors  than  to  the  partners 
themselves,  we  defer  the  consideration  of  it  until  we  treat  of 
the  rights  and  remedies  of  third  persons  against  the  firm.  And 
then  we  shall  state  our  dissent  from  some  of  the  views  fre- 
quently expressed  of  this  lien,  and  endeavor  to  show  how  it 
needs  to  be  qualified  or  modified  before  it  can  harmonize  with 
the  law  of  partnership,  or  the  general  law-merchant. 


CH.  VIII.J         OF   THE   REMEDIES    OF   PARTNERS    INTER   SE.  291 


CHAPTER    VIII. 

OF   THE   REMEDIES   OF   PARTNERS   INTER   SE. 
SECTION    I. 

GENERAL  CONSIDERATIONS. 

The  relation  of  partners,  and  the  legal  status  of  a  partner- 
ship, are  peculiar ;  and  the  remedies  which  each  partner  has 
against  another  are  equally  so,  and  it  is  sometimes  difficult  to 
define  them.  A  partnership  is  not  a  corporation,  nor  a  legal 
person  ;  and  yet  the  common  law  yields  so  far  to  the  reasons 
and  necessities  of  the  law-merchant  as  to  consider  the  partner- 
ship as  a  quasi  corporation,  or,  at  least,  to  recognize  it  as  having 
some  kind  and  measure  of  personality.  Perhaps  it  might  be 
better  if  our  law,  like  the  Scotch  law  (founded  on  the  civil  law), 
carried  this  personality  so  much  farther  as  to  permit  actions 
by  or  against  the  firm,  without  reference  to  the  individual  part- 
ners, (a)  In  Illinois,  it  has  been  held  that,  under  the  attach- 
ment act  of  that  State,  a  copartnership  may  be  sued  by  their 
firm  name,  and  a  garnishee  proceeded  against  in  the  same 
way.  Qaa')  The  same  power  is  given  by  statute  in  some  other 
States,  (^aaa')  In  some  instances,  it  might  be  useful  and  safe 
to  permit  (as  the  Scotch  law  permits)  (^)  a  partner  to  proceed 
against  a  partnership,  or  the  firm  against  a  partner,  much  as 
may  be  done  in  the  case  of  a  corporation.  Nothing  of  that 
kind  is  known  to  the  common  law  ;  and  it  may  be  that  equity 
has  now  established  principles  and  methods  which  practically 
answer  as  well.  But  in  equity  an  action  to  recover  for  money 
misappropriated  by  a  partner  should  make  the  defaulting 
partner  a   party,  (bb)      In    this    country,    where    equity   and 

(a)  2  Bell  Coram.  Bk.  7,  V.  p.  510.  (b)  Ibid. 

(art)  U.  S.  Express  Co.  v.  Bedbury,  (bb)  Atkinson    v.    Mackreth,    Law 

84  111.  459.  Rep.  2  Eq.  570. 

(aaa)  Stuart  v.   Corning,  32  Conn. 
105. 


292  THE   LAW   OF    PARTNERSHIP.  [CH.  VIII. 

law  have,  in  many  States,  approached  closely  together,  and 
seem  to  be  tending  towards  unity,  there  may  be  still  less  need 
of  any  remedies  in  addition  to  those  now  made  use  of.  But 
many  questions  in  the  use  of  these  remedies  certainly  demand 
better  and  more  certain  answers  than  can  now  be  made.  They, 
however,  can  be  given  authoritatively  only  by  adjudication,  or 

by  legislation. 
*  268        *  As  a  general  rule,  the  law  will  not  take  cognizance 

of  questions  which  relate  to  the  partnership  between 
living  partners,  (c)  The  reasons  for  this  are  substantial  and 
of  much  weight.  One  is,  that  if  a  partner  calls  on  another  to 
acknowledge  or  satisfy  any  claim  in  which  the  partnership  is 
interested,  the  plaintiff  will  either  prevail  and  recover  damages 
to  which  he  must  himself  eventually  contribute,  or  be  defeated, 
and  perhaps  be  obliged  to  pay  to  the  defendant  something 
which  gives  the  plaintiff  a  right  to  call  at  once  on  the  defendant 
to  refund  a  part  of  what  he  pays.  (cZ)  The  second  reason  is 
little  more  than  a  development  or  consequence  of  the  first. 
It  is,  that  no  partner  has  a  several  and  personal  claim  on  any 
other  partner  for  any  matter  in  which  the  partnership  is  in- 
terested, because  neither  can  the  partners  be  separated,  —  all 
being  interested,  both  as  plaintiffs  and  as  defendants,  —  nor  can 
any  claim  or  item  of  claim  be  separated  from  the  other  inter- 

(c)  Or  as  the  rule  is  laid  down  by  no  action  against  the  partnership  for 
Abbott,  C.  J. :  "  One  partner  cannot  the  amount  of  his  expenditures,  be- 
maintain  an  action  against  his  copart-  cause  he  cannot  be  both  plaintiff  and 
ner  for  work  and  labor  performed,  or  defendant  of  record ;  nor  against  his 
money  expende<l  on  account  of  the  copartners,  for  the  reason  stated  here- 
partnership."  Holmes  v.  Higgins,  1  after  in  the  text,  that,  until  an  account 
B.  &  C.  76.  It  is  unnecessary  to  ad-  of  the  partnership  concerns  is  taken,  it 
duce  here  the  numerous  authorities  is  impossible  to  tell  whether  he  is 
upon  this  point ;  for,  as  is  said  here-  really  a  debtor  or  creditor  of  the  other 
after,  the  whole  of  this  section  consists  partners.  But,  after  a  trial  and  verdict 
simply  in  a  statement  of  the  exceptions  for  the  plaintiff,  it  is  too  late  for  the 
to  the  general  rule.  We  have  already  defendant  to  object  that  the  subject- 
seen  that,  for  his  personal  services  in  matter  of  the  suit  was  a  copartnership 
the  affairs  of  the  partnership,  as  a  gen-  contract  between  him  and  the  plaintiff, 
eral  rule,  no  partner  is  entitled  to  com-  The  objection  should  be  made  at  the 
pensation,  even  as  an  item  of  account  trial.  Smith  v.  Allen,  18  Johns.  245. 
between  the  partners.  For  his  ad-  See  Gomersall  v.  Gomersall,  14  Allen, 
vances  and  outlays  in  behalf  of  the  60 ;  and  Crottes  v.  Frigerio,  18  La. 
firm,  each  partner  is,  indeed,  entitled  Ann.  283. 

to   the   proper  credits,   whenever  the  (d)  Milburn    v,    Codd,   7   B.   &  C. 

partnership    accounts    are    made    up.  419,  421. 
But  we  shall  see  that  he  can  maintain 


CH.  VIII.]         OP    THE    REMEDIES    OF    PARTNERS    INTER    SE.  293 

ests  of  the  partnership.  One  partner  may  to-day  pay  much 
more  or  much  less  than  the  sum  which  would  fall  upon  him  to 
pay,  in  proportion  either  to  the  numbers  of  the  partners,  or  to 
ins  share  or  interest  in  the  concern.  But  yesterday  he  may 
have  done  just  the  reverse  ;  and  the  charge  or  credit  of  yes- 
terday must  be  brought  into  connection  with  the  charge  or 
credit  of  to-day,  before  it  can  be  ascertained  whether  he  has 
paid  too  much  or  too  little,  and  therefore  whether  he  may  claim 
of  the  other  partners,  or  they  of  him.  But,  to  settle  this 
question  finally  and  justly,  the  charges  and  credits  of  all 
other  days,  and  not  only  so,  but  of  all  *  the  other  part-  *  269 
ners,  must  be  taken  into  consideration,  before  it  can  be 
ascertained  whether  the  plaintiff  has  a  valid  claim  against  the 
defendant,  (e) 

The  objections  to  the  cognizance  by  law  of  the  claim  of  a 
partner,  against  a  partner  on  partnership  account,  resolve  them- 
selves into  this :  The  balance  against  every  partner,  on  part- 
nership account,  is,  like  every  other  debt  to  the  partnership,  a 
part  of  the  stock  or  property  of  the  partnership ;  all  this  is 
first  bound  to  the  debts  of  the  firm,  and,  after  these  are  paid, 
it  all  belongs  to  the  partners  severally,  in  due  proportion.  No 
one,  therefore,  can  make  good  his  separate  claim  or  title  to  one 
of  these  debts  or  balances,  any  more  than  he  can  to  the  sep- 
arate debt  of  any  creditor  of  the  firm  or  a  severed  portion  of 
the  merchandise.  There  is,  indeed,  no  separate  claim  until 
adjustment  of  all  the  claims  ;  and  therefore  no  ground  for 
maintaining  such  a  suit  at  law. 

It  may  be  said  that  there  is,  in  fact,  in  each  partner  a  kind 
of  latent  but  vested  interest  in  his  share,  and  a  proportionate 
claim  against  every  partner  who  withholds  his  share  ;  and  that 
the  process  of  account  and  adjustment  gives  no  title,  but  only 
ascertains  its  extent  and  measure.  Something  like  this  is 
true ;  and  equity  proceeds  on  principles  not  very  different. 
But  the  common  law  cannot,  for  the  reason  that  it  has  no 
methods  nor  processes  by  which  it  could  cause,  or  regulate,  or 

(ft)  Lord  Chancellor  Cottenhara  ex-  Francisco  v.  Fitch,  25  Barb.  130;  Mo- 
plains  the  disability  of  partners  to  sue  rin  v.  Martin,  25  Mo.  360 ;  Hammond 
each  other  in  Kichardson  v.  Bank  of  v.  Hammond,  20  Ga.  556;  Wiggin  v. 
England,  4  My Ine  &  C.  171,  172.     See  Ghimmings,  b  Allen,  153. 


294  THE   LAW   OF   PARTNERSHIP.  [CH.  VIII. 

recognize  the  account  and  adjustment  necessary  to  define  the 
personal  claim  of  each  partner.  Certainly  it  cannot  do  this  as 
easily  and  as  completely  as  equity  can  do  it ;  and  this  is  sub- 
stantially the  reason  why  equity  has  jurisdiction  over  all  cases 

of  this  kind.  (/) 
*  270        *  The  limits  between  legal  and  equitable  jurisdiction 

in  relation  to  questions  arising  under  partnership  are, 
on  the  whole,  sufficiently  well  defined,  although  there  are  some 
questions  upon  which  an  unfortunate  degree  of  obscurity  still 
rests.  We  will,  in  the  first  place,  consider  those  cases  of  which 
courts  of  law  take  cognizance,  and  then  those  which  are  referred 
to  equity. 

SECTION    II. 

OF  QUESTIONS  BETWEEX  PARTNERS  OF  WHICH  COURTS  OF  LAW  TAKE 

COGNIZANCE. 

1.    Of  Demands  Distinct  from  the  Affairs  of  the  Partnership. 

While  the  accounts  of  the  partnership  remain  unadjusted, 
one  partner  cannot  recover  of  the  other  any  money  received  on 

(/)  "  It  is  a  general  rule,  that  be-  to  ascertain  how  much  was  due  at  the 

tween  partners,  whether  tliey  are  so  in  execution  of  the  deed,  and  wiiether  the 

general  or  for  a  particular  transaction  sum  has  been  reduced  in  any  and  what 

only,  no  account  can  be  taken  at  law."  degree  by  the  intermediate  gains  of  the 

Per  Abbott,   C.  J.,  in  Borill  v.  Ham-  partnership  business.    Such  an  account 

mond,   6   B.  &   C.   149,  151.     And  in  cannot  be  taken  by  a  jury,  and  conse- 

Rogers  v.  Kogers,  1  Hall,  391,  it  was  quently  no  issue  could  be  taken  on  the 

expressly  held,  that  a  court  of  law  can-  debt  on  which   tiie  defendants   rely." 

not  take  jurisdiction  of   accounts  be-  "  The  short  objection  to  this  applica- 

tween  partners.     See  Harvey  v.  Crick-  tion  is,"  said  Chambre,  J.,  "that  the 

ett,  5  Maule  &  S.  38G,  340;  Smith  v.  court  cannot  direct  a  partnership  ac- 

Barrow,  2  T.  R.  476,  478 ;   Nugent  v.  count  to  be  taken,  without  assuming  a 

Locke,  4  Cal.  318;   McKnight  v.  Mc-  jurisdiction  that  does  not  belong  to  it." 

Cutchen,  27  Mo.  436.      In  De  Tastet  Chapman   v.  Koops,  3  B.  &  P.  289; 

V.  Shaw,  1   B.  &  Aid.  664,  (369,  Lord  Parker  v.  Pistor,  id.  288.     See  Judd  v. 

EUenborough,    C.    J.,    delivering    the  Harris,  6  Vt.  185 ;  Spear  v.  Newell,  13 

opinion  of  the  court,  said  :  "  The  only  id.  288;    Beach  v.  Hotchkiss,  2  Conn, 

mode  in  which  a  fact  can  be  contro-  425. 

verted  in  an  action  at  law,  namely,  by  The    action    of    account    may    be 

taking  an  issue  to  be  tried  by  a  jury,  brought    between    partners    wherever 

is   impracticable  in  the  present  case:  that   action    is  in   use;    but   it  seems 

because  the  debt  constitutes  an  item  in  properly    applicable    only  where    the 

a  partnership  account ;   and  the  part-  partnership    has   come   to  an  end.     1 

nership  account  must  be  taken  in  order  Story  Eq^.  §§  659-665. 


CH.  VIII.]         OF   THE   REMEDIES   OP   PARTNERS   INTER   SB.  295 

partnership  account,  (ff^  But  partners  may  sue  their  part- 
ners, or  be  sued  by  them,  on  any  matter  not  connected  with 
the  partnersliip,  as  freely,  and  in  precisely  the  same  way,  as  if 
they  were  not  partners ;  for  the  plain  reason,  that,  outside  of 
the  partnership,  they  are  not  partners.  Nor  does  it  make  any 
difference  whether  this  personal  and  separate  contract  or  debt 
becomes  afterwards  connected  with  the  partnership,  or  is  so  at 
the  time  in  the  intention  of  the  parties,  if  it  be  not  on  account 
of  the  partnership,  so  as  to  involve  all  the  partners.  Thus,  if 
one  partner,  who  has  taken  more  than  his  proportion  from  the 
partnership,  and  therefore  has  a  large  debit  against  him  on  the 
partnership  books,  wishes  to  reduce  this  debit,  and  borrows 
money  from  another  partner,  confessedly  to  be  paid  to  the 
partnership  in  reduction  of  this  debit,  the  borrower  is 
bound  personally  to  the  lender,  and  the  *  lender  can  sue  *  271 
personally  the  borrower.  And,  if  a  partner  sues  a  part- 
ner on  any  independent  and  several  indebtedness,  the  de- 
fendant cannot  set  off  or  recoup  any  alleged  balance  which 
he  claims  that  he  should  have  against  the  plaintiff,  on  partner- 
ship account,  when  that  account  shall  be  hereafter  settled  and 
balanced.  (</) 

?o,  too,  a  partner  can  sue  a  partner  on  any  contract  or  trans- 
action arising  before  the  partnership,  although  referring  to  the 
partnership.  (A)  Thus,  if  one  proposed  partner  borrow  money 
of  another,  to  be  advanced  by  the  borrower  as  a  part  of  his  con- 
tribution to  the  stock  of  the  partnership,  the  borrower  is  liable 

iff)   Smith  V.   Smith,  33   Mo.   557.  Roberts    v.  Fitler,   13   Penn.   St.   265; 

[Though  one  partner  give  another  his  Molony  v.  Davis,  48  id.  512. 

promissory  note,  if  it  be  before  and  in  (h)  Goddard    v.    Hodges,   3   Tyrw. 

aid  of  settlement,  and  may  not  be  found  209.     Where  the  plaintiff  contracted  to 

to  be  due  on  settlement,  no  suit  at  law  do  certain  work  for  a  joint-stock  cora- 

between  the  partners  can  be  founded  pany  for  a  given  sum,  and  afterwards 

on  it.     Buell  v.  Cole,  54  Barb.  (N.  Y.)  caused  his  name  to  be  inserted  in  the 

353.   Theneglect,  however,  of  a  defend-  books  of  the  company  as  a  holder  of 

ant  to  enjoin  a  suit  at  law  against  him  shares  therein, — held,  that  this  did  not 

by  a  copartner,  in  respect  to  their  part-  affect  his  right  to  sue  the  company  in 

nership  dealings,  does  not  prevent  his  respect  of  the  prior  contract.     Lucas 

maintaining  a  bill  for  an  account  after  v.  Beach,  1  Scott  N.  K.  350,  1  Man.  & 

judgment   in    the   suit,  and  offsetting  G.  417.     See  Holmes  v.  Higgins,  1  B. 

against  it  so  much  as  upon  settlement  &  C.  74  ;   Fox  i'.  Clifton,  G  Bing.  776  ; 

shall  be  found  just.     Gregg  i^.  Brower,  Howell  v.  Brodie,  6  Bing.  N.  C.  44; 

G7  111.  525.]  Cheny  v.  Clark,  3  Vt.  431;   Currier  v. 

(//)  Ives  V.  Miller,  19  Barb.  190.    See  Webster,  45  N.  H.  226. 


296 


THE   LAW   OF    PARTNERSHIP. 


[CH. 


VIII. 


at  law  personally  to  the  lender,  whether  the  money  so  borrowed 
is  so  used  and  applied  by  the  borrower  or  not.  (i) 

So,  too,  if  the  contract  or  transaction  arise  after  the  termina- 
tion of  the  partnership,  although  it  have  a  reference  to 
*272    it,  an  action  at*  law  is  still  maintainable.  (/)     Thus, 


((■)  Helme  v.  Smith,  7  Bing.  714, 
opinion  of  Parke,  J. ;  A'.r  parte  Notley, 
1  Mont.  &  A.  46 ;    Elegie  v.  Webster, 

5  M.  &  W.  618;  Bumpass  v.  Webb, 
1  Stewart,  19  ;  Scott  v.  Campbell,  30 
Ala.  728  ;  Duncan  v.  Lyon,  3  Joims. 
Ch.  362;  Bailey  v.  Starke,  1  Eng.  191; 
Biernan  v.  Braslies,  14  Mo.  24 ;  French 
V.  Styring,  2  C.  B.  n.  s.  357,  40  Eng.  L. 

6  Eq.  274.  See  CoUamer  v.  Fos- 
ter, 26  Vt.  754;  Pool  v.  Delancy,  11 
Mo.  570;  Currier  v.  Ivowe,  40  N.  H.  72. 

The  above  cases  show  that  if  A., 
entering  into  partnership  with  B.,  at 
B.'s  request  advances  for  him  the 
amount  of  capital  B.  has  agreed  to 
contribute  to  the  joint  funds,  this  is  a 
loan  of  money  by  A.  to  B.,  and  con- 
stitutes a  debt,  arising  previous  to  the 
partnership,  which  A.  may  recover  at 
law  pending  the  partnership,  and 
though  the  partnership  accounts  are 
unsettled.  See  also  Williams  v.  Hen- 
shaw,  11  Pick.  84;  [Crater  v.  Binnin- 
ger,  45  N.  Y.  545.  So  one  partner 
may  sue  another  for  money  loaned  to 
pay  the  latter's  share  of  an  execution 
against  the  firm.  Chamberlain  v. 
Walker,  10  Allen  (Mass.),  429.]  And 
if  persons  enter  into  partnership,  and 
pay  in  their  respective  contributions, 
one  of  them  cannot  now  recover  back 
his  share  from  the  otiiers,  though  the 
concern  prove  a  losing  one  and  is  aban- 
doned. The  shares  of  all  the  partners 
are  now  only  subject  to  an  account. 
See  opinion  of  Cockburn,  C.  J,  in 
French  v.  Styring,  supra ;  Nockels  v. 
Crosby,  3  B.  &  C.  819,  824,  opinions  of 
Holroyd  and  Littledale,  JJ.  See  also 
Gale  V.  Leckie,  2  Stark.  107 ;  Town- 
send  V.  Goewey,  19  Wend.  424 ;  Man- 
ning V.  Wadsworth,  4  Md.  59;  Rock- 
well V.  Wilder,  4  Mete.  661 ;  Wright  v. 
Mickie,  6  Gratt.  364 ;  Robinson  v.  Mc- 
intosh, 3  E.  D.  Smith,  221.  It  has 
been  said,  that  it  is  not  competent  for 
partners  to  agree  in  their  articles  that 


sueh  person  as  a  majority  of  them 
shall  afterwards  appoint  shall  have 
the  power  to  sue  in  his  own  name  for 
moneys  agreed  to  be  contributed  by 
each  partner  to  the  general  fund.  For- 
tune V.  Brazier,  10  Ala.  791.  But  we 
have  mucli  doubt  of  this.  See  post, 
p.  *275,  and  note  («). 

(J)  Causes  subsequent  to  dissolu- 
tion, from  which  a  right  of  action  be- 
tween partners  may  arise,  may  be  such 
as  originate  solely  in  the  relations  of 
partners  to  third  persons.  Osborne  v. 
Harper,  5  East,  225;  Wright  o.  Hunter, 
1  East,  20,  5  Ves.  792.  See  Butcher  v. 
Forman,  6  Hill,  583.  See  Wright  v. 
Cumpsty,  41  Penn.  102,  where  the 
plaintiff  and  defendant  dissolved  part- 
nership, but,  before  the  formal  and 
public  dissolution,  the  defendant  con- 
tracted large  debts  in  the  name  of  the 
old  firm,  which  the  plaintiff  paid. 
IJeld,  that  the  plaintiff  might  recover 
the  amount  in  an  action  against  the 
defendant  as  money  paid  to  his  use. 
Hutton  V.  Eyre,  0  Taunt.  289, 1  Marsh. 
603.  But  if  there  are  more  than  two 
partners,  and  if,  after  dissolution,  by 
the  misconduct  of  one,  the  rest  are 
compelled  to  pay  money  to  third  par- 
ties, it  is  important  to  ascertain  whether 
such  payment  is  made  out  of  a  joint 
fund,  or  by  the  several  contributions 
of  eacii ;  for,  after  dissolution,  there  is 
generally  no  joint  stock  or  fund,  and  if 
such  payment  is  made  by  an  aggregate 
of  the  several  funds  of  the  contributing 
partners,  then  each  contributor  must 
bring  a  separate  action  for  the  amount 
of  his  advance,  because  quoad  that  pay- 
ment the  contributors  are  not  partners. 
See  Osborne  v.  Harper,  supra ;  Graham 
V.  Robertson,  2  T.  R.  282;  Brand  v. 
Boulcott,  3  B.  &  P.  235 ;  Kelby  v.  Steel, 
5  Esp.  194;  Manahan  v.  Gibbons,  19 
Johns.  109,  112,  420;  Doremus  v.  Sel- 
den,  id.  213. 

Of  the  foregoing  cases,  it  is  to  be 


CH.  VIII.]        OF   THE    REMEDIES   OF   PARTNERS    INTER   SE. 


297 


if  tliere  were  three  partners,  and  the  partnership  is  dis- 
solved by  consent,  and  there  is  a  charge  against  one  of  them 
for  a  thousand  dollars,  and  he  borrows  money  from  another 
partner  to  pay  it,  and  does  so  pay  it,  the  lender  can  sue  the 
borrower,  although  the  accounts  are  unsettled,  and  it  is  uncer- 
tain where  the  final  balance  will  lie  or  what  it  will  be.  (^) 
But  if,  in  such  a  case,  the  accounts  are  all  adjusted  and  bal- 
anced, and  it  is  certain  that  the  lender  owes  the  borrower,  as 
partner,  on  this  final  balance,  what  he  thus  owes  might  be 
applied  by  way  of  set-off  to  the  lender's  action.  But  not  un- 
less the  accounts  are  settled.  (Z)  In  a  suit  between  partners, 
the  account  books  of  the  firm,  although  inaccurately  kept, 
are  admissible  evidence  against  a  partner  having  access  to 
them.  (//) 

If  one  partner  sells  his  separate  property  to  his  partner, 
this  does  not  make  it  partnership  property  ;  and  the  seller  may 
sue  the  buyer  for  the  price,  at  law.  {Ill) 

*  If  the  parties  to  a  debt  or  contract  can  be  considered    *  273 
in  reference  to  it  as  only  joint  sureties   or  joint  con- 
tractors, (m)    or  connected    in    any  other  way  than  as  part- 


observed,  that  the  parties  were  not 
partners  at  the  time  of  action  brought ; 
that  the  cause  of  action  accrued  sub- 
sequently to  dissolution  ;  and  that  the 
subject-matter  of  the  suit  was  in  no 
way  connected  with  the  partnership 
nor  with  the  partnership  accounts.  See 
Milburn  v.  Codd,  7  B.  &  C.  419.  Though 
the  plaintiff  and  defendants  had  ceased 
to  be  partners,  and  the  cause  of  action 
had  accrued  after  their  dissolution,  yet 
the  subject-matter  of  the  suit  was 
deemed  to  be  properly  an  item  of  the 
unsettled  partnership  accounts,  and  the 
plaintiff's  action,  tlierefore,  not  main- 
tainable. See  De  Jarnette  v.  McQueen, 
31  Ala.  230. 

(^•)  A.  &  B.  dissolved  partnership, 
and  A.  assumed  the  possession  and 
entire  control  of  the  partnership  stock 
in  trade.  In  disposing  of  the  goods, 
he  sold  a  part  of  them  to  B.,  who 
signed  a  bill  of  sale,  acknowledging 
the  purchase  of  A.  Held,  that  A. 
might  recover  the  value  of  the  goods  in 
an  action  at  law  against  C.     Caswell 


V.  Cooper,  18  111.  532.  The  plaintiff 
and  three  other  persons  entered  into 
partnership  fur  a  single  adventure,  the 
plaintiff  furnishing  all  the  capital.  The 
defendant  was  one  of  the  four  part- 
ners, and  the  adventure  being  closed, 
and  the  firm  dissolved,  the  capital 
was  deposited  with  the  defendant  for 
the  plaintiff.  Htld,  that  it  thereby 
became  the  imlividual  property  of  the 
plaintiff,  and  could  be  recovered  by 
him  of  the  defendant.  IVIyers  v.  Winn, 
16  111.  135.  See  Warbritton  v.  Cam- 
eron, 10  Ind.  302  ;  Rockwell  r.  Wilder, 
4  Mete  562;  Roache  v.  Pendergrast, 
3  Harris  &  J.  33 ;  Chamberlain  v. 
Walker,  10  Allen,  429.  See  Wycoff  v. 
Purnell,  10  Iowa,  332. 

(/)  Ives  r.  Miller,  19  Barb.  196.  See 
Pool  V.  Delaney,  11  Mo.  570;  Scott  v. 
Campbell,  30  Ala.  728;  Coleman  v. 
Coleman,  12  Rich.  Law  (S.  C),  183. 

(//)  Topliff  y.  Jackson,  12  Gray,  5G5. 

(///)  Elder  V.  Hood,  28  111.  538. 

(w)  Burnell  v.  Minot,  4  J.  B.  Moore, 
340 ;  Helme  v.  Smith,  7  Bing.  709,  713, 


298 


THE   LAW   OF   PARTNERSHIP. 


[CH.  VIII. 


ners,  (n)  the  disability  of  partnership  does  not  apply,  although 
they  may  be  partners  generally.  (t») 

It  is  quite  clear  that  certain  particular  and  distinct  trans- 
actions may  be  separated  from  the  affairs  or  business  of  the 
partnership,  by  the  agreement  of  the  parties,  (p)  Then  those 
persons  who  are  concerned  in  this  separated  matter  are  not  as 
partners  to  each  other,  although  in  all  other  business  relations 
they  remain  partners.  And  it  may  be  added,  the  law  will  take 
cognizance  of  any  such  separated  transaction,  and  of  any  single 
one  of  which  the  character  or  circumstances  are  such  as  to 

indicate  that  the  meaning  of  it  is,  that  one  partner  shall 
*  274    pay  a  certain  sum  of  money  to  *  another  partner  before 

any  account  is  taken  ;  which  money  is  not  to  be  carried 
into  the  general  account  when  that  is  taken,  (q') 


714  ;  Holmes  v.  Williamson,  6  Maule  & 
S.  158 ;  Ansell  v.  Waterhouse,  6  id. 
390,  per  Bayley,  J. ;  Blackett  v.  Weir, 
5  B.  &  C.  385,  388;  Batard  v.  Hawes, 
2  Ellis  &  B.  287. 

(n)  If  a  person  is  only  a  nominal 
partner,  but,  from  being  held  out  as  a 
partner  to  third  jiersons,  is  obliged  to 
pay  the  debts  of  the  firm,  he  may,  in 
an  action  against  the  actual  partner, 
show  the  true  nature  of  his  relations  to 
the  firm,  and  recover  the  whole  amount 
he  has  been  compelled  to  pay.  La- 
tham V.  Kenniston,  13  N.  H.  213.  In 
like  manner,  if  persons  share  in  profits 
in  such  a  way  that  they  are  partners 
quoad  third  persons,  but  yet  are  not 
partners  inter  se,  there  is  nothing  to  pre- 
vent an  action  being  maintained  by 
either  against  the  other.  Hesketh  v. 
Blanchard,  4  East,  144. 

As  to  a  distinction  between  a  gen- 
eral and  a  special  partnership,  see  Gal- 
braith  v.  Moore,  2  Watts,  86.  See 
Brigham  i'.  Eveleth,  9  Mass.  538  ; 
Jones  V.  Harraden,  id.  540;  Gow  on 
Part.  [79],  citing  Abbott  v.  Smith,  2 
W.  Bl.  947 ;  per  Lord  Kenyon,  Merry- 
weather  V.  Nixon,  8  T.  R.  816  ;  Graham 
V.  Robertson,  2  id.  282;  Herries  v. 
Jameson,  5  id.  556 ;  Evans  v.  Yeatherd, 
2  Bing.  133;  Wilson  v.  Cutting,  4 
iNIoore  &  S.  268;  Koel  v.  Bowman,  2 
Litt.  40 ;  Wriglit  v.  Hunter,  5  Ves.  792. 


(o)  As  where  four  persons,  who  had 
acted  as  directors  of  a  proposed  rail- 
way company,  being  sued  for  debts 
contracted  on  account  of  the  concern, 
jointly  retained  an  attorney  to  defend 
them  on  their  personal  responsibility, 
held,  that  one  of  tlie  four,  who  had  paid 
the  attorney's  bill,  was  entitled  to  sue 
the  others  for  contribution.  Tindal, 
C.  J. :  "  If  these  four  persons  entered 
into  the  contract  with  the  attorneys, 
distinct  from  their  character  of  mem- 
bers of  the  company,  it  appears  to  me 
that  the  case  does  not  fall  within  the 
general  rule."  Edger  v.  Knapp,  6 
Scott  N.  R.  707,  712;  Boulter  v.  Pep- 
low,  9  C.  B.  493;  Sedgwick  v.  Daniell, 
2  H.  &  N.  319. 

(p)  Coffee  V.  Brian,  10  J.  B.  Moore, 
341,  3  Bing.  54 ;  Cross  v.  Cheshire, 
6  Exch.  43,  6  Eng.  L.  &  Eq.  517. 
See  Cousten  v.  Burke,  2  Harris  &  G. 
300,  303;  CoUamer  v.  Foster,  26  Vt. 
754;  Williams  v.  Henshaw,  11  Pick. 
83,  84 ;  Gibson  v.  Moore,  6  N.  H.  547 ; 
Caswell  V.  Cooper,  18  111.  532  ;  Buck- 
ner  v.  Ries,  34  Mo.  357.  The  nisi  priits 
case  of  Robson  v.  Curtis,  1  Stark.  78, 
seems  hardly  reconcilable  with  the 
principle  of  the  foregoing  decisions. 

(7)  See  the  language  of  Bayley,  J., 
in  Jackson  v.  Stopherd,  2  Cromp.  &  M. 
361,  4  Tyrw.  330:  and  see  Einlay  v. 
Stewart,  56  Penn.  St.  183. 


CH.  VIII.]         OF  THE   REMEDIES   OF   PARTNERS    INTER   SE. 


299 


On  similar  grounds,  a  partner  can  sue  a  partner  on  his  note 
or  indorsement  or  acceptance,  (r)  Nor  do  we  think  it  would 
be  competent  for  the  defendant  to  defeat  such  an  action  by 
showing  that  it  was,  in  fact,  on  partnership  account,  or  a  part- 
nership debt,  because  tliis  would  vary  by  evidence  a  written 
contract.  («) 

So,  too,  if  a  partner  receives  a  sum  of  money  actually  belong- 
ing to  his  partner,  but  carries  the  same  to  partnership  account, 
the  partner  to  whom  the  money  belongs  may,  nevertheless,  sue 
the  partner  who  received  it.  (Q     And,  in  general,  the  mere 


(r)  Preston  v.  Strutton,  1  Anst.  50; 
Neale  v.  Turton,  4  Bing.  151  ;  Bonaffe 
V.  Fenner,  6  Smedes  &  M.  21*2  ;  Grigsby 
r.  Nance,  3  Ala.  347 ;  Morrison  v. 
Stockwell,  9  Dana,  172 ;  Lomas  v. 
Bradshaw,  9  C.  B.  620.  See  Teague 
V.  Hubbard,  8  B.  &  C.  345;  Case  v. 
Maxey,  6  Cal.  276.  And,  where  it  is 
ascertained  by  two  partners  wiio  are 
about  closing  their  concerns,  that  a 
balance  will  certainly  be  due  by  one 
of  them  to  the  other  on  a  final  settle- 
ment, although  the  true  balance  cannot 
at  the  time  be  ascertained,  then  if 
such  debtor  partner  gives  his  note  to 
the  creditor  partner  for  a  sum  within 
the  balance  which  it  is  acknowledged 
will  be  due  to  him  on  the  final  settle- 
ment, such  note  is  given  upon  a  good 
consideration,  and  is  equivalent  to  an 
express  promise  to  pay  th'e  given  sum 
mentioned ;  and  the  paj' ment  of  such 
note  may  be  enforced  at  law,  though 
the  balance  is  not  struck  between 
them.  Rockwell  v.  Wilder,  4  Mete. 
562.  See  Ives  !;.  Miller,  19  Barb.  196  ; 
Pool  V.  Delaney,  11  Mo.  570.  See 
Gridley  v.  Dole,  4  Comst.  486.  In 
Van  Ness  v.  Forrest,  8  Cranch,  80,  it 
was  held,  that  a  promissory  note,  given 
by  one  partner  to  another  for  the  use 
of  the  copartnership,  will  sustain  an 
action  in  the  name  of  the  promisee 
against  the  maker,  notwithstanding 
the  connection,  and  that  the  money, 
when  recovered,  would  belong  to  the 
copartnership. 

(.s)  It  should  be  remembered,  with 
respect  to  negotiable  paper,  tliat  credit 
is  , deemed  to  be  given  exclusively  to 


tho-se  whose  names  appear  on  the  face 
of  the  paper,  and  that  it  is  not  allow- 
able to  add  parties  by  parol.  See  1 
Pars,  on  Notes  &  Bills,  pp.  *93,  *102. 
[But,  to  an  action  on  a  note  given  by 
an  outgoing  partner  for  assets,  he  may 
set  up  in  defence  an  agreement,  that, 
for  any  notes  or  accounts  that  should 
prove  worthless,  he  should  be  allowed 
a  deduction  pro  tanto.  Bethel  v.  Frank- 
lin, 57  Mo.  466.] 

{t)  The  plaintiff,  and  Robert  Smith, 
his  father,  had  been  in  partnership, 
during  which  time  one  Keate  became 
indebted  to  them  in  531/.  Robert 
Smith  died,  leaving  plaintiff  his  sole 
executor.  Subsequently,  the  plaintiff 
took  the  defendant  into  partnership, 
and  Keate  became  indebted  to  these 
two  in  the  further  sum  of  30/.  He 
afterwards  became  involved,  and  his 
eiJects  were  assigned  to  trustees,  for 
the  benefit  of  his  creditors.  Two 
payments  were  made  in  the  course 
of  distribution  at  different  times. 
The  first,  which  was  made  to  the 
plaintiff  and  defendant,  was  divided 
between  them  according  to  their  sev- 
eral proportions  ;  that  is,  the  propor- 
tion of  the  former  debt  of  531/.  to  the 
plaintiffs  separate  use,  and  the  pro- 
portion of  the  30/.  in  moieties  between 
them.  After  this,  the  trustees  trans- 
mitted a  bill  of  exchange  to  the  jilain- 
tiff  and  defendant  in  their  joint  names, 
and  the  defendant  alone  received  the 
money  under  the  title  of  Smith  & 
Barrow.  The  plaintiff's  proportion  of 
this  second  dividend,  so  far  as  related  to 
his  original  debt,  was  79/.  14s.  Qd.    The 


300 


THE   LAW    OF   PARTNERSHIP. 


[CH.  VIII. 


*  275  fact  that  *  a  transaction  is  entered  upon  partner- 
ship books  or  accounts  as  belonging  to  the  partnersliip 
will  not  prevent  a  suit  by  the  partner  to  whom  it  actually 
belongs  ;  as  only  the  fact  of,  and  not  the  appearance  of,  partner- 
ship interest  could  defeat  his  suit. 

If  there  be  a  firm  of  more  than  two  persons,  and,  on  settle- 
ment, one  is  found  to  have  withdrawn  more  than  his  share,  the 
other  two  may  have  a  joint  action  against  him  thereon  ;  but 
neither  one  of  the  other  two  can  sue  separately,  although  he  has 
an  assignment  of  all  the  rights  and  interests  of  his  associates  in 
the  assets  of  the  firm,  (tt) 

If  the  articles  of  partnership,  or  other  agreements  between 
the  partners,  are  under  seal,  covenant  will  lie  for  any  breach  of 
the  agreement  to  enter  into  partnership,  or  of  any  stipulation 
for  payment,  advances,  or  other  acts  for  setting  the  partnership 
into  operation,  although  accounts  between  the  partners  which 
are  subsequent  to  the  partnership  require  to  be  investigated  and 
adjusted  in  a  court  of  equity,  (w) 


question  was,  whether  the  plaintiff 
could  recover  this  sum  from  the  de- 
fendant, in  an  action  for  money  had 
and  received  to  the  plaintifTs  use,  it 
being  contended  for  the  defendant 
that  it  was  money  received  on  account 
of  a  partnership  transaction,  and  there- 
fore not  recoverable  in  the  present 
action.  Held,  tliat  he  could  maintain 
this  action.  Smith  v.  Barrow,  2  T.  R. 
476.  See  Coffee  v.  Brian,  10  J.  B. 
Moore,  o41,  3  Bing.  4  ;  ante,  p.  *  271 
and  notes ;  Cross  v.  Cheshire,  7  Exch. 
43,  6  Eng.  L.  &  Eq.  517. 

(tt)  Wiggin  V.  Cummings,  8  Allen, 
353. 

(u)  Venning  v.  Leckie,  13  East,  7 ; 
Ex  parte  Notley,  1  Mont.  &  A.  46  ; 
Glover  v.  Tuck,  24  Wend.  153  ;  Terrill 
V.  Richards,  1  Nott  &  McC.  20 ;  Wil- 
liams V.  Henshaw,  11  Pick.  81;  Ellison 
V.  Chapman,  7  Blackf.  224;  Bailey  v. 
Starke,  1  Eng.  191.  In  like  manner, 
covenant  will  lie,  subject  to  the  quali- 
fication stated  in  the  text,  for  the 
breach  of  any  of  the  stipulations  in 
the  articles  of  partnership  after  the  part- 
nership has  actually  begun.  Glover 
V.  Tuck,  supra;  Wantu.  Reese,  1  Bing. 


18 ;  Hatcher  v.  Seaton,  2  M.  &  W.  47  ; 
Bedford  v.  Brutton,  1  Scott,  261,  262; 
M'Arthur  v.  Ladd,  5  Ohio,  514,  521 ; 
Duncan  v.  Lyon,  3  Johns.  Ch.  351, 
362 ;  Hayes  v.  Flowers,  25  Miss. 
168;  Ridgway  v.  Grant,  17  III.  117; 
Manning  v.  Wadsworth,  4  Md.  70 ; 
Hall  I'.  Stewart,  12  Penn.  St.  213; 
Capen  v.  Barrows,  1  Gray,  376.  But 
covenant  does  not  lie,  on  an  agreement 
of  partnership,  to  compel  the  payment 
of  a  balance  due  to  the  partnership 
from  one  of  the  partners.  Niven  v. 
Spickerman,  12  Johns.  401.  An  ac- 
tion will  lie  between  partners  for  the 
breach  of  a  covenant  to  account. 
And  in  tlie  simple  case  of  a  single, 
or  at  most  but  temporary,  breach  of 
partnership  covenants,  unless  the  bill 
pray  for,  and  there  are  just  grounds 
for,  dissolution,  equity  will  not  inter- 
fere by  injunction  or  otherwise;  but 
will  leave  the  injured  party  to  his 
action  of  covenant,  as  the  more  ap- 
propriate remedy.  Marshall  v.  Col- 
man,  2  Jac.  &  W.  266. 

Each  partner,  committing  a  breach 
of  liis  covenant,  may  be  sued  by  all 
the  rest  jointly  for  the  joint  damage 


CH.  VIII.]        OF   THE   REMEDIES   OF   PARTNERS   INTER    SE. 


301 


*  Whenever  there  has  been  any  breach  of  an  express    *  276 
stipulation  between  persons  who  are  partners,  an  action 
for  damages  will  be  sustainable,  unless  the  breach,  or  the  stipu- 
lation itself,  or  both,  are  such  that  they  involve  the  whole 
partnership  business  and  accounts,  and  the  damages  can  be 


snstnined  by  tliem  in  respect  thereof: 
for  tlie  covenant  of  each  covenantor 
is,  in  contemplation  of  law,  made  with 
all  the  rest,  excluding  himself,  and  all 
the  rest  are  joint  as  atjainst  him  ; 
"  for  if  there  be  twenty  partners,  and 
one  of  them  covenants  with  all  the 
rest,  he  is,  in  that  respect,  several 
from  them  all,  and  they  all  joint 
against  him."  Per  curiam  in  Thim- 
blethorpe  v.  Hardesty,  7  Mod.  117 ; 
Vesey  v.  Mantell,  9  M.  &  W.  323; 
Ecclcston  V.  Clipsham,  1  Saund. 
153:  Wright  v.  Michie,  6  Gratt.  354, 
358 ;  Spencer  v.  Durant,  Comb.  115  ; 
Saunders  v.  Johnson,  Skin.  401 ;  Capen 
V.  Barrows,  1  Gray,  376.  It  was  held, 
in  one  Massachusetts  case,  on  the 
supposed  authority  of  an  English 
decision,  that  where  three  or  more 
copartners  have  contributed  severally 
and  in  different  proportions  to  the 
joint  stock,  and  one  of  them  withdraws 
from  the  copartnership,  in  violation  of 
their  mutual  agreement,  each  has  his 
several  remedy  for  a  breach.  Dun- 
ham V.  Glllis.  8  Mass.  462.  See 
Thomas  v.  Pyke,  4  Bibb,  418.  But 
Dunham  v.  Gill  is  has  recently  been 
overruled,  and  the  authority  of  the 
case  upon  which  it  was  decided 
strongly  questioned,  in  Capen  v.  Bar- 
rows, supra,  by  Metcalf,  J.,  in  de- 
livering the  opinion  of  the  court. 
Though  partners  covenant,  each  re- 
spectively with  the  others,  and  with 
their  respective  executors,  adminis- 
trators, &c.,  upon  the  death  of  one 
of  the  partners,  a  covenantee,  his 
right  of  action  survives  to  his  co- 
covenantees.  Eccleston  v.  Clipsham, 
1  Saund.  153. 

As  in  actions  of  covenant  between 
partners,  so  in  actions  upon  simple 
contracts,  each  partner  is  regarded  as 
contracting  with  the  rest,  excluding 
himself,  and  may  be  sued  by  all  the 


rest  jointly  for  the  violation  of  his 
contract ;  he  being  several  from  them 
all  in  respect  of  the  breach,  and  they 
all  joint  against  him.  Venning  v. 
Leckie,  13  East,  7. 

Though  partners  cannot,  by  agree- 
ment among  themselves,  give  an  au- 
thority to  any  one  of  them  to  bring 
an  action  in  his  name  against  persons 
not  members  of  the  firm,  there  is  no 
objection  to  their  empowering  one  of 
their  number  to  be  the  sole  plaintiflF 
in  actions  to  be  brought  inter  se  in  the 
course  of  the  partnership  business. 
"  Such  an  agreement  is,  in  effect,  an 
undertaking  not  to  object  on  account 
of  all  who  ought  otherwise  to  have 
joined  in  the  action  not  being  joined." 
Per  Best,  C.  J.,  in  Radenhurst  v. 
Bates,  3  Bing.  463,  470;  Cross  v. 
Jackson,  5  Hill,  478.  In  this  last  case, 
the  property  and  interest  of  a  large 
association  were,  by  their  articles, 
vested  in  trustees  thereafter  to  be 
elected,  and  the  subscribers  agreed  to 
pay  to  such  trustees  their  respective 
subscriptions.  Cowen,  J.,  said  :  "  Tlie 
effect  was,  on  the  trustees  being 
elected,  as  provided  by  the  articles, 
to  vest  every  legal  right  of  the  com- 
pany in  them,  the  right  to  sue  the 
defendant  in  their  own  names  in- 
clusive. Had  it  been  left  for  the  law 
to  imply  a  promise,  it  would,  no  doubt, 
have  looked  to  the  other  stock  sub- 
scribers as  the  promisees,  because  the 
consideration  came  from  tiietn  ;  and,  in 
that  case,  the  action  must  have  been 
in  the  names  of  the  whole."  Niven  v. 
Spickerman,  12  Johns.  401.  See  Da- 
vies  V.  Hawkins,  3  Moore  &  S.  488 ; 
see  also  Fortune  v.  Brazier,  10  Ala. 
791,  ante,  p.  *  271,  note,  for  a  case 
hardly  reconcilable  with  the  above 
authorities ;  Brown  v.  Tapscott,  6  M. 
&  W.  119. 


302  TliE   LAW    OF    PARTNERSHIP.  [CH.  VIII. 

determined  only  by  first  settling  those  accounts,  (v)  Thus,  if 
one  partner  agrees  to  pay  another  a  certain  salary,  or  commis- 
sion, or  other  compensation  for  his  services,  over  and  above  his 
share  of  the  ])rofits,  and  independently  of  them,  it  would  seem 
that  an  action  at  law  can  be  maintained  on  this  prom- 
*277  ise.  (w)  And  the  same  rule  would  *  probably  aj)ply  to 
the  l)reach  of  any  distinct  and  independent  agreement  in 
the  articles  of  partnership,  unless  the  difficulty  of  determining 
the  damages  without  a  general  settlement  should  make  the 
action  nugatory,  and  be  sufficient  to  defeat  it. 

The  common  law  formerly  allowed  to  a  partner  scarcely  any 
remedy  whatever  against  a  partner.  It  seemed  to  say  that 
partners  have  agreed  to  trust  each  other,  and  waive  all  legal 
rights.  Malynes  expressly  declares  that  "  partners  cannot  sue 
each  other  by  the  law.  If  two  men  have  a  wood  jointly,  and 
the  one  selleth  the  wood  and  keepeth  the  money  all  to  himself, 
in  this  case  his  fellow  shall  have  no  remedy  against  him  by 
tile  common  law  ;  for  as  they,  when  they  took  the  wood  jointly, 
put  each  other  in  trust,  and  were  contented  to  occuj^y  and 
deal  together,  so  the  law  suffereth  them  to  order  the  profits 

(v)  Capen  v.  Barrows,  1  Gray,  376.  the  non-payment  of  which  the  cove- 
See  Bedford  v.  Brutton,  I  Bing.  N.  C.  nant  was  alleged  to  have  been  broken, 
407 ;  see  Andrews  v.  Ellison,  6  J.  B.  was  to  be  allowed  out  of  the  funds  of 
Moore,  199;  and  compare  Bedford  v.  the  copartnership.  A  nonsuit  was 
Brutton,  supra,  with  Estes  v.  Whipple,  accordingly  entered,  and  upon  appeal 
12  Vt.  373.  See  also  Ridgway  v.  the  judgment  was  affirmed.  The 
Grant,  17  111.  117.  court   said:    "The  parties   were   stip- 

(w)  Paine   v.   Thacher,   25    Wend,  ulating     concerning    the    partnership 

450.      In    Weaver    v.    Upton,    7   Ired.  business,  and  the  terms  on  which  it 

458,  the  action  was  covenant,  and  the  was   to   be    carried    on  ;    and,   among 

breach  assigned   the   non-payment   of  others,     that     Upton     bargained    and 

.^450  by  the    defendant   to   the  plain-  agreed  to  let  Weaver  have  $450,  for 

tiff.     The  covenant  was  contained  in  his  services  that  year.     It  seems  to  us 

articles     of     copartnersiiip     between  that   it  would  be  against  justice  and 

Upton  &  Weaver,  and  was  as  follows  :  right  to  construe  the   covenant  to  be 

"  The   said   Upton,  of  the  first  part,  an  agreement  by  Upton,  that  he  would 

bargains  and  agrees  to  give  me,  the  pay  that  sum  out  of  his  own  pocket, 

said  Weaver  of  the  second  part,  four  We  think  that  it  was  an  item  in  the 

hundred  and  fifty  dollars,  to   manage  expense  account  of  the  firm,  and  that 

the  business,  wliich  I  agree  to  manage  the  firm  should  pay  it."     The  case  of 

according   to   the    best    of    my  judg-  Hills  v.   Bailey,   27   Vt.   548,  is  quite 

ment, ."     In   this  action,  the    de-  similar.      [When    partners    agree    to 

fendant's   counsel   moved    to    nonsuit  put  mto  the  firm  a  specified  amount, 

the  plaintiff,  upon  the  ground  that  the  each  may  sue  the  other  for  a  breach 

covenant   amounted   to    an    article   of  of    the    agreement.      Trait   v.    Baird, 

copartnership,  and  that  the  $450,  for  12  Kan.  420.] 


CH.  VIII.]         OF   THE   REMEDIES   OF   PARTNERS   INTER   SE.  303 

thereof."  {x')  But  the  law,  in  these  days,  would  not  suffer 
the  one  to  do  so  great  a  wrong  to  tlie  otlier.  We  have 
already  seen,  and  shall  again  see,  that  the  law  sustains 
actions,  and  gives  remedies,  between  partners,  unless  more 
substantial  and  sufficient  reasons  than  the  mere  theory,  or 
rather  fancy,  stated  by  Malynes,  interferes  to  prevent  the  law 
from  doing  justice. 

If  a  partner  gives  his  copartner  a  sum  of  money  for  a  specific 
purpose,  and  the  copartner  keeps  the  money,  there  is  autliority 
and  reason  for  holding  tliat  the  partner  who  gave  the  money 
may  sue  him  who  received  and  holds  it.  (?/)  So  a  partner  may 
sue  his  partner  on  a  matter  separated  by  an  award,  (j/f/) 

2.    Of  a  Demand  founded  upon  a  Balance  of  Account  Stated. 

*  There  are  no  cases  in  which  an  action  at  law  by  *  278 
partner  against  partner  is  maintained,  so  numerous  or 
diversified  as  those  which  are  founded  upon  the  striking  of  a 
balance.  There  is  much  conflict  and  uncertainty  among  them  ; 
most  of  which,  we  think,  might  have  been  avoided  by  a  distinct 
recollection  of  the  reasons  and  principles  obviously  applicable 
to  such  cases. 

The  general  rule  is,  that  a  partner  may  sue  at  law  a  partner 
on  a  promise  to  pay  a  balance  which  has  been  struck  and  agreed 
upon,  (z)     The  reason  for  this  is  clear  and  certain  ;  it  is,  that 

(x)  Malj-nes,  Lex  Merc.  310.  (yij)  [One  partner  may  sue  another  on 
{y)  See  Sharp  v.  Warren,  6  Price,  an  award  upon  a  partnership  matter  in 
131,  where  tlie  auditor  of  a  benefit  dispute  between  tliem,  other  partnership 
club,  himself  a  member,  liaving  mis-  matters  being  still  unsettled.  Blake- 
applied  the  funds  of  the  society  and  ley  v.  Graham,  111  Mass.  8.] 
refused  to  pay  them  over,  it  was  held,  (?)  And,  as  we  have  already  seen, 
that  the  proper  officers  of  the  club,  an  action  may  be  maintained  upon 
suing  in  its  name,  miglit  maintain  in-  such  a  promise,  notwithstanding  a 
dehitatus  assumpsit  against  him  for  the  covenant  to  account  between  the  par- 
amount, on  the  ground  that  the  de-  ties.  Moravia  v.  Levy,  2  T.  R  483, 
fendant's  carrying  away  the  money,  note.  See,  in  illustration  of  the  gen- 
and  leaving  the  society,  made  him  eral  principle  enunciated  in  the  text, 
liable  to  them,  as  if  he  were  not  him-  Preston  v.  Stratton,  1  Anst.  50;  Bri- 
self  a  member  of  the  society,  and  that  erly  v.  Cripps,  7  C.  &  P.  709 ;  Wray  v. 
he  had  placed  himself  out  of  the  pro-  Milestone,  5  M.  &  W.  21 ;  Henley 
tection  of  his  situation  in  the  society  v.  Soper,  8  B.  &  C.  16 ;  Winter  u. 
by  his  conduct  in  withdrawing.  See  White,  1  Brod.  &  B.  350;  Ozeas  v. 
Smith  V.  Barrow,  2  T.  11.476;  ante,  Johnson,  1  Binn.  191,  4  Dall.  434; 
p.  *  274  and  notes  ;  Cross  v.  Chesliire,  Walker  v.  Long,  2  P.  A.  Browne,  125  ; 
6   Exch.  43;  ante,  p.  *271  and  notes.  Young  v.  Brick,  2  Penning.  663;  Beach 


304  THE   LAW    OP   PARTNERSHIP.  [CH.  VIII. 

all  the  reasons  for  refusing  this  remedy  at  law  disappear  from 
such  a  case.  For,  in  the  first  place,  as  to  a  settled  balance, 
they  are  no  longer  partners.  If  the  settlement  has  closed  their 
concerns,  or  has  followed  tlie  dissolution  of  the  partnership, 
they  are  no  longer  partners  at  all ;  if  the  partnership  goes  on, 
they  are  not  partners  as  to  this  balance,  because  it  has  been 
taken  out  of  the  current  accounts,  separated  from  the  partner- 
ship, and  appropriated  to  the  partner  to  whom  it  is  due.  In 
the  next  place,  there  is  no  longer  any  objection  on  the  ground 
that  the  law  cannot  take  an  account  of  the  partnership  debts 
and  means,  and  take  into  view  all  those  facts  and  considerations 

which  are  necessary  in  order  to  ascertain  who  owes  the 
*  279    other,  and  how  much.    The  law  cannot  do  it,  and  *  equity 

will  not  do  it ;  for  it  has  been  done  already  by  the  par- 
ties themselves.  As  there  is  now  no  reason  for  a  court  to  do  it, 
the  inability  of  a  court  to  do  it  constitutes  no  reason  for  refusing 
cognizance  of  the  case. 

We  apprehend  the  true  rule  to  be,  that  courts  of  law  should 
sustain  any  action  between  partners  of  the  character  above 
described.  But  the  question  is  sometimes  decided  on  more 
technical  grounds.  Sometimes  it  is  said  that  no  such  action 
will  be  maintained,  unless  for  a  final  balance.  And  this  was 
asserted  somewhat  obiter  perhaps,  in  Massachusetts,  at  a  time 
when  the  equity  powers  of  tlie  Supreme  Court  of  that  State 
were  not  so  extensive  as  they  now  are  ;  and  it  was  added,  that 
all  the  different  States  concur  in  this.  But  after  remarking 
that  in  some  of  our  States,  and  in  England,  no  suit  at  law,  even 
for  a  final  balance,  can  be  maintained,  unless  upon  an  express 
promise  to  pay  this  balance,  the  court  go  on  to  say  that,  in 
Massachusetts,  this  is  unnecessary  ;  and  the  suit  will  be  main- 

V.  Hotchkiss,  2  Conn.  425;  Lamalere  deceased,  that  the  former  will  pay  the 

V.  Caze,  1  Wash.  C.  C.  435 ;  Wetmore  latter  a  certain  sum  of  money  in  con- 

V.   Baker,   9   Johns.    307 ;    Murray    v.  sideration  of  all  interest  in  the  part- 

Bogert,  14  id.  318  ;  Clark  v.  Dibble,  16  nership  account  being  relinquished,  an 

Wend.   601 ;    Attwater    v.    Fowler,    1  action  of  assumpsit  to  recover  the  sum 

Hall,  180  ;  Calvert  v.   Marlow,  6  Ala.  agreed  upon  may  be  maintained.   Wells 

34-2;  Gulick  v.   Gulick,  2   Green,  578;  v.  Wells,  Ventr.  40.     See  Lane  v.  Ty- 

McCoU  V.  Oliver,  1    Stew.   510  ;  Fan-  ler,  49  Me.  108  ;  Holyoke  v.  Mayo,  50 

ning  V.  Chadwick,   3  Pick.  420 ;   Van  Me.   385 ;  Nims  v.  Bigelow,  44  N.  H. 

Amringe    i'.    Ellmaker,   4    Barr,   281.  376;  Goble  v.  Howard,  12  Ohio,  165; 

So,  if  it  is  agreed  between  a  surviving  Wright  v.  Cumpsty,  41  Penn.  102. 
partner,  and  the  representative  of  one 


CH.  VIII.]         OF   THE   REMEDIES   OP    PARTNERS   INTER   SE. 


305 


tained  althougli  the  accounts  are  not  closed  between  the  part- 
ners, and  there  exist  outstanding  debts ;  provided  these  debts 
are  valueless,  or  the  plaintiff  tenders  them  to  the  defendant 
before  the  action,  (a) 

It  would  seem,  therefore,  that  the  phrase  "  final  balance  "  is 
not  used  in  a  very  strict  sense,  althougli,  in  another  part  of  the 
same  decision,  the  court  ask,  "  Is  the  account  a  final  balance, 
and  will  the  payment  in  this  suit  be  an  absolute  termination  of 
all  the  partnership  accounts  between  these  parties  ?  "  (6) 
the  last  clause  *  of  this  sentence  being  in  the  nature  of  *  280 
a  definition  of  a  final  balance. 

It  is  certain,  as  our  notes  show,  that  there  are  high  authori- 
ties which  recognize  a  rule  requiring  that  the  balance  should 
be  final ;  meaning  that  the  accounts  should  be  closed  and  this 
balance  be  the  result,  and  that  there  should  be  also  an  express 
promise  to  pay  this  balance,  (c)     But  this  is  going  further 


(a)  Williams  v.  Henshaw,  11  Pick. 
81,  82. 

(b)  In  Williams  v.  Henshaw,  12 
Pick.  378,  the  question,  as  stated  by 
the  court  was,  "  whether  one  part- 
ner, after  the  expiration  of  tlie  joint 
concern,  or  even  after  dissolution,  can, 
at  any  time,  without  any  settlement, 
without  any  agreement  with  or  notice 
to  his  copartner,  by  assnminff  all  the 
outstanding  debts,  maintain  assumpsit 
against  him  for  any  balance  which 
may  be  due  ? "  The  court  hdd  tliat 
he  could  not ;  and  for  the  reason,  that, 
notwithstanding  a  judgment  for  the 
plaintiff  on  a  balance  thus  made  out, 
"  in  many  ways  new  balances  might 
arise,  which  would  give  rise  to  new 
actions,  and  thus  create  a  midtiplicity 
of  suits.''  See  Brinlcy  v.  Kupfer,  6 
Pick.  179  ;  Sikes  v.  Work,  6  Gray,  433. 
In  Wilbj'^  V.  Phinney,  15  Mass.  IIG, 
the  expression  "  final  balance  "  seems 
to  be  used  with  great  latitude.  See 
Panning  v.  Ciiadwick,  3  Pick.  420, 
423 ;  Rockwell  v.  Wilder,  4  Mete.  5(Jl. 
See  also  Haskell  v.  Adams,  7  Pick.  50; 
Capen  v.  Barrows,  1  Gray,  376,  382. 
In  Haskell  v.  Adams,  several  members 
of  a  company  gave  its  agent  their 
note,  which  was  discounted,  and  money 
raised   for  the   use   of    the   company. 


The  company  being  dissolved,  the 
partners  who  gave  the  note  brought 
assumpsit  against  anotlier  partner  to 
recover  the  proportion  of  the  amount 
of  the  note  due  from  him.  The  com- 
pany was  still  in  debt,  and  no  adjust- 
ment of  their  affairs  had  been  made. 
Held,  that  the  action  could  not  be 
maintained. 

It  may  be  inferred  from  all  the 
above  cases  that  the  balance  which  is 
treated  as  final,  is  one  occurring  upon 
the  dissolution  of  the  firm.  And  in 
Dickinson  v.  Granger,  18  Pick.  317, 
the  court  say  expressly:  "A  final  bal- 
ance of  course  can  never  arise  till  after 
a  dissolution."  [Before  one  partner 
can  sue  another  at  law,  there  must  be 
a  dissolution,  a  final  settlement,  a  bal- 
ance struck,  and  a  promise  to  pay. 
Balances  struck  preparatory'  to  a  settle- 
ment will  not  support  an  action.  Burns 
V.  Nollingham,  60  111.  561.] 

(c)  That  there  must  be  an  express 
promise  to  pay  a  balance,  seems  to 
have  been  held  by  Buller,  J.,  in  Moravia 
V.  Levy,  2  T.  R.  483,  note  ;  though  in 
Foster  v.  AUanson,  id.  479,  the  same 
judge  said  that  he  had  no  difficulty  in 
holding  that  the  dissolution  of  a  pre- 
viously existing  partnership  and  the 
settlement  of  an  account  were,  in  point 
20 


306 


THE    LAW    OF    PARTNERSHIP. 


[CH,  VIII. 


than  the  weight  of  authority ;    and  much  further,  we  tliink, 

than  tlie  reason  of  the  case  extends.  The  later  English  au- 
thorities appear  to  have  established  the  rule  in  that 

*  281  country,  that  an  express  promise  is  *  not  necessary, 
because  a  promise  is  implied   in  closing  the  accounts 

and  stating  the  balance.  (cZ) 


of  law,  "  a  sufficient  consideration  for 
a  promise ; "  which  remark  seems  as 
applicable  to  an  implied  as  to  an  ex- 
press promise.  But  in  Fromont  v. 
Couphmd,  2  Bing.  170,  it  was  distinctly 
intimated  by  the  court,  mainly  upon 
the  authority  of  the  cases  just  cited, 
and  contrary  to  the  nisi  prins  case  of 
Rackstraw  v.  Imber,  Holt  N.  P.  368, 
that  there  must  be  an  express  promise. 
It  is  to  be  observed,  however,  that  the 
court  also  hekl,  that  no  balance  had 
been  struck  between  the  parties,  and 
that  the  case  was  decided,  partly  at 
least,  on  that  ground.  In  this  country, 
Fromont  v.  Coupland,  and  Moravia  v. 
Levy,  have  been  followed  in  quite  a 
number  of  the  States.  Thus,  in  New 
York,  one  partner  cannot  recover  a 
balance  of  accounts,  except  there  be  an 
express  promise  to  pay  it.  Casey  v. 
Brush,  2  Caines,  293;  Halsted  v. 
Schraelzel,  17  Johns.  80 ;  Westerlo 
V.  Evertson,  1  Wend.  532  ;  Townsend 
V.  Goewey,  19  id.  42i ;  Pattison  v. 
Blanchard,  G  Barb.  537.  So  in  South 
Carolina :  Course  v.  Prince,  1  Mill's 
Const.  R.  416.  In  Illinois  :  Davenport 
V.  Gear,  2  Scam.  495;  Frink  v.  Ryan, 

3  id.  322;  Chadsey  v.  Harris,  11  111. 
151  ;  Blue  v.  Leathers,  15  id.  32 ;  and 
see  Wycoff  i\  Purnell,  10  Iowa,  332.  In 
Pennsylvania,  the  early  cases  seem  to 
hold,  that  the  promise  upon  which  one 
partner  may  recover  from  another  a 
balance  of  accounts  need  not  be  ex- 
X)ress.     Ozias  v.  Johnson,  1  Binn.  191, 

4  Dall.  434  ;  Lamalere  v.  Caze,  1  Wash. 
C.  C.  435 ;  Hourguebie  v.  Girard,  2  id. 
212;  Williams  v.  Henshaw,  11  Pick. 
81.  But  in  Killam  v.  Preston,  4  Watts 
&  S.  14,  the  court  seemed  inclined  to 
hold,  apparently  upon  the  authority  of 
the  earlier  English  cases,  that  the 
promise  must  be  express.  But  this 
was  not  directly  ruled.      And  in  Van 


Amringe  v.  EUmaker,  4  Penn.  St.  281, 
the  court  held,  that,  conceding  the 
principle  that  assumpsit  will  not  lie  by 
one  partner  to  recover  from  the  other 
a  balance  due  upon  the  settlements  of 
the  partnership  accounts,  without  proof 
of  an  express  promise  to  pay,  yet  the 
execution  of  a  note  for  the  balance  due 
after  settlement  was  a  sufficient  ex- 
press promise.  See  Brown  v.  Agnew, 
G  Watts  &  S.  235;  Hamilton  v.  Hamil- 
ton, 18  Penn.  St.  20.  Whether  an  ex- 
press promise  is  requisite  in  New  Jersey 
and  in  North  Carolina,  see  Jaques  v. 
Hulit,  1  Harrison,  38  ;  Gulick  v.  Gulick, 
2  Green,  578 ;  Graham  v.  Holt,  3  Ired. 
300. 

(d)  Rackstraw  r,  Imber,  Holt  N.  P. 
36b.  The  plaintiff  and  defendant,  hav- 
ing dissolved  partnership,  met  to  ad- 
just their  accounts.  The  defendant 
admitted  a  certain  balance  to  be  due 
from  him  to  the  plaintiff;  and  offered 
to  pay  it,  if  the  plaintiff  would  sign  a 
certain  deed.  The  plaintiff  refused  to 
sign  the  deed,  and  brought  the  present 
action  for  the  admitted  balance.  It 
was  held  that  he  was  entitled  to  re- 
cover. See  Henley  v.  Soper,  8  B.  &  C. 
16,  21.  In  Wray  v.  Milestone,  5  M.  & 
W.  21,  the  plaintiff  and  defendant, 
beside  having  other  general  dealings, 
had  also  been  partners  in  a  particular 
adventure  for  the  purchase  and  sale  of 
wool.  They  came  to  a  general  ac- 
count, of  which  a  debit  against  the 
defendant  for  loss  on  wool  formed  one 
item.  The  defendant  signed  the  ac- 
count, and  admitted  the  balance  due. 
The  present  action  was  brought  to 
recover  the  amount  of  the  item  entered 
in  the  account  as  the  "  loss  on  wool." 
Upon  motion  for  a  new  trial,  one  of 
the  questions  was,  whether  a  sufficient 
promise  by  the  defendant  was  proved. 
Lord  Abinger,    C.  B. :  "  The  account 


CH.  Vlir.]         OF   THE    REMEDIES   OF   PARTNERS   INTER   SE. 


307 


The  act  of  settling  the  account  and  striking  the  balance  is 
itself  the  plainest  acknowledgment  of  an  indebtedness  which 
is  wholly  liberated  from  all  complication  with  the  accounts  of 
the  partnership  :  it  grows  out  of  them,  but  only  out  of  their 
termination  and  settlement.  Nor  can  we  doubt  that  this  rule 
of  law  must  prevail  in  this  country  also,  (e) 

Then,  as  to  the  question  whether  the  balance  must  be  a  final 
one,  we  cannot  but  think  that  it  is  quite  enough  if  it  be  a  bal- 
ance, or  a  debt,  distinctly  separated  from  the  partnership 
accounts,  *  either  by  their  entire  settlement,  or  by  a  set-  *  282 
tlement  which  may  be  partial  as  to  the  affairs  of  the 
partnership,  but  complete  as  to  this  debt.  If  not  absolutely 
final,  perhaps  a  presumption  will  always  exist  that  it  remains 
connected  with  partnership  affairs.  But,  as  it  is  perfectly  well 
settled  that  a  partner  may  sue  his  copartner  on  a  cause  of 
action  which  never  pertained  to  the  partnership,  it  seems  quite 
as  certain  that  he  should  have  his  action  for  a  cause  which  he 
can  show  to  have  been  cut  out  from  the  partnership  by  himself 
and  his  partners  jointly,  and  to  be  as  completely  separated  from 
it  as  if  there  had  never  been  any  connection  between  them. 


being  settled,  there  is  an  unqualified 
acknowledgment,  signed  by  tlie  de- 
fendant, tliat  15/.  is  due  from  him  to 
the  plaintiff  on  the  general  balance  of 
accounts  between  them."  ..."  If  the 
item  forms  part  of  a  settled  account, 
with  a  promise  to  pay  the  balance,  I 
think  there  is  no  need  of  an  express 
promise  to  pay  the  particular  item." 
Parke,  B.  :  "  There  is  no  occasion  to 
go  through  the  form  of  words  that  he 
promises  :  the  transaction  speaks  for 
itself."  Maule,  B. :  "I  know  of  no 
rule  of  law  which  requires  in  this,  or 
in  any  other  case,  an  express  promise." 
In  Jackson  v.  Stopherd,  2  Cromp.  & 
M.  361,  to  which  we  have  already  re- 
ferred, ante,  p.  *  274  and  notes,  two 
persons  who  had  worked  a  coal-mine 
having  dissolved  partnership,  and  made 
an  agreement  for  the  division  of  a  cer- 
tain portion  of  their  property,  the 
nature  of  their  bargain  for  the  division 
and  the  subsequent  actual  use  l)y  one 
partner  of    the  whole   property,  was 


held  to  raise  an  implied  obligation  on 
him  to  pay  the  other  partner  for  a 
moiety  of  it.  Cross  v.  Cheshire,  7 
E.xch.  43  ;  ante,  p.  *271  and  notes.  In 
this  case,  a  promise  by  the  defendant 
to  pay  the  plaintiff,  his  partner,  the 
sum  sued  for,  was  implied  from  the 
defendant's  admission,  that,  through 
his  own  improper  use  of  the  partner- 
ship name,  the  plaintiff  had  been  com- 
pelled to  expend  tiiat  sum  for  the 
defendant's  sole  benefit. 

(e)  In  Massachusetts,  an  action  by 
one  partner  against  another  to  recover 
a  balance  of  accounts,  may  be  sustained 
upon  an  implied  promise.  Williams 
V.  Henshaw,  11  Tick.  79;  Wilby  v. 
Phinney,  15  Mass.  116,  121;  Brigiiam 
V.  Eveleth,  9  id.  538;  Fanning  v.  Chad- 
wick,  3  Pick.  420;  Dickinson  v. 
Granger,  18  id.  317.  So  also  in 
Alabama,  M'Coll  v.  Oliver,  1  Stew. 
510 ;  Pope  v.  Randolph,  13  Ala.  214  ; 
and  in  Vermont,  Spear  v.  Newell,  13 
Vt.  288.     See  ante,  p.  *279,  note  {b). 


308 


THE   LAW   OF    PARTNERSHIP. 


[CH.  VIII. 


It  is,  undoubtedly,  necessary  tliat  all  the  partners  should  be 
bound  by  the  settlement,  or  by  the  agreement  by  which  this 
matter  was  separated  from  the  partnership.  (/)  In  few  words, 
we  think  it  not  necessary  that  the  balance  should  be  general  as 
well  as  final ;  but  it  is  sufficient  if  it  be  so  far  final  that  the  de- 
cision of  the  question  will  be  final  upon  all  parties,  and  that 
nothing  which  can  happen  to  the  partnership  will  make  it 
necessary  or  just  to  review  this  decision.  (^) 


(/)  See  Gill  v.  Kuhn,  6  S.  &  R. 
333 ;  Course  v.  Prince,  1  Mill's  Const. 
R.  416;  Borill  v.  Hammond,  6  B  &  C. 
149,  151,  per  Littledale,  J. ;  Carr  v. 
Smith,  5  Q.  B.  128 ;  Cliadsey  v.  Harris, 
11  111.  151;  Morrow  v.  Riley,  15  Ala. 
710.  One  partner  may  impliedly  as- 
sent to  and  be  bound  by  an  account 
stated.  So  held,  per  Washington,  J., 
in  Lamalere  v.  Caze,  1  Wash.  C.  C, 
437.  But  see  Killam  v.  Preston,  4 
Watts  &  S.  14.  See  also  Beach  v. 
Hotchkiss,  2  Conn.  425 ;  Robinson  i;. 
Williams,  8  Mete.  454. 

(g)  It  seems  to  be  well  established 
by  the  English  cases  (to  some  of  which 
we  have  already  alluded),  that  the 
balance  for  wliich  a  suit  will  lie  between 
partners  is  not  necessarily  a  general 
balance  of  all  the  accounts  between 
them,  but  may  be  a  balance  in  respect 
of  specific  matters,  which,  by  agree- 
ment, have  been  insulated  from  the 
general  accounts.  So  in  Jackson  v. 
Stopiierd,  2  Cromp.  &  M.  361 ;  Coffee 
V.  Brian,  3  Bing.  54 ;  Cross  v.  Chesh- 
ire, 7  Exch.  43;  Brown  v.  Tapscott, 
6  M.  &  W.  119.  So  wliere  a  balance 
of  accounts  is  taken,  and  a  note  given 
as  the  balance,  that  must  be  paid  ;  al- 
though there  are  subsequent  accounts 
upon  which  the  payee  may  eventually 
be  found  in  arrears.  Preston  v.  Strut- 
ton,  1  Anst.  50.  The  plaintiff  and 
defendant  were  partners  in  a  stage- 
coach company,  which  was  dissolved  in 
the  montli  of  November.  The  plain- 
tiff's action  was  for  the  recovery  of 
certain  balances  of  accounts,  by  which 
it  appeared  that,  during  the  partner- 
ship, a  balance  was  struck  every 
month ;  and  that  for  the  months  of 
September,   October,   and    November, 


balances  had  been  found  due  from  the 
defendant  to  the  plaintiff,  though  the 
balance  for  November  had  since  been 
paid.  Held,  tliat  the  plaintiff  might 
recover  the  balances  in  his  favor  on 
the  September  and  October  accounts. 
Brierly  v.  Cripps,  7  C.  &  P.  709 ;  Carr 
V.  Smith,  5  Q.  B.  128.  In  Vermont, 
a  partner  can  recover  only  a  balance 
found  due  to  him  upon  dissolution,  and 
after  the  adjustment  of  all  the  partner- 
ship dealings.  Spear  v.  Newell,  13  Vt. 
288;  Warren  v.  Wheelock,  21  id.  323. 
See  Sawyer  v.  Proctor,  2  id.  580.  The 
same  is  true  in  Illinois.  Davenport 
V.  Gear,  2  Scam.  495;  Chadsey  v. 
Harrison,  11  111.  151;  and  is  apparently 
the  doctrine  of  the  following  cases : 
Graham  v.  Holt,  3  Ired.  -300 ;  Pope  v. 
Randolph,  13  Ala.  214 ;  Killam  v.  Pres- 
ton, 4  Watts  &  S.  14  ;  Halderman  v.  Hal- 
derman,  1  Hempst.  558 ;  Chase  v.  Garvin, 
19  Me.  211.  The  proposition  of  the  text 
is  sustained  in  the  case  of  Gibson  v. 
Moore,  6  N.  H.  547,  in  which  all  the 
leading  authorities  are  reviewed,  and 
a  conclusion  reached  wliich  seems  to 
be  founded  both  upon  the  better  au- 
thority and  the  better  reason.  There 
the  plaintiff  and  defendant  had  been 
partners.  A  controversy  having  arisen 
respecting  some  of  their  partnership 
affairs,  they  referred  the  matters  in 
dispute  to  arbitration.  The  referees 
awarded  that  the  defendant  should  pay 
the  plaintiff  S88.08,  and  the  defendant 
promised  to  pay  the  award.  But  there 
had  been  no  settlement  of  the  general 
concerns  of  the  partnership,  nor  any 
final  balance  struck.  The  present 
action  was  assumpsit  on  the  award, 
and  the  court  he/d  that  it  might  be 
maintained.      Parker,    J.,    said :    "  In 


CH.  YIII.]         OF   THE   REMEDIES   OF   PARTNERS   INTER   SE. 


309 


*  It  is  of  no  importance  how  the  settlement  has  been  *  283 
made  ;  whether  by  the  parties,  or  by  law,  or  by  arbitra- 
tion, (/i)  Indeed,  a  suit  on  an  award  has  been  maintained, 
where  the  partners  submitted  "  all  differences  "  between  them 
to  the  arbitrators,  on  the  ground  that  an  award  in  such  a  case 
is  a  final  settlement  of  the  partnership:  and  this  rule  was 
applied  in  one  case  where  the  plaintiff  could  not  have  sued  the 
defendant  on  the  agreement  to  submit,  (i) 

*  So  where  the  settlement  did   not  embrace  all  the    *  284 
debts,  some  of  no  great  amount  being  left  outstanding, 

the  plaintiff  was  permitted  to  enter  a  remittitur  as  to  these,  (y) 
It  is  said  tliat  if  there  be  a  dissolution  or  expiration  of  the 
period  of  partnership,  no  partner  can,  without  the  consent  of 
his  copartner,  assume  all  the  outstanding  debts  as  belonging 
to  him,  and,  allowing  their  full  value,  so  strike  a  balance,  and 
sue   his   copartner.  (¥)      But  it  must  be  true  that  the  mere 


the  present  case,  there  has  been  no 
final  balance  struck.  The  settlement 
of  the  partnersliip  concerns  generally 
still  remains  to  be  made.  But,  by 
agreement  between  the  parties,  in 
relation  to  a  specific  portion  of  the 
partnership  transactions  a  final  adjust- 
ment has  been  made.  Tiie  partners 
have  agreed  to  close  thus  far,  and  one 
has  agreed  to  pay  the  other  a  certain 
sum  notwithstanding.  Nor  is  it  of  any 
importance  that  tlie  debts  of  the  part- 
nership are  not  all  paid,  if  such  be  the 
fact.  Creditors  cannot  object.  They 
will  have  the  responsibility  of  both 
partners  still,  nor  is  the  payment  of 
money  by  one  partner  to  the  other  to 
their  prejudice.  If  it  was,  that  could 
not  prevent  the  partners  from  adjusting 
the  concerns  between  themselves,  so 
as  to  create  a  liability  from  one  to  the 
other.  They  are  not  parties  here,  nor 
their  rights  in  question.  If  partners 
can  pledge  the  partnership  property 
for  the  debt  of  an  individual  partner, 
and  creditors  cannot  hold  it  (Wiiit- 
ney  r.  Dean,  5  N.  H.  249),  they 
may  surely  make  any  adjustment  of 
the  partnership  interests  among  them- 
selves that  tliey  think  expedient." 
And  see,  upon  tlie  same  point.  Sawyer 
V.  Proctor,  2  Vt.  580;  Van  Ness  v. 
Torrest,  8  Cranch,  30. 


It  seems  to  be  established,  both  in 
England  and  in  this  country,  that,  if 
the  partnership  affairs  are  so  nearly 
adjusted  that  there  remains  but  a  single 
item  to  liquidate,  one  partner  may 
maintain  an  action  against  his  copart- 
ner for  a  balance  due  him  growing  out 
of  the  partnership  transactions,  such 
balance  being  so  far  final  as  to  remove 
tlie  difiiculty  as  to  partnership.  Rob- 
son  V.  Curtis,  1  Stark.  78;  Borill  v. 
Hammond,  6  B.  &  C.  149,  per  Bayley, 
J.,  dissentiente ;  ^lusier  v.  Trumpour,  5 
Wend.  274  ;  Westerlo  v.  Evertson,  1 
id.  534  ;  Gibson  r.  Moore,  6  N.  H.  549; 
Clark  V.  Dibble,  16  Wend.  603;  Byrd 
V.  Fox,  8  Mo.  574 ;  Brubaker  v.  Robin- 
son, 3  Penn.  295;  Van  Amringe  v.  Ell- 
maker,  4  Barr,  283. 

{h)  Henly  v.  Soper,  8  B.  &  C.  16, 
20.  See  Gibson  v.  Moore,  6  N.  H. 
547 ;  Brierly  v.  Cripps,  7  C  &  P.  709 ; 
Preston  v.  Stratton,  1  Anst.  50 ;  Wray 
V.  Milestone,  5  M.  &  W.  21. 

({)  Winter  r.  White,  3  J.  B.  Moore, 
674.     See  Burnell  r.  Minot,  4  id.  340. 

(/)  Brinley  v.  Kupfer,  6  Pick.  179. 
See  cases  at  end  of  preceding  note, 
and  Sikcs  v.  Work,  6  Gray,  433 ;  Frink 
V.  Ryan,  3  Scam.  322. 

(/.•)  Williams  i-.Henshaw,  12  Pick. 
378. 


810 


THE   LAW   OF   PAETNERSHIP. 


[CH.  VIII. 


existence  of  outstanding  debts  ought  not,  of  itself,  to  defeat 
tlie  right  of  a  partner  to  an  action  at  law,  if  every  thing  but 
these  debts  is  settled  and  determined,  and  he  is  willing  either 
to  take  them  all  at  their  face,  or  allow  and  transfer  them  all  to 
his  jiartner  as  of  no  value  whatever.  (/) 

If  the  accounts  have  been  settled,  and  one  partner  can  prove 
that  he  paid  too  much  to  the  other,  by  some  mistake  or  igno- 
rance of  fact  or  of  accounting,  there  would  not  seem  to  be  any 
reason — unless  one  should  grow  out  of  the  peculiar  circum- 
stances of  the  case  —  to  prevent  him  from  recovering,  at  law, 
what  he  has  thus  overpaid,  (wt) 


(/)  Rockwell  V.  Wilder,  4  Mete.  556, 
561.  The  existence  of  outstanding 
debts  due  tiie  firm  will  not  necessarily 
defeat  an  action  of  assumpsit  between 
partners  for  a  balance,  if  the  plaintifT 
show  tliat  tlie  outstanding  debts  are 
incapable  of  collection,  and  thus  that 
the  judgment  rendered  will  make  a 
final  settlement  between  the  partners. 
And  in  such  case,  especially  if  an  as- 
signment of  all  tlie  outstanding  debts 
be  seasonably  given  or  tendered  to  the 
other  part}%  the  action  may  be  sus- 
tained. Per  INIorton,  J.,  in  Williams  v. 
Henshaw,  II  Pick.  79. 

(m)  Bond  v.  Hays,  12  Mass.  34; 
Chase  v.  Garvin,  19  Me.  211.  If  an  ac- 
count between  partners  has  been  stated, 
in  wliich  tliere  is  a  manifest  error  in 
the  figures,  or  in  the  principles  upon 
M'hich  it  is  adjusted,  the  amount  really 
due  to  the  injured  party  may  be  re- 
covered in  assumpsit,  leaving  the  dis- 
solution and  settlement  otherwise  un- 
affected. But  where  tiiere  is  no  actual 
adjustment  of  accounts,  and  one  part- 
ner purchases  the  interest  of  another 
for  a  gross  sum,  but  the  purchase  is 
affected  by  fraud,  the  defrauded  part- 
ner mny  wholly  avoid  the  contract, 
and  have  the  accounts  reopened ;  but 
his  remedy  is  in  equity.  Chase  v.  Gar- 
vin, supra. 

Upon  the  principle  stated  in  the 
text,  if,  after  the  dissolution  of  a  part- 
nership, settlement  of  the  accounts, 
and  division  of  the  profits,  some  of  the 
former  partners,  from  causes  arising 
subsequently   to   the    dissolution,   are 


compelled  to  incur  heavy  expenses  on 
the  account  of  the  former  partnership, 
an  action  would  apparently  lie  by 
them,  against  the  other  partners,  to 
recover  their  proportion  of  such  ex- 
penditure. Graham  v.  Robertson,  2 
T.  R.  282.  See  Kennedy  v.  M'Fadon, 
3  Harris  &  J.  194.  So  if  a  partnership 
has  been  dissolved,  and  the  partnership 
accounts  adjusted,  and  one  partner  is 
afterwards  obliged  to  pay  an  outstand- 
ing claim  not  provided  for,  he  may 
maintain  assumpsit  against  his  co- 
partner for  the  proportion  of  it  which 
the  latter  ought  to  pay  by  reason  of 
his  joint  liability.  Brown  v.  Agnew, 
6  Watts  &  S.  235,  238.  See  Dickinson 
V.  Granger,  18  Pick.  315,  317  ;  Kelley 
V.  Kautfman,  18  Penn.  St.  351.  But 
an  agreement  between  two  partners 
after  dissolution,  to  the  effect  that 
they  would  "  quit  even"  to  avoid  the 
expenses  of  a  chancery  suit,  does  not 
authorize  one  to  maintain  an  action  at 
law  against  the  other  to  recover  con- 
tribution for  a  partnership  debt  subse- 
quently paid.  De  Jarnette  v.  Mc- 
Queen, 31  Ala.  230.  See  Fanning  v. 
Chadwick,  3  Pick.  420.  [One  partner 
may  sue  another  for  money  advanced, 
if  the  transaction  be  single  ;  not  involv- 
ing the  rights  of  creditors,  or  an  ad- 
justment of  partnership  accounts. 
Russell  V.  Grimes,  46  Mo  410;  Finlay 
V.  Stewart,  56  Penn.  St.  183.  See  also 
Wells  I'.  Simonds,  51  How.  (N.  Y.)  Pr. 
48.  Or  for  his  share  of  the  declared 
profits,  if  by  mutual  agreement  one 
partner  is  made  general  manager,  and 


CH.  VIII.]        OF   THE   REMEDIES    OF   PARTNERS   INTER   SE.  311 

*  In  New  Hampshire,  it  is  provided  by  statute  that  *  285 
"  any  coi)artner  or  joint  owner  may  maintain  an  action 
of  assumpsit,  against  one  or  more  of  his  copartners  or  joint 
owners,  to  recover  his  just  share  of  any  goods  or  chattels, 
choses  in  action,  or  the  proceeds  thereof,  received  by  such  co- 
partners or  joint  owners,  and  not  accounted  for,  delivered, 
paid,  or  otherwise  settled  for  on  demand."  (w) 

If,  in  the  articles  of  partnership,  or  even  independently  of 
them,  one  partner  covenants  with  another  that  he  will  account, 
it  seems  clear  that  an  action  of  covenant  lies  for  a  breach,  (o) 
And  it  was  said,  some  years  since,  in  Massachusetts,  that 
assumpsit  would  lie  on  such  a  promise  between  partners,  (j^) 
We  think  that  such  an  action  would  be  maintained  now  every- 
where. 

3.    Of  a  Demand  for  Contribution. 

A  difference  has  been  made  between  an  action  at  law  between 
partners  for  contribution,  and  those  we  have  been  considering, 
for  which  it  is  not  easy  to  see  sufficient  reason.  Courts,  at 
least  in  England,  seem  to  have  held,  or  judges  have  said,  that 
a  partner  who  has  paid  money  for  the  partnership,  may,  gener- 
ally, sue  his  copartners  for  contribution,  (g)    This  is  the  more 

is  from  time  to  time  to  pay  over  de-  (  p)  Wilby  v.  Phinney,  15  Mass.  120. 

clart'fl  dividends  of  profit  to  tlie  otliers.  (q)  Tlie  rule  usually  laid  down  upon 

Wadley  v.  Jones,  55  Ga.  329.     Or  for  this  point  is,  that  contribution  may  be 

his  share  of  the  assets  after  dissolution  obtained  in  an  action  of  assumpsit  by 

and  actual  division.     Hunt  u.   Morris,  one  partner  against  another,  for  money 

44   Miss.    314 ;    -Dakin   v.    Graves,   48  laid  out  for  the  defendant's  use.     But 

N.   H.  45.     Or  for  money   paid   on   a  it  has  always  rested  rather  upon  the 

firm    debt,  which,  on   dissolution,  the  c?(W«  of  eminent  judges  tlian  upon  the 

other   partner   had   agreed   on  receipt  authority  of   adjudged   cases,  and,   in 

of  the  assets  to  pay.     Hinkie  v.  Reid,  the  general  form  in  wliich  it  has  been 

43  Ind.  300.     Or  for  a  sum  agreed  by  customary  to  state  it,  may  be  consid- 

one    partner  to  be  paid  to   the  other,  ered  as  no  longer  supported  even  by 

for  his  interest  in  the  concern.     Wells  the  weight  of  Englisli  authority.     See 

V.  Carpenter,  65  111.  447.]  Abbott  v.  Smith,  2  W.  El.  947.     Other 

(?i)  Revised  Statutes  of  New  Hamp-  cases  and  dicta  which   are  sometimes 

shire,  ch.  180,  §  4,  p.  358.  cited  in  support  of  the  right  to  contri- 

(o)  Foster  i'.  AUanson,  2  T.  R.  479  ;  bution  between   partners,  we  have  al- 

Want  2>.  Reece,  1  Bing.  18;  Owston  ?;.  ready   referred  to;    and  they  are,  we 

Ogle,  13  East,  538;  Duncan  w.  Lyon,  3  think,   better    explained    upon    other 

Johns.    Ch.    3(52;    Bailey   v.    Starke,  1  grounds.      See    Wright   v.    Hunter,   5 

Eng.  191.     See  Niven  v.  Spickerman,  Ves.    792;    ante,   p.   *271   and   note; 

12  Johns.  401.  Holmes   v.  Williamson,  6  Maule  &  S. 


312 


THE   LAW   OF    PARTNERSHIP. 


[CH.  VIII. 


*  286  remarkable,  because  the  whole  *  doctrine  of  contribu- 
tion is  originally  only  equitable.  Every  reason  against 
other  actions  at  law,  between  copartners,  would  seem  to  apply 
to  those  for  contribution.  One  partner  pays  money  to-day,  and 
another  to-morrow ;  and  the  only  way  of  determining  the 
questions  which  might  arise  from  such  payments  would  seem 
to  be,  to  credit  the  paying  partner  with  the  amount  he  pays, 
and  give  this  item  its  due  place  and  weight  in  the  general  ac- 
count of  the  partnership.  We  find  but  little,  or  rather  nothing, 
in  American  jurisprudence,  (r)  and  nothing  in  the  reason  of 


159 ;  Blackett  v.  Weir,  5  B.  &  C.  385, 
388;  Evans  v.  Yeatherd,  2  Bing.  133; 
Wooley  V.  Batte,  2  C.  &  P.  417,  is,  per- 
haps, the  most  direct  adjudication  in 
favor  of  contrihution  at  law  between 
partners.  See  Milburn  v.  Codd,  7  B. 
&  C.  419,  per  Bailey,  J. 

Mr.  Gow,  in  the  first  and  second  edi- 
tions of  his  work  on  Partnership,  laid 
down  the  rule  that,  "  in  an  action  of 
assumpsit,  for  money  paid  to  his  use, 
one  partner  may  enforce  from  his  co- 
partner contribution  towards  a  debt, 
which  the  single  partner  may  have 
discharged,  but  for  which  the  firm  were 
jointly  liable."  Gow  on  Part.  (2d  ed.) 
90.  In  the  subsequent  editions,  how- 
ever, the  rule  is  greatly  qualified,  and 
its  operation  restricted  to  the  case  of 
partners  in  a  single  transaction.  For 
the  rule  in  its  changed  and  limited 
shape,  he  cites  numerous  cases.  Ab- 
bott V.  Smith,  2  \V.  Bl.  947  ;  Merry- 
weather  V.  Nixon,  8  T.  li.  186  ;  Evans 
V.  Yeatherd,  2  Bing.  133;  Herries  v. 
Jamieson,  5  T.  R.  556,  per  Lord  Ken- 
yon  ;  Ansell  v.  Waterhouse,  6  Maule  & 
S.  390,  per  Bayley,  J. ;  Holmes  v.  Wil- 
liamson, id.  158 ;  Carlen  v.  Drury,  1 
Ves.  &  B.  157  ;  Wright  v.  Hunter,  5 
Ves.  792  ;  Burnell  v.  Minot,  4  ,L  B. 
Moore,  340.  But  these  cases  seem  to 
be  very  far  from  establishing  the  prop- 
osition for  which  they  are  cited.  In 
some  of  them  are  to  be  found  dicla  of 
judges  asserting  the  general  right  of 
contribution  between  joint  defendants  ; 
in  some  contribution  is  actually  en- 
forced, but  between  persons  who  are 
not  partners,  but  simply  joint  contrac- 


tors, or  otherwise  jointly  connected ; 
while  in  others  the  question  before  the 
court  is  the  competency  of  a  witness, 
his  competency  depending  upon  his 
liability  to  contribute,  eitlter  in  luiv  or  in 
eqnitji,  to  a  demand  which  his  testimony 
establishes.  The  distinction,  if  any, 
which  these  cases  suggest,  is  one  be- 
tween persons  who  are  simply  joint 
contractors,  and  between  those  who 
hold  to  each  otiier  the  closer  relation  of 
partners  ;  that  is,  it  is  between  parties 
who  are  partners,  and  those  who  are 
not,  and  not  between  different  kinds  of 
partners.  And  the  difference  as  to  the 
right  of  contribution,  between  those 
who  are  partners  and  those  wlio  are 
merely  co-debtors  or  co-contractors,  as 
well  as  the  reason  for  it,  is  obvious. 
They  are  thus  stated  by  the  court  in 
White  V.  Harlow,  5  Gray,  463,  468: 
"  Where  two  independent  parties  owe 
a  joint  debt,  and  one  pays  the  whole, 
which  he  may  be  compelled  to  do  by 
the  creditor,  the  law,  in  the  absence 
of  any  express  agreement  of  such  debt- 
ors, implies  a  promise  of  the  co-debtor, 
to  him  who  has  thus  paid  the  whole,  to 
pay  him  one-half  of  the  common  debt 
thus  discharged.  But,  when  one  part- 
ner tlius  pays  the  whole  debt,  the  law 
implies  no  such  promise :  it  merely 
authorizes  him  to  charge  the  whole 
to  the  firm  in  partnership  account,  of 
which  he  will  have  the  benefit,  as  a 
credit  on  settlement  of  that  account, 
voluntarily,  or  by  a  suit  in  equity." 

(i)  The  American  authorities,  indeed, 
seem  to  be  against  the  right  of  contri- 
bution as   between  partners.     And  in 


CH.  VIII.]         OF   THE   REMEDIES   OF   PARTNERS   INTER   SE. 


313 


the  case,  to  *  sustain  an  action  at  law  by  a  partner  against  *  287 
his  partner  for  contribution,  unless  the  facts  of  the  case 
and  the  whole  character  of  the  transaction  insulate  it  from  the 
general  accounts  of  the  partnership,  and  bring  it  within  those 
reasons  which,  as  we  have  said,  seem  to  us  sufficient  to  sustain 
any  action  at  law  between  partners.  («) 


this  respect  no  distinction  is  made  be- 
tween trading  and  professional  partner- 
sliips.  "Wcsterlo  i-.  Evertson,  1  Wend. 
532;  Gridley  r.  Dole,  4  Mill's  Const. 
486  ;  Lawrence  v.  Clark,  9  Dana,  2-57  ; 
Kennedy  v.  McFadon,  3  Harris  &  J. 
194 ;  Bracken  v.  Kennedy,  3  Scam. 
564 ;  Brown  v.  Agnew,  6  Watts  &  S. 
238 ;  Roberts  v.  Fitter,  1.3  Penn.  St.  265 ; 
Haskell  v.  Adams,  7  Pick.  59 ;  White 
V.  Harlow,  5  Gray,  463  ;  Morin  i'.  Mar- 
tin, 25  Mo.  360;  De  Jarnette  v.  Mc- 
Queen, 31  Ala.  230. 

(s)  As  where  one  partner  claims 
contribution  of  another  in  respect  of 
some  transaction  which  has  been  sep- 
arated from  the  partnership  accounts  ; 
or  has  arisen  after  dissolution  and 
settlement ;  or  is  a  consequence,  not  of 
the  relations  of  the  partners  inter  se, 
but  of  their  relations  to  third  persons. 
Graham  v.  Robertson,  2  T.  R.  232; 
Brown  r.  Agnew,  6  Watts  &  S.  2.35  ; 
Kelly  V.  Kauffman,  18  Penn.  St.  351 ; 
ante,  p.  *  285  and  notes.  Or  where  the 
parties  to  the  suit  for  contribution  are 
to  be  regarded  as  joint  contractors,  or 
in  any  other  light  than  as  partners. 
Ansell  I'.  Waterhouse,  6  Maule  &  S. 
390;  Holmes  v.  Williamson,  id.  158; 
Burnell  v.  Minot,  4  J.  B.  Moore,  340 ; 
Edger  r.  Knapp,  6  Scott  N.  R.  707, 
712;  Sedgwick  v.  Daniell,  2  H.  &  N. 
319;  Forbes  v.  Webster,  2  Vt.  58; 
Dupuy  V.  Johnson,  1  Bibb,  562.  Or 
where  there  is  a  special  agreement  be- 
tween partners  authorizing  one  of  them 
to  lay  out  money  on  partnerslup  ac- 
count, with  a  stipulation  that  tliey  will 
each  contribute,  in  due  proportion,  such 
sums  as  may  be  necessary  to  reimburse 
him.  Brown  v.  Tapscott,  6  M  &  W. 
119;  Geddes  v.  Wallace,  2  Bligh,  270; 


Waugh  V.  Carver,  2  H.  Bl.  235  ;  Hut- 
ton  V.  Eyre,  6  Taunt.  289 ;  In  re  Webb, 
2  J.  B.  Moore,  500  ;  Murray  v.  Bogert, 
14  Johns.  318.  There  must  be  actual 
payment  of  a  joint  debt,  before  one  part- 
ner can  recover  contribution.  Maxwell 
V.  Jameson,  1  B.  &  Aid.  51  ;  Taylor  v. 
Higgins,  SEast,  169;  Gumming  i-.  Hack- 
ley,  8  Johns.  202.  See  Dunn  v.  Lee, 
1  J.  B.  Moore,  2 ;  Barclay  v.  Gooch,  2 
Esp.  571 ;   Ex  parte  Sergeant,  1  Glyn 

6  J.  183.  Neither  will  a  suit  for  con- 
tribution be  maintained,  either  at  law 
or  in  equity,  in  consequence  of  a  recov- 
ery against  one  partner  under  a  judg- 
ment in  an  action  on  a  tort.  Merry- 
weather  V.  Ni.xon,  8  T.  R.  186 ;  Ansell 
i:  Waterhouse,  6  Maule  &  S.  390; 
Vose  r.  Grant,  15  Mass.  521  ;  Thweatt 
V.  Jones,  1  Rand.  328  ;  Dupuy  v.  John- 
son, 1  Bibb,  565;  Pecks  v.  Ellis,  2 
Johns.  Ch.  131 ;  Lingard  v.  Bromley,  1 
Ves.  &  B.  114,  117.  See  also  Seddon 
V.  Connell,  10  Sim.  79,  86;  Attorney- 
General  v.  Wilson,  Craig  &  P.  1,  28; 
Miller  r.  Fenton,  11  Paige,  18.  As  to 
rights  arising  from  payments  of  money 
under  illegal  contracts,  see  Aubert  v. 
Maze,  2  B.  &  P.  371 ;  Ex  parte  Bell,  1 
Maule  &  S.  752 ;  Watson  t'.  Fletcher, 

7  Graft.  1 ;  Sullivan  v.  Greaves,  Park 
on  Ins.  8.  See  Booth  v  Hodgson,  6 
T.  R.  405 ;  Tenant  v  Elliott,  1  B.  &  P. 
3 ;  Farmer  v.  Russell,  1  B.  &  P.  296 ; 
Sharp  V.  Taylor,  2  Phillips  Ch.  801,  818  ; 
Thompson  v.  Thompson,  7  Ves.  473 ; 
Anderson  v.  Moncrieff,  3  Dess.  Ch. 
124.  See  Edgar  v.  Fowler,  3  East, 
222.  A  partner  who  redeemed  lands 
of  tlie  firm  from  execution  was  held 
entitled  to  contribution,  in  Downs  v. 
Jackson,  33  111.  464. 


3U 


THE   LAW   OF   PARTNERSHIP. 


[CH.  VIII. 


SECTION    III. 

OF  QUESTIONS  BETWEEN  PARTNERS  COGNIZANT  ONLY  BY  COURTS  OF 

EQUITY. 


1.  Demands  between  Firms  having  a  Common  Member. 

*  288  *  The  reasons  which  liave  already  been  given  for  the 
refusal  of  courts  of  law  to  sustain  generally  actions 
between  partners,  indicate,  with  sufficient  clearness,  the  classes 
of  cases  in  which  courts  of  equity  give  relief.  It  may  be  said 
that  they  will  give  relief  wherever  law  will  not,  and  that  it  is 
the  general  rule  that  law  will  not  sustain  suits  between  partners. 
The  preceding  section  may  be  considered  as  stating  the  excep- 
tions to  this  rule  ;  and  all  cases  which  do  not  come  under  one 
or  other  of  these  exceptions  come  under  the  rule. 

One  important  class  of  actions,  in  which  suits  at  law  are  not 
maintainable,  needs  more  particular  attention.  It  consists  of 
cases  in  which  one  firm  has  a  cause  of  action  against  another 
firm,  and  there  is  some  one  person  who  is  a  member  of  both 
firms.     There  can  be  no  action  at  law  between  those  firms,  (f) 


{t)  Bosanquet  v.  Wray,  6  Taunt. 
598  ;  Mainwarlncr  v.  Newman,  2  B.  &  P. 
120  ;  Moffatt  v.  Van  Milligen,  id.  124, 
note ;  Jones  v.  Yates,  9  B.  &  C.  532 ; 
Griffith  V.  Ciiew,  8  S.  &  R.  30  ;  Portland 
Bank  v.  Hyde,  2  Fairf.  19G ;  Eastman 
V.  Wright,  6  Pick.  320,  321 ;  Graham  v. 
Harris,  5  Gill  &  J.  489  ;  Burley  v. 
Harris,  8  N.  H.  235  ;  Rogers  v.  Rogers, 
5  Ired.  Eq.  31 ;  Calvin  i'.  Markham,  3 
How.  (Miss.)  343;  Green  v.  Chapman, 
27  Vt.  2o6  ;  Englis  v.  Furniss,  4  E.  D. 
Smith,  587;  Haven  v.  White,  39  111. 
509.  Upon  the  same  principle,  a  plain- 
tiff cannot  summon  himself,  nor  can 
several  plaintiffs  summon  one  of  their 
own  number,  as  a  trustee,  in  the  pro- 
cess of  foreign  attachment.  Belknap 
V.  Gibbens,  13  Mete.  471.  See  Port- 
land Bank  v.  Hyde,  2  Fairf.  196.  And 
where  there  are  two  firms,  with  a 
partner  common  to  each,  in  an  action 
against  one  of  them  the  other  cannot 
be  summoned  as  trustee  ;  for  the  rea- 
son that  the  trustee  process  is  a  mode 


of  enforcing  bij  a  suit  at  law  the  contract 
between  the  trustee  and  the  principal 
debtor,  for  the  benefit  of  the  creditor  of 
the  latter.  Denny  v.  Metcalf,  28  Me.  389. 
In  Pennsylvania,  by  act  of  April 
14th,  1838,  it  was  enacted  that  no 
action  by  partners  or  several  persons 
against  partners  or  several  persons 
should  abate,  nor  the  action  be  de- 
feated by  reason  of  one  or  more  indi- 
viduals being  or  having  been  members 
of  both  firms,  or  being  or  having  been 
of  the  parties  plaintiffs,  and  also  of  the 
parties  defendants,  in  the  same  suit ; 
the  acts  and  declarations  of  the  partner 
or  persons  so  being  of  both  the  parties, 
plaintiffs  and  defendants,  to  affect  each 
party  respectively  to  the  same  extent 
as  the  acts  and  declarations  of  the 
other  partners  or  persons,  plaintiffs  or 
defendants,  would  affect  the  respective 
firms  or  parties  ;  provided,  that  no  act 
or  declaration  of  the  party  shall  be 
given  in  evidence  in  his  own  favor  to 
the  prejudice  of  others.     For    cases 


CH.  VIII.]         OF   THE   EEMEDIES   OF   PARTNERS   INTER   SE. 


315 


There  is  a  *  rule  which,  though  technical,  or  rather  *  289 
formal,  would  suffice  to  prevent  it.  It  is  the  rule  which 
prevents  the  same  party  from  being  both  plaintiff  and  defend- 
ant of  record  ;  for  then  a  man  would  sue  himself.  We  have 
ali'eady  remarked  that  a  partnership  possesses  a  kind  of  per- 
sonality, and  that  it  is,  for  many  purposes,  a  kind  of  corpora- 
tion. The  law  of  partnership,  as  it  is  incorporated  into  the 
common  law,  acknowledges  this  sul)stantially  as  the  foundation 
of  its  whole  system  ;  but  it  never  acknowledges  it  formally. 
Tlie  names  of  all  the  partners  —  as  a  general  rule  —  must  be  set 
forth,  both  as  to  the  plaintiffs  and  the  defendants.  They 
should  be  described  as  "  copartners,  under  the  name  and  style 
of  A.,  B.,  &  Co."  But  these  words,  however  usual  and  proper, 
and,  for  some  purposes  necessary,  are,  in  law,  words  of  de- 
scription ;  and  A.,  B.,  <fc  C.  can  no  more  sue  A.,  D.,  &  E.  than 
A.  can  sue  A.  (^i)     In  addition  to  this  technical  reason,  how- 


under  tliis  statute,  or  bearing  upon  it, 
see  Hepburn  r.  Curts,  7  Watts,  300; 
:\rFadclen  v.  Hunt,  5  Watts  &  S.  468; 
Tassey  v.  Church,  id.  468  ;  McConkey 
V.  Rogers,  Brightly  N.  P.  450. 

[u)  Upon  the  like  ground,  that  the 
same  person  cannot  in  the  same  suit 
be  both  plaintiff  and  defendant  of 
record,  no  action  can  be  maintained 
between  one  and  the  firm  of  which 
he  is  a  member.  See  ante,  p.  *  268, 
note  (c) ;  De  Tastet  v.  Shaw,  1  B.  & 
Aid.  664;  Neale  v-  Turton,  4  Bing. 
149;  Teague  v.  Hubbard,  8  B.  &  C. 
345;  Chadwick  v.  Clarke,  1  C.  B.  700; 
Westcott  V.  Price,  Wright,  220 ;  Tinal 
V.  Briglit,  Minor,  103 ;  Estes  v.  Whip- 
ple, 12  Vt.  373 ;  Bracken  v.  Kenned\-, 
3  Scam.  558,  564;  Myrick  i-.  Dame, 
9  Cush.  248,  254;  Homer  v.  Wood, 
11  id.  66 ;  Banks  v.  Mitchell,  8  Yerg. 
111.  Though  a  partner,  payee  of  a 
negotiable  note  made  by  his  firm,  can- 
not sue  the  makers,  his  indorsee  may 
recover  upon  it.  Smith  v.  Lusher, 
5  Cow.  688;  Thayer  v.  Buffum,  11 
Mete.  .398;  Davis  v.  Briggs,  39  Me. 
304 ;  Fulton  v.  Williams,  11  Cush. 
108,  110.  So,  if  the  partnership  be 
payee  of  a  note  made  by  one  of  the 
partners,  the  technical  impediment  to 


a  suit  on  the  note  is  removed  by  actual 
negotiation,  and  the  holder  may  claim 
a  valid  title  through  the  indorsement 
of  the  firm.  Per  Shaw,  C.  J.,  in  Parker 
V.  Macomber,  18  Pick.  509.  See  Bab- 
cock  V.  Stone,  3  McLean,  172.  And 
where  one  who  is  a  member  of  two 
firms  makes  a  promissory  note  in  the 
name  of  one  firm,  payable  to  a  person 
who  is  a  member  of  the  other  firm,  the 
payee  mny  sue  and  recover  upon  it  at 
law;  and  the  admissions  of  the  com- 
mon member  of  both  firms  cannot  be 
given  in  evidence  to  defeat  a  recovery 
on  the  instrument.  Moore  v.  Gano, 
12  Ohio,  300.  See  Baring  v.  Lyman, 
1  Story,  423.  But  the  assignee  of  a 
partner,  who  is  the  payee  of  a  non- 
negotiahle  note  made  by  the  partnership, 
cannot  sue  on  the  note,  since  his  as- 
signor could  not.  Hill  v.  McPlierson, 
15  Mo.  204.  If  a  firm  is  the  first  in- 
dorser  of  a  note,  the  holder,  being  a 
I)artner  therein,  cannot  sue  a  subse- 
quent indorser  on  the  note  :  it  being  a 
good  answer  to  the  suit  of  the  holder, 
that,  as  a  member  of  the  copartnership, 
he  stands  in  the  relation  of  a  prior 
indorser.  Decreet  v.  Burt,  7  Cush. 
551. 


316  THE   LAW   OF   PARTNERSHIP.  [CH.  VIII. 

ever,  it  may  be  said  that  such  suits  would  frequently  involve  an 
intricate  combination  of  interests,  to  which  the  processes 
*  290  of  *  law  are  not  adequate.  If  the  plaintiff  firm  recover, 
in  such  a  case,  A.  would  receive  a  sum  whicli  he  must 
contribute  to  raise,  and  the  account  might  possibly  involve  all 
of  those  of  both  partnerships.  This,  with  the  entire  sufficiency 
of  equity  for  such  cases,  has  doubtless  prevented  courts  or 
legislatures  from  annulling  or  modifying  this  rule. 

It  is  applied  with  equal  strictness  after  the  death  of  the 
partner  common  to  both  firms,  or  of  any  other  partner,  and 
after  the  dissolution  of  the  partnership  in  any  way.  (v)  The 
foundation  of  the  rule  is,  that  a  party  cannot  sue  himself, 
because  he  cannot  contract  with  himself;  and,  therefore,  there 
never  was  a  valid  contract  at  law  between  these  two  firms,  {w') 
But  an  action  may  be  maintained  on  any  transactions  subse- 
quent to  the  death  of  the  common  partner,  or  his  withdrawal 
from  either  firm,  (a;)  So  far  as  this  disability  is  merely  tech- 
nical, it  may  be  doubted  whether  it  exists  in  the  case  of  a 
dormant  or  secret  partner.  The  rule  seems  to  be,  that  the 
creditors  of  a  partner  are  not  obliged  to  include  the  name  of  a 
secret  partner  among  the  defendants.  (?/)    There  is  an  obvious 

(y)  Bosanquet   v.   Wray,  6    Taunt,  who  in  truth  has  a  dormant  partner, 

598;    De  Tastet  v.  Shaw,  1  B.  &  Aid.  the  defendant  may  plead  in  abatement 

664 ;    Burley  v.   Harris,  8  N.  H.  235 ;  that  liis  partner  ought  to   be  joined, 

Portland  Bank  v.  Hyde,  2  Fairf.  196.  unless  it  be  shown  that  the  interest  of 

See  Englis  v.  Furniss,  4  E.  D.  Smith,  the  plaintiff  is  thereby  materially  al- 

587.     And  in  Ohio,  a  surviving  part-  tered,  and  that  it  is  no  injury  to  the 

ner  cannot  maintain  proceedings  in  rem  plaintiff  to  compel  him  to  bring  a  new 

for  supplies  furnished  by  the  copart-  action  against  the  two,  and  to  allow 

nership  to  the  vessel  of  his  copartner ;  them   therein   to   set   off  a   debt  con- 

the  water-craft  law  of  that  State  not  tracted  by  the  plaintiff,  as  the  plaintiff 

creating  a  new,  artificial  person,  with  believed,   to  the  other  partner  alone, 

capacity  to  contract,  but  merely  giv-  but  in  which  both  partners  are  in  truth 

ing  an   accumulative   remedy  against  equally  interested.     But  this  case  may 

the    owner    himself.       Thompson    v.  now  be  considered  as  overruled,  and 

Steamboat  J.  D.  Morton,  2  Ohio  St.  26.  the  rule  to  be,  that,  if  the  plaintiff  have 

See  Miller  v.  Andres,  13  Ga.  366.  no  means  of  knowing  the  existence  of 

(w)  Rose   V.   Poulton,  2  B.   &   Ad.  the  partnership,  the  partner  sued  can- 

822.  not  plead  in  abatement  the  non-joinder 

(.r)  Bosanquet  v.   Wray,  6   Taunt,  of  a  dormant  partner.     De  Mautort  v. 

598.  Saunders,  1  B.  &  Ad.  308 ;   E.v  parte 

{y)  It  was  held,  in  one  case,  Dubois  Hodgkinson,  19   Ves.   294  ;    Ex  parte 

V.  Ludert,  5  Taunt.  609,  that  if  a  plain-  Norfolk,  id.  4.58  ;    Ex  parte  Watson,  id. 

tiff  sues  a  defendant,  with  wiiom  alone  462 ;  Ex  parte  Matthews,  3  Ves.  &  B. 

he   believes    he   has    contracted,   but  126 ;  Baldney  v.  Ritchie,  1  Stark.  338 ; 


CH.  VIII.]         OF   THE   REMEDIES   OF   PARTNERS   INTER   SE.  317 

reason  for  this.  Why  should  the  creditor  lose  a  remedy,  and  the 
firm  acquire  a  protection,  merely  by  the  firm's  keeping 
secret  the  name  of  one  of  them  ?  or  why  should  *  the  *  291 
creditor  be  bound  to  place  on  record  a  name  which  he 
does  not  know,  and  is  hindered  from  knowing  by  his  debtors  ? 
The  rule  seems  to  go  further,  however.  If  the  creditor  knows 
the  name  of  a  secret  partner,  it  would  seem  that  he  is  under 
no  obligation  to  make  him  defendant,  (z)  And  there  is  some 
reason  for  this  ;  partly  in  the  advantage  of  a  uniform  rule,  and 
much  more  in  the  principle  that  the  firm  should  be  estopped 
from  requiring  that  another  should  make  public  what  they 
themselves  choose  and  endeavor  to  keep  private. 

But  the  rule  is  sometimes  said  to  go  still  further,  even  to  the 
converse  proposition,  that  the  firm,  in  their  own  action,  need 
not  name  a  dormant  or  secret  partner  ;  and,  therefore,  the  want 
of  his  name  cannot  be  taken  advantage  of,  by  abatement  or 
otherwise.  The  reasons  which  apply  to  the  other  side  of  this 
rule  have  no  application  whatever  to  this.  But,  as  a  mere 
matter  of  convenience,  there  is  perhaps  no  objection  to  this 
proposition,  although  we  are  not  certain  that  the  authorities, 
when  well  considered,  sustain  this  rule  where  the  firm  is  plain- 
tiff,  (tt)     But  to  go  further:    If  a  firm  should  seek  to  sue 

I)oo  i\  Chippenden,  cited  in  Abbott  on  contracted,  he  knew  or  liad  the  means 

Shipping ;  S^'lvester  v.  Smitli,  9  Mass.  of  knowing  tiiat  otliers   were  jointly 

119.      See   Cookingham   v.  Lasher,  39  interested  with  the  defendants;   or,  in 

N  y.  (Keyes)  454,  and  Bird  v.  JMcCoy,  other  words,  to  decide  witli  whom  the 

22  Iowa,  549.  contract    was    intended   to    be    made. 

(z)  If  he  was  unaware  of  the  dor-  Stansfiekl  v.  Levy,  3  Stark.  8;  Mullett 

mant  partner,  at  the  time  of  making  v.  Hook,  1  Moody  &  M.  88 ;   De  Mau- 

the  contract  sued  upon,  lie  may  or  may  tort  v.  Saunders,  1  B.  «Sb  Ad.  398  ;    Ex 

not,  at  his  election,  join  the  dormant  parte  Layton,  6    Ves.   438;   Davies  v. 

partner.      Ex  parte  Hamper,  17   Ves.  Hawkins,  3  Maule  &  S.  488,  492 ;  Bon- 

412;    Ex  parte    Liddle,   2    Kose,    36;  field  r.  Smith,  12  M.  &  W.  405.     See 

Grellier  v.  Neale,  1  Peake,  146  ;   Kob-  Robinson  v.  Wilkinson,  3  Price,  538. 

inson   v.   Wilkinson,  3  Price,  538;  Ex  Where,  by  direction  of   the  plaintiff, 

jiarte   Layton,  6  Ves.  438 ;    Hoare   v.  the  writ  was  served  on  one  only  of  two 

Dawes,  1  Doug.  371 ;    Wilson  v.  Wal-  partners  in  trade,  when  the  declaration 

lace,  8  S.  &  K.  55;    Page  v.  Brant,  18  showed    that   the    plaintifi"   knew   the 

111.  37  ;  Cleveland  v.  Woodword,  15  Vt.  names  of  both,  and  a  verdict  was  ob- 

302 ;    Blin  i'.  Pierce,  20  id.  25 ;    Hagar  tained  upon  a  plea  of  non-assumpsit, 

V.  Stone,  id.  106.     But  if  the  plaintiff  pleaded  hy  the  partner  on  whom  the 

sue  only  the  ostensible  members  of  a  writ  was  served,  it  was  held  that  the 

firm,  and  the  non-joinder  of  the  rest  is  judgment  sliould  be  arrested.     Shields 

objected  to,  it  will  be  for  the  jury  to  v.  Oney,  5  Munf.  550. 

say  whether,  at  the  time  the  plaintiff  (a)  Skinner  i-.  Stocks,  4  B.  &  Aid. 


318 


THE   LAW    OF   PARTNERSHIP. 


[CH.  VIII. 


*  292  another  *  firm,  when  one  partner  in  either  is  a  secret 
partner  in  the  other,  because  he  need  not  be  named  in 
that  one,  or  even  if  he  is  secret  in  both,  and,  therefore,  need 
not  be  named  in  either,  we  should  have  much  doul)t  whether 
such  a  suit  could  be  maintained  against  the  substantial  rea- 
sons which  oppose  it,  until  it  were  otherwise  determined  by 
adjudication. 

And  if  it  be  said  that,  if  the  partner  common  to  both  be  only 
nominal  (6)  in  one,  or  both,  having  no  real  interest  whatever,. 


437.  See  Ross  v.  Decy,  2  Esp.  469, 
note ;  George  v.  Claggett,  7  T.  R.  361, 
note ;  Rod  well  v.  Hedge,  1  C.  &  P.  220; 
Gordon  v.  Ellis,  2  C.  B.  821 ;  Cothay 
V.  Fennell,  10  B.  &  C.  671 ;  Alexander  v. 
Barker,  2  Cromp.  &  J.  133  ;  Robson  v. 
Drummond,  2  B.  &  Ad.  303. 

It  appears,  from  the  cases  just  above 
cited,  to  be  the  doctrine  of  the  English 
cases  that  the  dormant  partner  may  be 
coplaintitf  with  the  ostensible  partner 
in  a  suit  upon  a  contract  made  by  the 
latter  upon  partnership  account.  As 
to  the  otlier  question,  whether  in  such 
a  case  the  secret  partner  must  join,  or 
whether  the  ostensible  partner  may  sue 
alone,  we  have  already  indicated  the 
principles  by  which,  we  think,  it  should 
be  answered.  The  English  cases  seem 
rather  to  favor  the  doctrine  that  the 
ostensible  partner  may,  if  he  chooses, 
sue  without  joining  the  secret  mem- 
bers of  the  firm.  He  is  regarded  as  an 
agent,  contracting,  in  his  own  name, 
for  an  undisclosed  2)rincipal,  in  which 
case  either  the  agent  or  the  principal 
may  sue  upon  the  contract.  Sims  v. 
Bond,  5  B.  &  Ad.  389.  See  Maw  man 
V.  Gillett,  2  Taunt.  327  ;  Lloyd  v-  Arch- 
bowie,  2  Taunt.  324  ;  Lereck  v.  Shaftoe, 
2  Esp.  468  ;  Brassington  v.  Ault,  2  Bing. 
177  ;  Steel  r.  Western,  7  J.  B.  Moore,  31. 

In  the  United  States  the  rule  of  the 
English  courts  has  been  followed,  and 
it  has  been  generally  held,  that  the 
ostensible  partner  is  the  only  necessary 
party  plaintiff  to  a  suit  to  enforce  a 
partnership  contract,  thougli  the  dor- 
mant partner  may  be  joined.  Mitchell 
V.  Dall,  2  Harris  &  G.  159,  171;  Clark- 
sou   V.   Carter,   3    Cow.    84 ;    Hawley 


I'.  Cramer,  4  id.  717  ;  Clark  v.  Mil- 
ler, 4  Wend.  628 ;  Boardman  v.  Kee- 
ler,  2  Vt.  65;  Lapham  v.  Green,  9 
id.  407  ;  Morton  v.  Webb,  7  id.  123  ; 
Curtis  V.  Belknap,  21  id.  433 ;  Lord  v. 
Baldwin,  0  Pick.  352;  Wood  v.  O'Kel- 
ley,  8  Cush.  406 ;  Wilson  v.  Wallace, 
8  S.  &  R.  55;  Barstow  v.  Gray,  3 
Greenl.  409 ;  Ward  v.  Leviston,  7 
Blackf.  466;  Monroe  v.  Ezzell,  11  Ala. 
603 ;  Bank  of  St.  Mary's  v.  St.  John, 
25  id.  566,  621-624 ;  Gregory  v.  Bailey, 
4  Harring.  256  ;  Speake  v.  Prewitt,  6 
Tex.  252  ;  Jackson  v.  Alexander,  8  id. 
109 ;  Keane  v.  Eisher,  9  La.  Ann.  70, 
74.  But  when  the  ostensible  and  se- 
cret partners  all  sue,  on  a  partnership 
contract,  the  defendant  may  make  the 
same  defences,  whether  by  offset  or 
otherwise,  a.s  if  the  action  had  been 
brought  in  the  name  of  the  acting 
partner  with  whom  the  contract  was 
actually  made.  Ililliker  v.  Loop,  5  Vt. 
116  ;  Lapham  v.  Green,  9  id.  407  ;  Lord 
V.  Baldwin,  6  Pick.  352;  Ward  v.  Lev- 
iston, 7  Blackf.  466  ;  Hose  v.  Murckie, 
2  Call,  409;  Beach  v.  Hay  ward,  10 
Ohio,  455.  The  right  of  set-off  in  such 
cases  is  provided  for  by  statute  in 
Massachusetts,  Gen.  Stat.  ch.  130,  §  9. 
In  New  York,  since  the  code,  which 
provides  (§  111)  that  "every  action 
must  be  prosecuted  in  the  name  of  the 
real  party  in  interest,"  a  dormant  part- 
ner is  a  necessary  party  as  a  plaintiff 
in  an  action  for  the  recovery  of  a  part- 
nership debt,  founded  on  a  partnership 
contract,  whether  the  relief  sought  be 
legal  or  equitable.  Secor  v.  Keller,  4 
Duer,  410. 

(b)  There  are  cases  which  hold  that 


CH.  VIII.]         OF   THE    REMEDIES    OF    PARTNERS    INTER    SE.  319 

sucli  a  suit  may  be  maintained,  we  should  have  some 
doubt  if  he  *  were  nominal  in  both,  and  more,  if  he  were  *  293 
nominal  in  one  and  actual  in  the  other  ;  because  a  merely 
nominal  partner  is  a  perfectly  real  partner  as  to  those  parties. 
It  seems  to  be  agreed  that,  if  the  action  is  brought  on  a  written 
contract,  in  which  all  the  names  are  used,  the  want  of  interest 
in  one  does  not  sustain  an  action  without  him,  or  an  action 
which  makes  him  both  plaintiff  and  defendant,  (c)  And  we 
should  be  inclined  to  think  the  relation  of  partnership,  and 
the  law  springing  out  of  this  relation,  should  have  much  the 
same  effect  as  a  written  contract. 

2.    Of  the  Demand  of  a  Firm  Grounded  on  the  Tort  of  a  Member 

thereof. 
This  question  has  arisen  where  a  firm  has  a  right  of  action, 
and  the  cause  of  action  is,  in  the  wdiole  or  in  part,  the  fraud  of 
one  of  the  partners.  If  A.  fraudulently  transfers  his  own 
property,  he  cannot,  generally  speaking,  bring  any  action  to 
recover  this  property,  because  he  cannot  avoid  his  own  act, 
nor  found  his  right  upon  his  wrong-doing.  But  if  A.,  of  the 
firm  of  A,,  B.,  k  Co.,  fraudulently  transfers  the  negotiable 
paper  of  A.,  B.,  &  Co.,  in  payment  of  his  own  debt,  under  cir- 
cumstances which  would  make  the  transfer  null  as  to  tlie 
partnership,  it  has  been  objected  to  the  action  of  A.,  B.,  &  Co. 
for  the  paper,  that  A.  cannot  be  a  plaintiff  in  such  an  action 
and  that  B.  &  Co.  cannot  sue  without  A.  (cZ) 

a  nominal  partner  need  not  join  as  a  (c)  Guidon  v.  Robson,  2  Camp.  302. 
coplaintiti'  in  an  action  on  a  contract  (d)  Jones  v.  Yates,  9  B.  &  C.  532. 
made  by  the  firm.  Davenport  v.  Rack-  Sykes  &  Bury  being  in  partnership, 
strow,  1  C.  &  P.  89  ;  Kell  v.  Nainby,  Sykes  gave  the  moneys  and  bills  of 
JO  B.  &  C.  20 ;  Harrison  v.  Fitzhenry,  the  partnership  in  payment  of  his 
3  Esp.  238 ;  Ex  parte  Alexander,  1  separate  debt,  and  in  fraud  of  his  co- 
Glyn  &  J.  409  ;  Atkinson  v.  Laing,  1  partners,  the  party  receiving  the  prop- 
Dow.  &  R.  N.  P.  16;  Bernard  v.  Wil-  erty  being  privy  to  the  fraud.  Sykes 
cox,  2  Johns.  Cas.  374.  See  Allen  v.  &  Bury  having  become  bankrupt,  their 
White,  Minor,  365.  On  the  other  assignees  brought  trover  for  the  bills, 
hand,  the  nominal  partner  may  be  a  and  assumpsit  for  the  money.  The 
witness  for  the  plaintiff,  if  he  be  clearly  Court  of  King's  Bench  held,  that  the 
shown  to  have  no  interest  whatever  in  plaintiffs  could  not  recover.  The  doc- 
the  concern.  Parsons  v.  Crosby,  5  trine  of  Jones  v.  Yates  was  approved 
Esp.  199;  Davenport  v.  Rackstrow,  in  Greeley  v.  Wyeth,  IG  N.  H.  10. 
Kell  V.  Nainby,  supra;  Glossop  v.  Col-  See  Wallace  v.  Kelsall,  7  M.  &  W.  264, 
man,  1  Stark.  25 ;  Teed  v.  Elworthy,  273 ;  Gordon  v.  Ellis,  7  Man.  &  G.  607, 
14  East,  210.  G22;  Brewster  u.  Mott,  4  Scam.  378; 


320 


THE   LAW   OF   PARTNERSHIP. 


[CH.  VITI. 


*  294  *  But  such  an  objection  is  wholly  technical,  nor  do  we 
think  that  even  on  technical  ground  it  is  unanswerable. 
The  law  is  familiar  with  instances  of  a  party's  name  being  used 
by  others,  for  their  exclusive  benefit,  and  against  his  will.  An 
assignee  for  value  of  a  chose  in  action  so  sues  in  the  name  of 
the  assignor  ;  and,  after  notice  given  of  the  assignment,  the 
debtor  is  bound  only  to  the  assignee,  and  the  assignor,  who  is 
nominal  plaintiff,  can  neither  withdraw  nor  defeat  the  action, 
nor  release  the  judgment ;  having,  in  fact,  no  more  power  over 
the  action,  and  no  more  to  do  with  it,  than  if  his  name  were 
not  used.  ((?)  If  there  be  some  objection  to  the  application  of 
a  similar  rule  to  the  case  under  consideration,  there  may  be 
less  to  permitting  B.  &  Co.  to  sue,  on  the  ground  that  the  fraud 
of  A.  removes  him  from  all  interest  and  from  the  case.  Nor 
are  cases  wanting  which,  at  least,  incline  to  this  view.  (/) 

Even  if  it  should  be  held  that  a  partner  cannot  release  or 
assign  to  his  copartner  his  share  of  a  partnership  debt,  so  as 
to  authorize  a  suit  by  the  partner  alone — a  proposition  which 


Daniel  v.  Daniel,  9  B.  Mon.  195 ;  Buck 
V.  Mosley,  24  Miss.  170 ;  Goode  v.  I\Ic- 
Cartney,  10  Tex.  193;  Nail  v.  Mclntyre, 
31  Ala.  532.  See  opinion  of  Parker,  C. 
J.,  in  Greeley  f.  Wyeth,  10  N.  H.  18, 
and  of  Bigelow,  J.,  in  Homer  v.  Wood, 
11  Gush.  68.  [Craig  v.  Hulschezer,  34 
N.  J.  3(33.] 

In  Pennsylvania,  where  equitable 
remedies  are  administered  through  the 
medium  of  common-law  forms,  the 
English  rule,  as  laid  down  in  Jones  v. 
Yates,  has  been  distinctly  denied  any 
operation.  Purdy  v.  Powers,  6  Barr, 
492. 

(e)  1  Pars,  on  Cont.  (5tli  ed.)  230. 

{/)  There  are  dicta  to  tlie  effect, 
that  in  such  a  case  the  injured  partners 
could  not  sue  without  joining  their 
fraudulent  copartner  ;  since,  tlie  action 
being  ex  contractu  and  the  contract 
joint,  the  remedy  must  also  be  joint, 
and  the  partners  can  have  no  joint 
capacity,  except  when  all  sue  together. 
See  opinion  of  Lord  Tenterden,  C.  J., 
in  Jones  v.  Yates,  9  B.  &  C.  539  ;  of 
Bigelow,  J.,  in  Homer  v.  Wood,  11 
Gush.  64.    In  Longman  i;.  Pole,  Moody 


&  M.  223,  J.ord  Tenterden,  C.  J.,  in 
summing  up,  said  :  "  I  think,  in  point 
of  law,  this  action  is  maintainable ;  if 
a  person  colludes  with  one  partner  in 
a  firm  to  enable  him  to  injure  the 
other  partners,  I  think  they  can  main- 
tain a  joint  action  against  the  person 
so  colluding."  Perliaps,  however,  this 
case  is  distinguishable,  on  the  ground 
that  the  action  was  case  for  a  tort. 
Tlie  following  case  is  somewhat  more 
in  point.  Assumpsit  for  goods  sold 
and  delivered.  The  defendant's  coun- 
sel stated  that  the  plaintiff  and  one 
Morgan  were  in  partnership  together ; 
and  that,  on  a  dissolution  of  that  part- 
nership, it  was  agreed  between  them 
that  Evans  should  receive  some  of  the 
debts,  and  Morgan  the  others.  This 
debt  was  to  be  paid  to  Morgan,  and 
the  defendant  had  accordingly  paid  it 
to  him.  They  called  Morgan  to  prove 
this  case,  and  Lord  Kenyon  held  him 
a  competent  witness,  as  the  judgment 
in  this  cause  would  not  conclude  his 
right.  He  was  examined,  and  on  hia 
evidence  the  defendant  obtained  a  ver- 
dict.   Evans  v.  Silverlock,  1  Peake,  21. 


CH.  VIII.]        OF   THE   REMEDIES   OF    PARTNERS    INTER   SE.  321 

we  do  not  think  would  now  be  universally  held,  although  an 
unavoidable  inference  from  the  strict  and  technical  rules  of 
the  common  law  —  it  does  not  necessarily  follow  that  the  same 
rule  would  be  applied  where  a  partner  destroys  or  loses  his 
right  by  his  fraud.  The  true  objection  is,  so  far  as  there  is  any 
one  of  substance,  that  if  the  firm  or  the  other  partners 
alone  recovered,  it  *  would  be  recovered  as  the  property  *  295 
of  the  firm,  and  the  fraudulent  party  would  have  his 
share.  It  must  be  admitted  that  this  objection  has  much  weight. 
But  perhaps  it  might  be  obviated  by  reduction  or  severance  of 
damages,  by  set-off,  or  recou|)ment,  or  in  some  other  similar  way, 
at  law,  (^)  as  well  as  it  could  be  in  equity.  And  it  certainly 
would  be  a  great  hardship  to  deny  to  the  innocent  parties  any 
relief,  either  at  law  or  equity.  (A) 

If  a  partner  bring  a  bill  in  equity  against  the  other  partners, 
for  a  settlement  of  the  affairs  of  the  firm,  the  fraudulent  char- 
acter of  the  purpose  for  which  the  firm  was  formed  is  no 
defence.  (7«A) 

As  equity  is  undoubtedly  the  principal  tribunal  for  the  ad- 
judication of  questions  arising  under  the  law  of  partnership,  it 
is  perhaps  always  able  to  give  relief  or  remedy  in  cases  which 
justly  called  for  it,  and  cannot  obtain  it  at  law.  (i)  The  most 
frequent  instances  of  actual  resort  to  equity  are  for  a  dissolu- 
tion, or  for  a  sale  in  the  course  of  settlement  by  law  ;  for  an 
account,  either  general  or  particular,  under  some  specific  agree- 
ment ;  for  contribution  ;  (7)  for  the   enforcement  of  rights, 

{ij)  Daniel  f.  Daniel,  9  B.  Mon.  195.  funds  into   tlie   new   investment,   and 

(h)  "  The  defrauded  partner  may,  treat  it  as  trust  property  held  by  that 

perhaps,  have  a  remedy  in  equity,  by  partner  for  the  benefit  of  the  firm,  and 

a   suit   in   his   own  name   against  his  as  liable   to  be  accounted  for  by  any 

partner  and  the  person  with  whom  the  person  into  whose  possession  the  same 

fraud  was  committed."    Per  Lord  Ten-  may  come,  who  is  not  a  honajide  pur- 

terden,  C.  J.,  in  Jones  ?•.  Yates,  9  B.  &  chaser   for   a  valuable    consideration, 

C.  539.     "  If  a  partner,  fraudulentlj'  or  without   notice."      Per    Story,   J.,   in 

improperly,  without  the  consent  of  his  Kelley  v.  Greenleaf,  3  Story,  101.    See 

partners,  applies  the  partnership  funds  Halstead    v.    Shepard,    23    Ala.    558 ; 

to  his  own  private  purposes,  or  for  his  Purdy  v.  Powers,  6  Barr,  494. 
own  private  profit   or  emolument,  or  [Idi)  Harvey  v.  Varney  (2  Browne), 

invests  the  same  improperly  in  his  own  98  Mass.  118. 

name  and  for  his  own  use,  the  other  (/)  See   Hamilton   v.   Cummings,  1 

partners  have  a  right,  if  they  can  dis-  Johns.  Ch.  517. 

tinctly  trace  the  investment,  and  elect  (j)  Wright  v.  Hunter,  5  Ves.  702  ; 

so   to   do,   to   follow    the    partnershij)  Abbot    v.   Smith,   2    W.  Bl.  947,   949. 

21 


322 


THE    LAW    OF    PARTNERSHIP. 


[CH.  VIII. 


given  eitlicr  by  law  or  by  agreement  of  the  partners  ;  for  a 
remedy  for  wrong  clone  by  a  partner,  or  prevention  of  it  by 
injunction  against  him  ;  for  an  injunction  against  third  parties, 
to  prevent  them  aiding  a  partner  in  doing  a  wrong  to  the  part- 
nership ;  —  sometimes  for  specific  performance  of  agree- 
*  296  ment  to  enter  into  partnership  ;  —  in  general,  *  for  all 
frauds  or  mistakes  of  fact ;  {k)  —  and  in  some  cases  for 
a  manager  or  receiver  of  the  business  or  the  property  of  the 
partnership.  Some  of  these  topics  we  shall  consider  sepa- 
rately. Here  we  would  remark  that  the  legal  maxim,  "  de 
minimis  nori  curat  lex,''^  is  applied  with  a  wide  meaning  in 
equity.  It  is  a  general  rule,  that  good  reasons  must  be  given, 
and  facts  proved  making  out  a  strong  case  of  considerable 
damage,  before  equity  will  interfere.  (/) 


Hence,  in  a  case  where  five  persons,  in 
partnership  as  coach  proprietors,  liad 
incurred  a  partnership  debt,  whicli  tlie 
creditor,  after  the  death  of  one  of  the 
partners,  recovered  in  an  action  against 
the  survivors,  on  a  bill  filed  for  that 
purpose  against  the  representatives  of 
tlie  deceased  partner,  by  the  partner 
who  liad  paid  the  damages  and  costs 
of  the  action.  Sir  John  Leach  decreed 
contribution,  not  only  for  the  damages, 
but  also  for  the  costs.  Thomas  v.  Lich- 
field, Rolls,  H.  T.  1831,  cited  in  Coll- 
yer  on  Part.  (Perkins'  ed.)  §  287.  See 
Browne  v.  Gibbins,  5  Ero.  P.  C.  491, 
3  id.  127  (Dublin  ed.)  ;  Sells  v.  Hub- 
bell,  2  Johns.  Ch.  397  ;  Jones  v.  Mor- 
gan, 16  Jur.  238. 

{k)  Througliout  the  whole  of  this 
section,  we  shall  constantly  meet  with 
illustrations  of  the  interference  of  eq- 
uity, wherever  fraud  taints  the  inter- 
course of  persons  who  became  partners 
fairly,  and  on  a  basis  of  mutual  good 
faith.  Here  we  shall  only  remark  that 
if,  in  the  original  agreement  of  associa- 
tion, there  has  been  fraud,  imposition, 
misrepresentation,  or  oppression,  equity 
may  declare  the  partnership  void  ab 
initio.  Howell  v.  Harvey,  5  Ark.  270, 
278 ;  Tattersall  v.  Groote,  2  B.  &  P. 
135,  per  Lord  Eldon ;  Hynes  v.  Stew- 
art, 10  B.  Mon.  429  ;  Fogg  v.  Johnston, 
27  Ala.  432.     And  the  injured  party 


may  file  a  bill  for  the  return  of  any 
premium  he  may  have  paid  for  tiie 
sake  of  becoming  a  partner.  Per  Lord 
Eldon,  in  Tattersall  v.  Groote,  supra ; 
Pillans  V.  Harkness,  CoUes  P.  C.  442; 
Hamill  v.  Stokes,  Uaniell,  20,  4  Price, 
161.  See  Evans  v.  Bicknell,  6  Ves.  174, 
182;  Akhurst  «.  Jackson,  1  Swanst. 
89;  Colt  V.  WooUaston,  2  P.  Wms. 
154 ;  Green  v.  Barrett,  1  Sim.  45 ; 
Blain  v.  Agar,  id.  37.  Or  for  an  ac- 
count and  a  receiver.  Ex  parte  Broome, 
1  Rose,  G9,  71.  See,  however,  Clifford 
V.  Brooke,  13  Ves.  131,  and  the  com- 
ments upon  the  last  two  cases  in  2 
Hov.  Supp.  327.  And  he  will  be  re- 
stored, as  far  as  possible,  to  his  origi- 
nal situation.  Hynes  v.  Stewart,  10  B. 
Mon.  429 ;  Fogg  v.  Johnston,  27  Ala. 
432.  See  Oldaker  v.  Lavender,  6  Sim. 
239.  But  upon  a  bill  by  one  partner 
against  his  copartners,  for  an  account 
and  his  share  of  the  profits,  a  fraud 
perpetrated  by  the  plaintiff  upon  one 
of  his  copartners,  in  a  transaction 
prior  to  and  independent  of  the  part- 
nership, by  means  of  which  he  pro- 
cured the  funds  contributed  as  his 
share  of  the  capital  of  the  firm,  is  no 
ground  for  annulling  or  rescinding  the 
contract  of  partnership.  Ingraham  v. 
Foster,  31  Ala.  123.  See  Stein  v.  Rob- 
ertson, 30  id.  286. 

(/)  See  post,  ch.  14,  §  1,  subsection  1. 


CH.  VIII.]         OF   THE   REMEDIES   OF    PARTNERS   INTER   SE,  323 

The  principal  exception  to  this  rule  is  in  cases  of  fraud. 
Where  that  is  clearly  proved,  a  court  of  equity  is  usually  prompt 
in  suppressing  or  punishing  the  fraud,  although  the  amount 
of  injury  resulting  from  it  may  not  be  large,  (m)     Perhaps  it 
may  be  useful  to  advert  to  the  question,  whether  money  which 
a  partner  seeks  to  recover  will  be  taken  from  or  paid  to  the 
funds  of  the  partnership  ;  for  this  is  very  generally  a  test  ques- 
tion, which  may  determine  whether  the  proper  remedy  is  at . 
law  or  equity.     Thus,  we  mentioned  covenant  or  assumpsit  as 
maintainable  on  an  agreement  to  pay  money  before  a  partner- 
ship, and   to   establish  or   launch  a  partnership  ;    but 
neither  of  these  actions  will  be  sustained,  if  the  *  money    *  297 
when  paid  is  to  be  paid  out  of  the  funds  of  the  partnership, 
or  if  recovered  is  to  be  added  or  credited  to  those  funds,  (w) 

It  was  said  in  the  preceding  section  that  actions  at  law  will 
lie  between  partners,  in  general,  on  any  contract,  transaction, 
or  indebtedness  which  is  taken  out  of  and  separated  from  the 
partnership  accounts,  before,  during,  or  after  the  partnership. 
Now,  we  have  in  the  question,  whether  the  money  is  eitlier  to 
come  from  or  be  paid  to  the  partnership,  or  is  to  remain  the 
benefit  or  loss  of  the  partner  only,  and  never  to  appear  in  the 
accounts  of  the  partnership,  perhaps  the  best  way  of  determin- 
ing whether  the  cause  of  action  is  so  separated  from  the  part- 
nership as  to  be  sufficient  for  a  suit  at  law. 

If  a  partner  files  a  bill  in  equity  against  his  copartners,  after 
the  termination  of  the  copartnership,  it  has  been  held  that  all 
the  parties  are  to  be  regarded  as  actors  ;  and  the  decree  should 
settle  the  partnership  concerns  between  all  the  partners,  as  if 
each  had  filed  a  bill  against  his  copartners,  (ww) 

It  may  be  regarded  as  a  general  rule,  that  a  bill  in  equity 
by  a  partner  for  a  balance  must  show  a  final  settlement  of 
the  partnership  affairs,  or  ask  the  court  to  make  such  a 
settlement,  (^nnn) 

(m)  The  vaaxim,  de  minimis  non  curat  v.  Ellison,  6  J.  B.  Moore,  199;  Caldi- 

lex,  "  is   never  applied  to  tlie  positive  cott  v.  Griffiths,  8  Exch.  808,  904,  per 

and    wrongful    invasion    of    another's  Maule,  J. 

property."     Per  Cowen,  J.,  in  5  Hill,  (nn)  Raymond  v.  Carne,  45  N.  H. 

175.  201. 

(n)  Bedford  v.  Brutton,  1  Scott,  245,  (nnn)    Williamson   v.   Haycock,    11 

261,  262,  1  Bing.  N.  C.  407 ;  Pearson  v.  Iowa,  40. 
Skelton,  1  M.  &  W.  504.     See  Andrews 


324  THE   LAW   OP   PARTNERSHIP.  [CH.  VIII. 


SECTION  IV. 

ON    THE    METHODS    AND    PROCESSES     OF    EQUITY     APPLICABLE    IN    CASES 
OF    PARTNERSHIP. 

1.    Of  a  Decree  for  Specific  Performance. 

A  decree  for  specific  performance  is  one  of  tlie  important  and 
most  frequent  means  of  relief  and  remedy  in  equity.  We  liave 
already  spoken  of  it  in  reference  to  a  prayer  for  this  relief 
against  one  who  refuses  to  carry  into  effect  an  agreement  for 
a  partnership.  In  general,  it  will  be  applied  by  equity,  as 
between  partners,  whenever  the  performance  of  a  certain  duty, 
or  of  a  distinct  promise,  is  prayed  for,  which  duty  or  promise 
the  court  can  enforce  or  cause  to  be  executed  efficiently  and 
adequately,  while  there  is  no  adequate  remedy  at  law  for  a 

breach  of  it.  (o) 
*  298       *  But,  as   has   been   already   intimated,  there   must 

always  be  duties,  as  of  general  good  conduct,  of  skill  or 
care,  or  the  like,  which  it  is  impossible  for  the  court  to  regulate 
or  enforce  by  a  decree  ;  and  nothing  is  done  in  such  cases  un- 
less a  positive  mischief  is  threatened,  which  may  be  prevented 
or  remedied  by  injunction  or  other  means,  (^p) 

(o)    Tlius,   equity  lias   enforced   an  lent  to  a  decree  for  specific  perform- 

agreement,  made  upon  the  dissolution  ance ;  as  where  the  active  members  of 

of  a  partnership,  that  a  particular  book  a  firm  are  enjoined  from  using,  in  the 

used  in  the  trade   should  become  the  joint  business,  any  other  than  the  name 

exclusive  property  of  one  of  the  part-  agreed  upon  in  the  articles  as  the  style 

ners,  and  that  a  copy  of  it  should  be  of  the  partnership.     See  post,  subsec- 

delivered  to  the  other.    Lingen  v.  Simp-  tion  4. 

son,  1  Sim.  &  S.  600.     So  if  one  part-  (p)  It  was  heJd,'m  quite  a  number  of 

ner    receives    moneys,    but   does    not  cases  in   England,   that   equity  would 

enter  the   receipts  in   the  partnership  not  prohibit  the  violation  of  a  negative 

books,  relief  will  be  granted  in  equity,  term   in  an   agreement,  unless   it  had 

Goodman  v.  Whitcomb,  1   Jac.  &  W.  tlie   power   of   enforcing   the   positive 

593.     So,  if  the  continuing  and  incora-  part  of  the  same  agreement,  upon  the 

ing  partner  agree  to  give  tlie  retiring  principle  that  the  court  should  not  in- 

partner  their  joint  and  several  bond  to  terfere  at  all,  unless  it  could  administer 

indemnify  him  against  the  debts  of  the  full  and  entire  relief.     Kemble  v.  Kean, 

first   partnership,   it    seems   that    this  6  Sim.  333  ;  Kimberly  v.  Jennings,  id. 

agreement    may    be    specifically    en-  340  ;    Baldwin   v.   Useful    Knowledge 

forced.     Warren  v.  Taylor,  8  Sim.  599.  Society,  9  id.  393  ;  Gervais  v.  Edwards, 

An  hijunction  against  the  breach  of  a  2  Drury  &  W.  80.     The  same  doctrine 

partnership  covenant  is  often  equiva-  was  asserted  in  the  American  case  of 


CH.  VIII.]         OF   THE    REMEDIES    OF   PARTNERS   INTER   SE. 


325 


Thus,  if  a  partner  covenants  to  give  his  whole  business  time 
and  attention  to  the  concerns  of  the  partnership,  no  specific 
performance  would  be  decreed  on  a  prayer  setting  forth  that  he 
w'as  generally  negligent  and  inattentive.  But  such  a 
covenant  would  *  be  construed  as  an  enforcement  of  *  299 
the  rule  of  law,  that  a  partner  must  not  engage  in  otlier 
business  which  interferes  with  his  duties  to  the  firm  or  other- 
wise injures  it ;  and  the  court  would  restrain  a  partner,  under 
such  covenant,  from  engaging  in  any  independent  business,  (g) 
And  if  the  plaintiff,  in  his  bill  for  specific  performance,  or  in 
his  separate  bill,  prays  that  an  account  of  the  profits  of  this 
forbidden  business  may  be  taken,  and  a  share  paid  to  them,  as 
if  it  were  done  on  their  joint  account,  equity  —  supposing  the 
justice  of  the  case  upon  all  its  facts  so  to  require  —  would 
grant  this  relief,  (r) 


Hamblin  i-.  Dinneford,  2  Edw.  Ch.  529. 
But  the  later  English  cases  have  adopt- 
ed a  different  principle.  Rolfe  v.  Rolfe, 
15  Sim.  88  ;  Dietrichsen  i-.  Cabburn,  2 
Phillips,  52 ;  Lumley  v.  Wagner,  5  De 
G.  &  S.  485,  13  Eng.  L.  &  Eq.  252.  It 
is  now  held  that  where  a  contract  con- 
tains covenants  to  do  certain  acts,  and 
also  to  abstain  from  doing  certain  acts, 
a  court  of  equity  lias  jurisdiction  to 
restrain  the  breach  of  a  negative,  though 
it  may  have  no  power  to  compel  spe- 
cific performance  of  the  affirmative  cov- 
enants ;  as  in  the  case  of  an  agreement 
by  a  musician  to  sing  at  a  particular 
theatre,  and  not  to  sing  at  any  other, 
in  which  case  an  injunction  may  be 
granted  against  the  breach  of  the  latter 
portion  of  the  agreement.  But,  it  seems, 
that  in  such  cases  the  court  will  not 
interfere,  if  it  is  apparent  that  its  juris- 
diction cannot  be  beneficially  exercised. 
Ibid.  In  Lumle}'  v.  Wagner,  supra,  all 
the  authorities  are  reviewed,  and  the 
principles  governing  the  question  elab- 
orately discussed.  See  Johnson  v. 
Shrewsbury,  &c.  R.  Co.,  3  De  G.,  M. 
&  G.  927,  19  Eng.  L.  &  Eq.  584. 

The  doctrine,  that  where  a  contract 
has  both  a  positive,  and  a  negative 
term,  and  the  positive  term  is  of  such 
a  nature  that  performance  cannot  be 


compelled  by  equity,  it  will  not  inter- 
fere to  prevent  the  violation  of  the 
negative  term,  seems  never  to  have 
been  applied  to  articles  of  partnership, 
though  "it  does  not  appear  why  cases 
of  actual  partnership  should  be  more 
favored,  in  the  exercise  of  the  jurisdic- 
tion by  injunction,  than  others."  Per 
Lord  Cottenham,  in  Dietrichsen  v.  Cab- 
burn,  2  Phillips,  59.  Thus  in  Kemble 
V.  Kean,  supra.  Sir  L.  Shadwell,  V.  C, 
said  :  "  In  the  case  where  the  parties 
are  partners,  and  one  of  the  partners 
contracts  that  he  shall  exert  himself  for 
the  benefit  of  the  partnership,  though 
the  court,  it  is  true,  cannot  compel  a 
specific  performance  of  that  part  of 
the  agreement,  yet.,  there  being  a  part- 
nership subsisting,  the  court  will  re- 
strain that  party  (if  he  has  covenanted 
that  he  will  not  carrj^  on  the  same  trade 
with  other  persons)  from  breaking  that 
part  of  the  agreement.  That  is,  in  case 
of  a  partnership."  See  Morris  v.  Col- 
man,  18  Ves.  437. 

((/)  Kemble  v.  Kean,  6  Sim.  333 ; 
Morris  i'.  Colman,  18  Ves.  437  ;  supra, 
note  (/>). 

(/•)  Somerville  r.  Mackay,  10  Ves. 
382;  Moritz  v.  Peebles,  4  E.'l).  Smith, 
135. 


326 


THE   LAW    OF   PARTNERSHIP. 


[CH.  VIII. 


2..    Of  a  Decree  for  a  Dissolution,  and  for  an  Account. 

We  connect  these  topics,  in  this  section,  because  a  court  of 
equity  frequently  decrees  an  account  between  partners  ;  almost 
always,  however,  where  there  has  been  or  is  to  be  a  dissolution 
of  the  partnership.  Indeed,  courts  of  equity  have  intimated, 
with  much  distinctness,  that  they  would  not  decree  any  account, 
unless  there  either  was  a  dissolution,  or  the  bill  prayed  for  a 
dissolution,  (s)  As  we  have  said,  this  is  generally  the  case  in 
point  of  fact ;  and  there  are  reasons  as  well  as  high  authority 
for  the  rule  ;  reasons  which,  however,  may  perhaps  be  summed 
up  in  this :  that  a  partner,  who  is  driven  to  a  court  of  equity  as 
the  only  means  by  which  he  can  get  an  account  from  his  part- 
ner, may  be  supposed  to  be  in  a  position  which  will  be  benefited 
by  a  dissolution ;  in  other  words,  such  a  partnership  as  that 
ought  to  be  dissolved.  (0 

(s)  Forraan  v.  Homfray,  2  Ves.  &  B.  defendant  to  complain  of  such  new  bill, 

329;   Waters    v.  Taylor,  15   Ves.    10;  if  he  repeats  the  injustice  of  witlihold- 

Loscombe  i-.  Russell,  4  Sim.  8;  Kne-  ing  what  is  due  to  the  plaintiff  ?  Would 

bell  V.  White,  2  Younge  «&  C,  Exch.  not  the  same  objection  lie  in  a  suit  for 

15.     These  last  two  cases  have  been  tithes,  which  accrue  de  anno  in  annum  ?  " 

supposed  to   overrule  the   doctrine  of  In  Knebell  v.  Wliite,  2  Younge  &  C, 

Sir  John  Leach  in  Harrison  v.  Armi-  Exch.    21,   Alderson,     B.,    remarking 

tage,  4   i\Iadd.    143,   and   Richards    v.  upon  this  point,  said :  "  Then  what  is 

Davies,  2  Russ.  &  M.  347  ;  Camblat  v.  the    principle  f      It   seems    this,   that 

Tuperv,  2  La.  Ann.  10.     One  partner  where   there   is   an   open   account,    in 

cannot  demand  an  account  in  respect  which  the  antecedent  items,  respecting 

of  particular  items,  and  a  division  of  which  the  account  in  equity  is  sought 

particular  parts  of  the  property ;  but  to  be  taken,  are  necessarily  connected 

the  account  must  necessarily  embrace  with,  and  not  capable  of  being  severed 

every  thing.     Baird  v.  Baird,   1  Dev.  from,  tlie  other  items  of  the  account 

&  B.  524 ;  McRae  v.  McKenzie,  2  id.  wliich  are  to  arise  in  future,  the  court 

232.  will   not  interpose  ;   for,   if   it   did,   it 

(f)  In  Forman  v.  Homfray,  2  Ves.  &  would  tolerate  the  bringing  of  a  suit 

B.  330,  Lord  Eldon  placed  the  reason  which  could  never  come  to  an  end  till 


of  the  rule  upon  the  ground  of  conven- 
ience, saying  :  "  If  a  partner  can  come 
here  for  an  account  merely,  pending 
the  partnership,  there  seems  to  be  noth- 
ing to  prevent  his  coming  annually." 
This  objection  was  met  bj'  Sir  John 
Leach,  Master  of  the  Rolls,  in  Richards 
V.  Davies,  2  Russ.  &,  M.  347,  as  follows  : 
"  It  is  objected  that,  if  such  a  suit 
be  entertained,  the  defendant  may  be 
vexed  by  a  new  bill  whenever  new 
profits  accrue;  but  what  right  lias  the 


the  account  itself  was  closed,  for  the 
state  of  the  account  would  be  continu- 
ally changing  whilst  it  was  under  dis- 
cussion and  settlement.  The  party 
who  seeks  redress  must  put  it  in  the 
power  of  the  court  to  close  finally,  by 
its  decree,  the  dispute  between  the 
parties.  As  soon  as  he  does  this,  he  is 
entitled  to  its  assistance.  In  the  case 
of  a  partnership,  tiierefore,  he  must 
pray  a  dissolution." 


CH.  VIII.]        OF   THE   REMEDIES    OF   PARTNERS   INTER   SE.  327 


*  We  apprehend,  however,  that  the  question  is  one    *  300 
which  is  perfectly  open  to  the  discretion  of  the  court, 
and  the  rule,  if  there  be  a  rule,  goes  no  farther  than  the  reason 
of  it. 

If  a  partner  prays  for  an  account,  and  his  case  shows  that  he 
has  need  of  one,  that  it  is  his  only  effectual  remedy,  and  that 
he  cannot  get  it  without  the  aid  of  the  court,  but  shows  also 
that,  as  soon  as  an  account  is  rendered,  no  sufficient  cause  of 
dissolution  will  remain,  and  circumstances  from  which  the 
court  could  infer  that  a  continuance  of  the  partnership  de- 
sired by  both  would  be  neither  injurious  nor  useless, —  in  such 
a  case,  we  know  not  why  a  decree  for  an  account  should  not  be 
rendered  ;  and  we  have  no  doubt  that  it  would  be  by  most  of 
our  courts,  if  not  by  all.  (w) 


(it)  Perhaps  it  may  now  be  said  that 
there  is  no  general,  or,  at  least,  no  uni- 
versal, rule,  to  the  effect  that  equitj' 
will  not  decree  an  account  between 
partners,  unless  there  be  dissolution, 
or  a  pra3'er  for  it.  The  cases  before 
Lord  Eldon,  supra,  p.  *  299,  note  ('),  in 
which  he  affirmed  the  existence  of  such 
a  rule,  may  perhaps,  be  deemed  to 
have  turned,  in  a  great  measure,  upon 
their  own  particular  circumstances.  In 
Harrison  v.  Armitage,  4  Madd.  143, 
and  Richards  v.  Davies,  2  Russ.  &  M. 
847,  Sir  Jolin  Leach  expressly  rules, 
that  though  the  court  could  not  carry 
on  a  partnership,  except  with  a  view 
to  dissolution,  yet  it  might  and  would, 
if  justice  so  required  and  the  petition- 
ing partner  had  no  other  remedy,  de- 
cree an  account  of  the  past  partnership 
transactions,  though  there  was  no  dis- 
solution, actual  or  prayed  for.  A  dif- 
ferent principle  governed  the  decision 
of  the  court  in  Losconibe  v.  Russell,  4 
Sim.  8,  and  was  approved  in  Knebell  r. 
Wliite,  2  Younge  &  C,  Exch.  15,  in 
both  of  which  cases  the  opinion  attrib- 
uted to  Lord  I'^ldon  was  followed,  as 
being  the  sounder  and  the  better  estab- 
lished. But  the  later  English  cases 
strongly  incline  in  favor  of  the  opinion 
of  Sir  John  Leach,  and  this  may  now 
be  considered  as  the  received  doctrine. 
In  Wallworth  v.  Holt,  4  Mylne  &  C. 


619,  635,  039,  Lord  Chancellor  Cotten- 
ham,  speaking  of  the  two  supposed 
rules,  —  "  the  one  binding  the  court  to 
withhold  its  jurisdiction,  except  upon 
bills  praying  a  dissolution,  and  the 
other  requiring  that  all  the  partners 
should  be  parties  to  a  bill  praying  it," 
—  says  :  "  The  result  of  these  two  rules 
would  be  that  the  door  of  this  court 
would  be  shut  in  all  cases  in  which  the 
partners  or  sliareholders  are  too  numer- 
ous to  be  made  parties  ;  which,  in  the 
present  state  of  the  transactions  of  man- 
kind, would  be  an  absolute  denial  of 
justice  to  a  large  portion  of  the  subjects 
of  the  realm,  in  some  of  the  most  im- 
portant of  their  affairs.  If  that  were 
the  rule  of  the  court,  —  if  a  bill,  in  no 
case,  would  lie  to  compel  a  man  to 
observe  the  covenants  of  a  partnership 
deed, — it  is  obvious  that  a  person  fraud- 
ulently inclined  might,  of  his  mere 
will  and  pleasure,  compel  his  copartner 
to  submit  to  the  alternative  of  dissolv- 
ing a  partnership,  or  ruin  him  by  a 
continued  violation  of  the  partnership 
contract."  See  farther  Bentley  v. 
Bates,  4  Jur.  552 ;  Hills  v.  Nash,  10 
id.  148 ;  Walburn  v.  Ingilby,  2  Mylne 
&  K.  61,  76. 

In  Pennsylvania,  it  has  been  decided 
that  a  court  of  equity  will  entertain  a 
bill  for  an  account  by  one  partner 
against   the   other,   although    the   bill 


328  THE    LAW    OP    PARTNERSHIP.  [CH.  VIII. 

*  301        *  111  England,  an  account  has  been  decreed  upon  a  bill 

praying  for  the  establishment  of  the  partnership,  (y) 

A  prayer  for  dissolution  is  often  made,  and  the  power  of 
equity  to  grant  it  for  good  cause  is  doubted  by  no  one.  Tliis 
subject,  however,  has  not  only  a  special  importance,  but  some 
peculiar  difficulties ;  and  -we  propose  to  treat  of  Dissolution  by 
Decree,  —  its  causes,  methods,  and  consequences,  —  by  itself. 

So,  too,  equity  is  often  called  upon  to  decree  a  sale  of  the 
partnership  property  ;  but,  as  this  would  itself  amount  to  a 
dissolution,  or  at  least  arrest  the  business  of  the  partnership 
for  the  time  being,  and  would  be  an  exertion  of  the  power  of 
equity  which  could  never  be  called  for  unless  where  there  was 
or  should  be  a  dissolution,  Ave  shall  consider  this  subject  in 
connection  with  that  of  the  dissolution  of  partnership ;  not, 
however,  altogether  in  the  chapter  on  dissolution  by  process  of 
law  ;  for  a  sale  may  also  be  decreed  where  the  dissolution  is  by 
expiration  of  a  limited  period  by  agreement  of  the  partners,  or 
by  the  death  of  one  or  more  of  them. 

Perhaps  the  aid  of  equity  is  not  invoked  in  any  cases  in 
which  it  is  more  indispensable,  or  more  useful,  than  when  it  is 
asked  to  settle  the  accounts  between  the  partners.  And  it  may 
be  well  to  say  something  of  the  principles  by  which  it  will  be 
guided  in  making  such  settlement. 

In  the  first  place,  it  is  perfectly  competent  for  the  partners 
to  agree,  at  their  own  pleasure,  how  the  accounts  shall  be  set- 
tled ;  and  if  such  agreements  are  entered  into  in  good  faith  by 
all  the  parties,  and  are  not  in  themselves  oppressive  and 

*  302    injurious,  they  *  will  be  carefully  respected.  (2)     And 

not  only  will  equity  thus  regard  express  agreements  how 
to  settle,  but  will  draw  from  the  words,  or  from  the  acts  of  the 

does  not  contemplate  a  dissolution  of  tered  into  for  a  partnership,  and,  two  of 

the  partnership.     Hudson  r.  Barrett,  1  the  partners  being  esquire  beadles  of 

Pars.    Sel.    Cas.    4U.      See   Firtle   v.  the   University   of  Cambridge,  it  was 

Penn,  3  Dana,  240,  248.  agreed  to  conceal  the  partnership  from 

iy)  Knowles  v.  Houghton,  11  Ves.  the  University,  and  therefore  that  the 

168.  articles  should  not  be  executed.     Lord 

(z)  Jackson  v.  Sedgwick,  1  Swanst.  Cowper  decreed  an  account  of  the  part- 

469.     And  this  remains   true,  though  nership  according  to  the  terms  of  the 

the    articles  containing   the   provision  draft  of  the  articles,  so  far  as  the  same 

respecting  the  mode  of  taking  the  ac-  were  reduced  to  a  certainty.     Worts  v. 

counts  be  not  actually  executed  by  the  Pern,  3  Bro.  P.  C.  548. 
parties.     As   where   articles   were  en- 


CH.  VIII.]         OF   THE   REMEDIES    OF   PARTNERS   INTER   SE.  329 

parties,  considered  in  connection  with  all  the  circumstances, 
■whatever  inference  or  information  it  can  as  to  their  original  or 
subsequent  intention  and  understanding,  and  will,  on  the  same 
condition  that  this  method  be  honest  and  not  injurious,  carry  it 
into  effect.  Thus,  if  there  have  been  many  settlements,  or 
even  one,  previously  made  between  the  partners,  if  this  be 
not  now  objected  to  by  either  of  them  for  good  cause,  and  be 
not  itself  obviously  and  considerably  objectionable,  the  court 
will  be  disposed  to  adopt  this  as  an  example  and  precedent, 
and  direct  the  future  accounts  to  be  made  up  on  the  same 
principle,  (a) 

If  it  be  necessary,  equity  will,  on  sufficient  proof,  compel 
the  production  of  concealed  articles,  or  agreements  as  to  the 
method  or  principles  of  accounting  ;  or,  if  they  are  ascertained, 
but  cannot  be  produced,  will  order  an  account  to  be  taken  in 
conformity  with  them.  The  topic  of  "  account  "  has,  liowever, 
so  much  extent  and  importance  in  the  law  of  partnership,  that 
we  propose  to  consider  it  in  a  chapter  by  itself. 

S.    Of  a  Decree  for  an  Injunction. 

There  is  nothing  in  the  practice  or  principles  of  equity  as  to 
the  enforcement  of  specific  rights  strictly  peculiar  to  cases  of 
partnership.  The  essentials  to  give  equity  jurisdiction  are 
three :  There  must  be  a  contract,  which  may  be  express  or 
implied,  but  must  be  valid  at  law  ;  there  must  be  an  infringe- 
ment of  this  contract  which  is  not  technical  merely,  but  material 
and  substantial ;  and  the  remedy  at  law  must  be  inad- 
equate. In  such  cases,  a  *  court  of  equity  will  frame  its  *  303 
remedy  so  as  to  make  it  in  the  greatest  degree  complete 
and  effectual ;  and  this  may  be  in  a  positive  form,  by  decree  of 
specific  performance,  or  in  a  negative  form,  by  injunction.  The 
former  having  been  somewhat  considered,  we  will  now  treat  of 
the  latter. 

Injunction  is  one  of  the  most  stringent  measures,  as  well  as 
one  of  the  most  efficacious  remedies,  within  the  practice  or 
power  of  equity.     It  is  never  made  use  of  on  slight  or  merely 

(a)  Jackson  v.,  Sedgwick,  1  Swanst.  460,  409;  Pettyt  v.  Janeson,  6  Madd. 
146 ;  ante,  pp.  *  238,  *  242,  and  notes. 


330  THE   LAW   OF   PARTNERSHIP.  [CH.  VIII. 

temporary  grounds.  (J)  The  reasons  against  interfering  be- 
tween married  parties  are  regarded  —  not  only  in  the  civil  law, 
to  which  we  have  already  referred,  but  at  common  law  —  as 
liaving  some  application  to  partnerships,  (c)  Mere  failure  or 
infirmity  of  temper,  disputes,  which,  however  vexatious,  are 
not  positively  injurious,  or  other  similar  troublesome  but  tol- 
erable grievances,  will  not  induce  equity  to  apply  this  remedy. 
Nor  will  injunction  issue  where  there  is  reason  to  believe  that 
it  will  not  be  efficacious  and  entirely  remedial  ;  nor  in  case  it 
will  prol)ably  inflict  an  extreme  inconvenience,  or  other  mis- 
chief, beyond  what  the  character  or  exigency  of  the  case  calls 
for  or  justifies,  (t?) 

It  is  said  that  equity  will  not  interfere,  by  injunction,  where 
there  is  only  a  single  breach  of  a  covenant,  actual  or  threat- 
ened, or  but  one  or  two ;  and  not  unless  there  are  many  or  a 
series  of  similar  wrong-doings,  such  as  would  amount  to  a 
course  of  bad  and  injurious  conduct,  (e)  This  may  be  a  rule 
which  would  operate  as  far  as  the  reason  of  it  goes  ;  which  is, 
that  for  such  single  breaches  the  injured  party  may  be  left  to 
his  remedy  at  law,  while  the  proper  course,  in  a  case  of  con- 
tinued bad  conduct,  is  to  put  a  stop  to  it.  But  there  can  be  no 
arbitrary  rule  that  equity  will  not  interfere,  by  injunction,  in  a 
case  of  a  single  breach,  if,  in  other  respects,  the  conduct  of  the 
defendant  calls  for,  and  is  suited  to,  equitable  relief.  A  ques- 
tion has  arisen,  somewhat  analogous  to  one  we  had  occasion  to 
consider  in  reference  to  a  prayer  for  account,  which  is,  whether 

injunction  will  be  decreed  where  dissolution  is  not  de- 
*  304    creed,  or  is  not  asked  for.     Our  general  *  answer  would 

be  the  same.  But  it  seems  to  be  much  more  clearly 
determined,  that  neither  dissolution  nor  a  prayer  for  it  are 
a  necessary  foundation  for  injunction,  than  that  they  are  not 
necessary  for  an  account.  (/) 

(b)  Goodman  v.  Wliitcomb,  1  Jac.  (e)  Marshall  v.  Colman,  2  Jac.  & 
&  W.  592;  Marshall  v.  Colman,  2  id.     W.  266. 

266;  Wray  v.  Hutchinson,  2  Mylne  &  (/')  In  Marshall  v.  Colman,  2  Jac. 

K.  235;  Henn  v.  Walsh,  2  Edw.   Ch.  &  W.  266,  S!<p-rt,  note   (e),  it  seems  to 

129.  have  been  questioned  by  Lord  Eldon 

(c)  Goodman  v.  Whitcomb,  1  Jac.  whether  equity  would  interfere  be- 
&  W.  592.  tween   partners   by  injunction,  unless 

{d)  Smith  V.  Fromont,  2  Swanst.  there  was  ground  for,  and  the  bill 
330.  prayed  a  dissolution  of,  the  partner- 


CH.  VIII.]        OF   THE   REMEDIES   OF   PARTNERS   INTER   SE.  331 

It  is  undoubtedly  true,  that  so  extreme  a  remedy  as  that  of 
injunction  —  which  entirely  arrests  the  proceedings  of  the  per- 
son against  whom  it  is  aimed,  and  utterly  disables  him  as  to 
the  subject-matter  of  it  —  would  seldom  issue,  unless  it  were 
made  necessary  by  a  grievance  which  would  suffice  for  a  decree 
of  dissolution,  if  that  were  called  for,  or  seemed  to  be  the 
proper  remedy.  But  not  only  does  this  decree  issue  without 
dissolution,  but  its  propriety  was  not  questioned,  even  in  a  case 
where  the  prayer  of  the  bill  was  for  the  protection  and  pres- 
ervation of  the  partnership,  of  which  the  defendant  threatened 
dissolution.  (^) 

The  cases  are  numerous  and  varied  where  injunction  has  been 
sought  and  granted  to  restrain  a  partner  from  making  an  im- 
proper use  of  the  partnership  property,  credit,  or  name.  This 
may  be  by  violation  of  partnership  articles,  or  a  breach  of  a 
duty  imposed  by  law,  or  a  wrongful  act  forbidden  by  law.  Thus, 
if  a  partner  becomes  grossly  intemperate,  or  involves  the  part- 
nership foolishly  in  debt,  or  wastes  its  resources,  (/t)  or 
becomes  insolvent,  («')  *  or  obstructs  or  embarrasses  or  *  305 
lessens  the  partnership  business,  (j)  or  misapplies  its 

sliip.  But  in  Charlton  v.  Poulter,  19  {(j)  An  application  was  made,  some 
Ves.  148,  note,  where  the  partnership  years  ago,  to  the  court  of  chancery, 
was  for  an  unexpired  term,  the  court  for  an  injunction  to  inhibit  the  de- 
restrained  the  gross  personal  miscon-  fendants  from  dissolving  a  commercial 
duct  of  one  partner,  though  there  was  partnership  :  the  other  side  proposed 
no  prayer  for  a  dissolution  before  the  to  defer  it,  as  not  having  had  time  to 
expiration  of  the  term.  The  principle  answer  the  affidavits;  but  it  was  in- 
of  this  last  case  seems  to  be  supported  sisted,  that  this  was  in  the  nature  of 
by  the  opinion  of  Lord  Eldon  in  Good-  an  injunction  to  stay  waste,  and  that 
man  r.  Whitcomb,  1  Jac.  &  W.  592.  irreparable  damage  might  ensue.  At 
And  in  Mills  v.  Thomas,  9  Sim.  609,  length  the  court  deferred  it,  the  de- 
Sir  L.  Shadwell,  V.  C,  said  :  "  I  am  fendants  undertaking  not  to  do  any 
of  opinion  that  the  court  ought  to  in-  thing  prejudicial  in  the  mean  time, 
terfere  between  copartners,  whenever  But  no  doubt  arose  concerning  the 
the  act  complained  of  is  one  that  tends  general  propriety  of  such  an  applica- 
to  the  destruction  of  the  partnersliip  tion.  Chavany  v.  Van  Sommer,  cited 
property,  notwithstanding  a  dissolution  in  3  Wood.  Lee.  416,  n.,  1  Swanst. 
of  the  partnership  ma}'  not  be  prayed."  512,  n. 

See   An.lcrson    v.  Wallace,  2   Molloy,  (/()  Mills   v.  Thomas,  9   Sim.   606, 

540;  Natusch  v.  Irving,  Gow  on  Part.  609;  Gratz  v.  Bayard,  11   S.  &  R.  41, 

App.  398,  406 ;  ante,  p.  *  197,  note  (.r) ;  48. 

Loscombe  v.  Russell,  4  Sim.  11  ;  Henn  (i)  Lawson  v.  Morgan,  1  Price,  303. 

V.  Wal.sh,2Edw.  Ch.  129;  Glassington  {j)  Charlton    v.   Poulter,   19    Ves. 

V.   Tliwaites,    1   Sim.   &  S.   124,  130,  148,  n. ;  ante,  p.  *304,  note  (/). 
note. 


332  THE   LAW   OF    PARTNERSHIP.  [CH.  VIIi; 

property,  (7c)  or  in  any  way  injurious  to  the  partnership  grossly 
misconducts,  (Z)  —  equity  will  not  only  restrain  him  from  the 
particular  wrongful  acts  complained  of,  but,  more  generally, 
from  using  the  name  of  the  firm  on  any  negotiable  paper,  or 
from  contracting  any  debt  for  the  partnership,  or  receiving  any 
payment,  (w)  But  a  disability  so  general  as  this  would  amount 
to  a  dissolution  of  the  partnership,  and  that  would  in  most  cases 
be  preferred  as  the  most  complete  and  adequate  remedy. 

It  has  even  been  intimated  that  equity  would  interfere  in 
this  way  if  a  partner  should  put  himself  in  a  position  which 
lays  him  under  a  strong  temptation  to  interfere  with  the  inter- 
ests or  damage  the  business  of  the  firm,  (w)  Nor  do  we  see 
any  reason  why,  in  a  case  of  this  kind,  of  sufficient  magnitude, 
the  court  should  refuse  its  interference  until  something  had 
been  done  to  show  that  the  temptation  had  been  yielded  to  and 
wrong  actually  inflicted. 

If  a  partnership  have  been  dissolved,  and  either  of  the  part- 
ners attempt  to  carry  on  the  former  business  for  their  own 
benefit,  and  in  a  way  injurious  to  the  former  partners,  the  in- 
jured partners  may  have  an  injunction,  (o)  So,  if  an  account 
has  been  finally  settled  between  the  partners,  and  one  or  more 
of  the  partners  has  undertaken  to  pay  all  the  outstanding 
debts,  or  certain  specified  debts,  and  to  indemnify  the  other 
partner,  if  he  be  compelled  to  pay  any  of  these  debts,  and  this 
other  partner,  being  obliged  to  pay  them  or  any  of  them, 
should  obtain  and  retain  money  which,  by  the  contract 
*  306  of  settlement,  belongs  to  the  indemnifying  *  partners, 
they  might  bring  an  action  at  law  for  the  money  so 
retained.  If,  however,  the  settlement  and  agreement  of  in- 
demnification could   not  be  used  as  a  defence,  or  by  way  of 

{k)  Williams    v.  Bingley,   2   Vern.  an  injunction  be  awarded  against,  &c., 

278,  note;  Master  y.  Kirton,  3  Ves.  74.  from    entering   into   any    contract    or 

(/)  Glassington  v.  Thwaites,  1  Sim.  contracts,  and  from  accepting,  &c.,  any 
&  S.  124  ;  Hood  v.  Aston,  1  Russ.  412.  bills,  &c.,  in  the  name  of  the  copartner- 
See  post,  p.  *  312.  As,  if  a  partner  re-  ship,  &c."  Seton's  Decrees,  308.  See 
moves  the  partnership  books  from  the  Williams  v.  Bingley,  2  Vern.  278,  note, 
place  of  business  of  the  firm,  he  will  (n)  Glassington  v.  Thwaites,  1  Sim. 
be  restrained  by  injunction  from  keep-  &  S.  133.  See  Burton  v.  Wookey,  6 
ing  them  at  any  other  place.  Greatrix  Madd.  367. 
V.  Greatrix,  1  De  G.  &  S.  692.  (o)  De  Tastet  u.  Bordenave,  Jacobs, 

(m)  The  usual  form  of  the  order  for  516. 
an  injunction  against  a  partner,  is, "  that 


CH.  VIII.]         OF   THE    REMEDIES   OF    PARTNERS   INTER   SE.  333 

estoppel  or  set-off  or  otherwise,  equity  would  interfere  and 
decree  an  injunction  against  these  proceedings  at  law.  (^j)) 
Generally,  as  we  have  already  seen,  courts  of  law  would  refuse 
jurisdiction  of  a  question  of  partnership,  where  they  could  not 
give  adequate  remedy.  And  in  this  country,  the  more  liberal 
practice  of  courts  of  law,  and  the  marked  approach  of  equity 
and  law  towards  each  other,  would  render  unnecessary,  perhaps 
always,  such  an  exercise  of  the  powers  of  equity.  Still,  it  is 
clearly  within  the  system  of  equity  jurisdiction  and  action,  and 
the  authorities  show  that  this  remedy  has  been  applied,  (^q) 

If,  upon  settlement,  it  is  agreed  that  one  or  more  of  the 
partners  shall  not  exercise  or  carry  on  a  certain  trade  within 
certain  limits,  and  a  valuable  consideration,  either  by  other 
agreements,  or  in  any  way,  is  given  for  this  ;  or  if  on  submis- 
sion to  arbitrators  of  the  affairs  of  a  partnership  for  final  set- 
tlement, an  award  is  made  to  the  same  effect,  and  the  partner 
so  inliibited  does  set  up  or  exercise  that  trade  or  business,  in 
violation  of  the  agreement  or  award,  — injunction  would  issue 
against  liim.  (;•)  And  this  has  been  granted  where  the  inhibi- 
tion did  not  appear  expressly  in  the  award,  but  it  was  proved 
that  the  award  was  made  on  that  basis.  (&) 

So  too,  if,  during  a  partnership,  a  partner  establishes  and 
carries  on  a  business  adverse  and  injurious  to  that  of  the 
partnership,  which,  as  we  have  seen,  the  law  forbids  him  to 
do,  —  or  even  threatens  and  prepares  to  do  this,  —  he  will  be 
restrained  by  injunction,  (f)  So  if  a  partner  use  the 
name  of  the  firm  in  any  *  wrongful  way,  he  will  be  re-  *  307 
strained.  (iC)     And  it  is  intimated  that  injunction  will 

(/))   Gold  V.  Canham,  1  Cas.  Cli.  311,  agreement  with  D.     Devau  v.  Fowler, 

2  Swanst.  325.    Where,  on  the  dissolu-  2  Paige,  400. 

tion  of  a  copartnership  between  D.  &  ('/)  8ee  preceding  note. 

F.,  D.  agreed  witii  F.  tliat  F.  should  (r)   Williams?;.  Williams,  2  Swanst. 

take  all  the  stock  and  effects,  and  pay  253,   1   Wilson    Ch.  473,  n. ;  Harrison 

all  the  debts  due  by  the  firm,  and  after-  v.  Gardner,  2  Madd.  198 ;  ante,  p.  *  261, 

wards  F.  became  insolvent  and  threat-  et  seq.,  and  notes, 

ened  to  dispose  of  all  the  partnership  (s)  Harrison  v.  Gardner,  supra. 

property  and  appropriate  the  same  to  (<)  See  Burton  v.  Wookey,  6  Madd. 

his    own    individual   use,    leaving   the  367;  Coates  v.  Coates,  id.  2»7  ;  Long 

debts  unpaid ;  upon  a  bill  filed  for  that  v.  Majestre,  1  Johns.  Ch.  305;  ante,  p. 

pur]:)ose,    an    injunction  was    granted  *  223,   et   seq.,   and    notes;    p.    *305, 

restraining  F.  from  disposing   of  the  note  («)• 

partnership    property    in    a    different  (u)  As   if    he   accept   or  negotiate 

manner  from   that  stipulated    in    his  bills  of  exchange,  in  the  partnership 


334  THE   LAW   OP   PARTNERSHIP.  [CH.  VIII. 

issue,  if  he  signs  the  instruments  of  the  firm  with  a  name  which 
purports  to  be  the  name  of  the  firm,  but  is  not  so  in  fact  or 
by  the  agreement  of  the  partners,  (i;) 

Causes  for  injunction  sometimes  arise  where  one  of  the 
partners  has  deceased.  We  shall  presently  see  that  this  event 
always  makes,  strictly  speaking,  a  dissolution  ;  but  it  may 
leave  certain  rights  behind  it  which  will  be  protected  by  in- 
junction. Thus,  any  misapplication  of  the  partnership  funds 
by  the  surviving  partner  will  be  prevented  by  injunction,  (w) 
But  there  must  be  sufficient  evidence  of  the  fact,  or  of  immi- 
nent danger  ;  for  a  mere  apprehension  that  the  surviving  part- 
ner may  abuse  his  powers  will  not  induce  a  court  to  restrain 
and  embarrass  him  in  the  exercise  of  these  powers,  (x)  Where 
the  representatives  of  the  deceased  do,  or  propose  to  do,  a 
wrong  to  the  surviving  partners,  the  latter  may  have  their 
remedy  by  injunction.  As,  if  the  deceased  held  a  lease,  or 
other  real  chattel  or  real  estate,  in  his  own  name,  but  actually 
as  partnership  property  and  for  the  partnership,  and  his  execu- 
tors propose  to  hold  or  apply  this  as  the  private  assets  of  the 
deceased,  they  will  be  restrained  by  injunction,  (y) 

The  statute  of  limitations  begins  to  run  at  the  death  of  a 
partner,  in  favor  of  his  personal  representatives  against  a  claim 
to  have  an  account  of  profits  received  by  him.  (^^) 

As  partners  who  suffer  from  misconduct  of  their  copartners 
may  have  injunction  against  them,  so  they  may  against  third 
parties  who  are  participant  with  the  partners  in  the  wrong- 
name,  but  not  for  partnership  pur-  (jj)  Alder  v.  Fouracre,  3  Svvanst. 
poses.  Ante,  p.  *  305,  cases  cited  in  489. 
note  (k)  ;  post,  note  (~).  [ny)  Weisman   v.    Smith,   6   Jones, 

(v)  Marsliall  v.  Colman,  2  Jac.  &  Eq.  r24.  [Partners  inter  sese  hold 
W.  266.  partnership  effects  for  each  other  un- 

{iv)  Hartz  v.  Schrader,  8  Ves.  317.  der  an  implied  trust ;  and  the  statute 
Thus,  upon  motion  by  the  representa-  of  limitations  rests  ujion  their  respec- 
tives  of  a  deceased  partner,  the  surviv-  tive  claims  against  each  other,  in  this 
ing  partner  will  be  restrained  from  regard,  and  begins  to  rim  on  the  oc- 
bringing  ejectment  upon  his  title,  as  currence  of  a  breach  of  trust ;  and, 
surviving  lessee  of  the  partnership  when  one  is  to  collect  and  pay  over 
premises.  Elliot  v.  Brown,  3  Swanst.  the  funds,  the  statute  is  not  set  in 
489,  n.  motion   till   there  is  a   failure  in   the 

(.r)  Woodward  f.  Schatzell,  3  Johns,     performance  of  that  duty.      Condrey 
Ch.  412 ;  Walker  v.  Trott,  4  Edw.  Ch.     v.  Gilliam,  60  Mo.  86.] 
38.     As  to  the  rights  and  powers  of 
surviving  partners  generally,  see  post. 


CH.  VIII.]         OF   THE    REMEDIES   OF   PARTNERS    INTER   SE. 


335 


doing.  Thus,  if  a  partner,  in  fraud  of  the  firm,  makes  or 
accepts  or  indorses  negotiable  paper  with  the  name  of  the 
firm,  but  for  his  own  use,  injunction  against  negotiating  or 
using  tlie  same  will  issue  against  a  third  party  in  possession  of 
the  note,  unless  he  came  into  possession  of  it  for  value,  and  in 
ignorance  of  its  fraudulent  origin,  (z) 

*  Where  a  note  was  made  by  one  who  had  been  a  part-  *  308 
ner  of  the  firm  until  its  dissolution,  and  who  signed  it 
with  the  name  of  the  firm,  it  was  doubted  whether  injunction 
should  issue  against  the  holder,  because  he  could  make  no  use 
of  the  note  at  law ;  it  being,  in  fact,  a  note  without  a  signa- 
ture, (a)  But  the  better  doctrine  undoubtedly  is,  that  the  use 
of  the  partnership  name  after  its  dissolution  will  be  prohibited 
by  injunction,  because  it  may  not  only  expose  the  former  part- 
ners to  a  suit  at  law,  but,  if  they  should  have  been  remiss  in 
giving  notice  of  their  dissolution,  it  might,  under  some  circum- 
stances, bind  them  to  the  payment  of  the  paper^  in  the  hands 
of  an  innocent  holder  for  value.  (Z*) 


(z)  Hood  V.  Aston,  1  Russ.  412,  415  ; 
Jervis  v.  White,  7  Ves.  413.  See  Mas- 
ter V.  Kirtan,  3  id.  74 ;  CoIIyer  on 
Part.  §  340,  note  (1)  ;  Newman'i'.  Mil- 
ner,  2  Ves.  483. 

(a)  Ryan  v.  Mackmath,  3  Bro.  C. 
C.  15. 

(b)  As  far  as  Ryan  v.  Mackmath, 


apparent  on  its  face,  wherever  tiie  cir- 
cumstances of  the  individual  case 
render  such  interference  expedient. 
See  Ryan  t- .  Mackmath,  3  Bro.  C.  C. 
15  (Perkins'  ed.),  and  notes  ;  Hamilton 
V.  Cummings,  1  Johns.  Ch.  517,  520 
Grover  v.  Hugell,  3  Russ.  432  ;  Hodg- 
son  V.  Murray,  2  Sim.  515,  3  id.  382 


supra,   can   be  regarded  as  authority  Simpson  v.  Howden,  3  Mylne  &  C.  97 

for  the   rule  that  equity  will  not   re-  104 ;    Peirsole   v.   Elliott,    6    Pet.   95 

strain  the  improper  use  of  the  partner-  Duncan     v.    Worrall,    10    Price,    31 

sliip  name  by  one  of  the  partners  after  Thompson  r.    Graham,   1   Paige,  384 

dissolution,  it  is  no  longer  law.     Lord  Pettit  r.  Shepherd,  5  id.  493 ;  Torrey 

Chancellor  Thurlow  there  decided  that  c.  Buck,  1  Green    Ch.  366;   Jones  v. 

he  would  not   order  an  instrument  to  Perry,  10  Yerg.  59 ;  Maise  v.  Garner, 

be   delivered  up  and  the  name  to  be  Mart.    &   Y.   383  ;  Garrett  v.  Miss.  & 


erased,  upon  which  an  action  could 
not  be  maintained  at  law.  Upon  the 
same  principle,  it  has  been  said  that 
equity  would  not  restrain  by  injunc- 
tion the  use  of  the  partnership  name 
after  dissolution.  But  the  doctrine 
of  Lord  Thurlow  in  Ryan  v.  Mack- 
math has  since  been  overruled.  It  is 
now  clearly  settled  that  courts  of  equity 
have  jurisdiction  to  order   an   instru- 


Ala.  R.  Co.,  1  Freem.  Ch.  70 ;  Sessions 
f.  Jones,  6  How.  (Miss.)  123  ;  Leigh  w- 
Everhart,  4  T.  B.  Mon.  379,  3»0 ;  2 
Story  Eq.  §§  698-702;  1  Madd.  Cii. 
301. 

The  authority  of  Ryan  v.  Mackmath 
not  being  valid  to  prevent  courts  of 
equity  from  restraining  the  use  of  a 
partnership  name  after  dissolution, 
there  would  seem  to  be  no  reason  wliy 


ment  to  be  delivered  up  and  cancelled,  they  should  not  do  this,  but,  on  the 
notwithstanding  it  be  void  at  law,  and,  other  hand,  as  suggested  in  the  text, 
perhaps,  even  though  its  nidlity  b'e    strong  reason  why   they   should.    In 


336 


THE   LAW   OF    PARTNERSHIP. 


[CH.  VITI. 


"We  shall  hereafter  consider,  in  a  separate  chapter,  the 
manner  in  which  the  creditors  of  the  firm  and  of  the  separate 
partners  may  obtain  from  the  property  of  the  firm  or  of  the 
separate  partners  the  security  or  payment  to  which  they  are 

entitled.  The  subject  is  one  of  much  difficulty  as  well 
*  309    as  importance.     We  will  *  not  anticipate  it  here  so  far 

as  to  inquire  what  rights  of  attachment  or  levy  a  sep- 
arate creditor  has  on  the  property  of  the  firm,  or  on  the  interest 
of  the  separate  partner  who  is  his  debtor,  in  that  property.  We 
will  say,  only,  that  if  such  creditor  proceeds,  or  proposes  to 
proceed,  to  an  interference  with  the  property  of  the  firm  — 
whether  by  attachment  or  levy,  to  which  he  has  no  legal 
right  —  it  would  seem  to  be  clear  that  the  firm,  and,  perhaps, 
that  the  joint  creditors  of  the  firm,  may  have  such  interference 
restrained  by  injunction,  (c) 


Webster  v.  Webster,  3  Swanst.  490, 
11.,  an  injunction  to  restrain  surviv- 
ing partners  from  using  the  name  of  a 
deceased  partner,  in  the  firm  of  the 
trade,  was  refused.  Possibly  this  case 
was  decided  upon  tlie  ground  tliat  tlie 
right  to  retain  the  partnersliip  name, 
considered  as  an  interest  of  tlie  nature 
of  good-will,  survived  to  the  remaining 
partners.  See  Lewis  i'.  Langdon,  7 
Sim.  421. 

(c)  A  court  of  law  will  not  inter- 
fere and  compel  the  creditor  of  one 
partner  to  delay  satisfying  his  execu- 
tion out  of  the  partnership  effects  till 
an  account  can  be  taken,  and  the  debtor 
partner's  interest  ascertained.  Parker 
V.  Pistor,  3  B.  &  P.  288  ;  Chapman  v. 
Koops,  id.  289.  But  in  these  very 
cases  it  is  intimated  that  relief  may  be 
had,  by  the  debtor's  partners,  or  the 
partnership  creditors,  by  bill  in  equity. 
And  the  true  conclusion  to  be  drawn 
from  a  view  of  the  English  authorities 
is,  that  a  separate  creditor  to  whom  exe- 
cution has  issued  for  the  debt  of  one 
partner  will  be  restrained  from  taking 
the  partnership  effects  thereon  until 
an  account  has  been  taken,  and  his 
debtor's  interest,  which  is  alone  prop- 
erly subject  to  the  execution,  ascer- 
tained. Eden  on  Inj.  3L  See  Skipp 
V.    Harwood,    2    Swanst.    586,     587  ; 


Lowndes  v.  Taylor,  1  Madd.  423. 
Such  an  injunction  will  be  granted  at 
the  suit  of  the  surviving  partner, 
Newell  V.  Townsend,  6  Sim.  419 ;  or 
of  the  joint  assignees  in  bankruptcy 
of  the  firm,  Taylor  v.  Field,  15  Ves. 
559;  Bevan  v.  Lewis,  1  Sim.  376; 
Anon.,  2  Ca.  Ch.  38;  and,  upon  the 
same  principle,  the  property  of  the 
partnership  will  be  protected  in  equity, 
whether  the  proposed  interference 
proceed  from  assignees  for  value  of 
one  partner's  interest  from  his  as- 
signees in  bankruptcy,  or  from  his 
executors  or  administrators,  Taylor 
V.  Fields,  4  Ves.  396,  15  id.  559; 
Barker  v.  Goodair,  11  id.  85;  Dutton 
V.  Morrison,  17  id.  206-209.  And,  it 
seems,  that,  if,  in  cases  of  this  nature, 
execution  be  satisfied  before  injunc- 
tion can  be  obtained,  tiie  court  may 
interfere,  and  stay  the  money  in  the 
hands  of  the  sheriff;  whom  the  plain- 
tiff should  properly  make  a  party  by 
supplemental  bill,  if  the  money  has 
come  into  his  hands  since  the  injunc- 
tion issued,  or  by  the  original  bill,  if 
the  money  was  in  his  hands  at  the 
time.  Franklin  v.  Thomas,  3  Meriv. 
225,  234;  Hawkshaw  v.  Parkins,  2 
Swanst.  549.  See  Axe  v.  Clarke,  2 
Dick.  549.  After  judgment  at  law 
against  a  firm   for  a  debt,  a  court  of 


CH.  VIII.]         OF   THE   REMEDIES   OF    PARTNERS   INTER   SE. 


337 


*  How  injunction  may  be  obtained,  can  be  ascertained    *  310 
only  by  a  consideration  of  the  processes  and  practice  of 
equity,  wliich  is  a  topic  by  itself.     It  may,  however,  be  proper 
to  remark,  in  this  connection,  that,  usually,  injunction  is  not 


equity  will  not,  it  seems,  at  the  in- 
stance of  one  ])artner,  grant  an  injunc- 
tion to  stay  execution  on  tiie  ground 
that  he  had  retired  from  the  partner- 
ship long  before  the  debt  was  incurred, 
and  that  the  plaintiff  at  law  was  ap- 
prised of  it ;  because  such  circum- 
stances would  constitute  a  good  legal 
defence.  Protheroe  v.  Forman,  2 
Swanst.  227. 

What  we  have  already  stated  as  the 
doctrine  of  the  English  cases,  namely, 
that  equity  will,  by  injunction,  restrain 
the  judgment  creditor  of  a  single  part- 
ner from  satisfying  his  execution  out 
of  tiie  partnership  effects,  and  will  com- 
pel him  to  wait  till  an  account  has 
been  taken,  and  the  interest  of  the 
debtor  partner  in  the  joint  property 
definitely  ascertained, — has  been  laid 
down  as  the  rule  very  generally  by 
the  English  text-writers.  See  1  Madd. 
Ch.  132,  189 ;  Gow  on  Part.  [144]  ; 
Collyer  on  Part.  §  831  (Perkins'  ed.) ; 
Eden  on  Inj.  31.  In  opposition  to  this 
conclusion,  however,  we  have  high  au- 
thority in  this  country.  In  Moody  v. 
Payne,  2  Johns.  Ch.  548,  tlie  precise 
point  came  before  Chancellor  Kent, 
and  was  decided  contrary  to  the  rule 
we  have  above  supposed  to  be  dedu- 
cible  from  the  English  cases.  Judge 
Story's  opinion,  on  the  other  hand,  is 
in  consonance  with  the  doctrine  of  the 
text.  Story  on  Part.  §  264.  And 
Chancellor  Kent  himself,  while  main- 
taining that  Moody  v.  Payne  is  in  ac- 
cordance with  the  weight  of  authority, 
seems  to  intimate  that,  in  his  own  opin- 
ion, the  contrary  doctrine  is  founded 
on  the  better  reason.  In  3  Kent  Comm. 
[65],  note,  he  says,  after  referring  to 
Sloody  V.  Payne,  and  Judge  Story's 
comments  thereon  :  "  As  I  have  already 
observed,  the  more  fit  and  suitable 
rule  of  practice  would  seem  to  be,  to 
have  the  adjustment  of  the  partnership 
account   precede    the    sale.     But    the 


current  of  authorities,  as  I  read  them, 
is  the  other  way,  and  they  are  em- 
phatically so  in  New  York."  See,  in 
support  of  this  last  remark,  Phillips  v. 
Cook,  24  Wend.  398,  408;  Matter  of 
Smith,  16  Johns.  106,  note;  Hergman 
V.  Dettlebach,  11  How.  Pr.  46.  The 
decision  in  Moody  v.  Pajne  was  also 
approved  and  followed  in  Sitler  v. 
Walker,  1  Freem.  Ch.  77.  See  Church 
V.  Knox,  2  Conn.  514,  524 ;  Brewster 
V.  Hammet,  4  id.  540  ;  Witter  v.  Rich- 
ards, 10  id.  37,  43.  See  the  opinions 
of  Parker,  C.  J.,  in  Morrison  v.  Blodg- 
ett,  8  N.  H.  252,  253,  and  Dow  v. 
Sayward,  14  N.  H.  9,  13.  See  also 
Hill  V.  Wiggin,  11  Post.  292. 

On  the  other  hand,  it  was  distinctly 
held,  in  Place  v.  Sweetzer,  16  Ohio, 
142,  that  while  partnership  goods  may 
be  levied  upon  under  execution  against 
one  of  the  partners,  for  his  separate 
debt,  the  sale  in  such  case  may  be  re- 
strained by  injunction  till  the  interest 
of  the  partner  is  ascertained.  And  in 
Cammack  v.  Johnson,  1  Green,  Ch. 
163,  the  court  intimated  its  opinion  to 
be  to  the  same  effect,  though  it  was 
not  considered  necessary  to  decide  the 
question.  So  also  in  White  v.  Wood- 
ward, 8  B.  Mon.  484.  See  further 
Moore  v.  Sample,  3  Ala.  319,  320. 

The  above  are  the  principal  direct 
authorities  upon  the  point  under  dis- 
cussion. In  none  of  them,  perhaps,  is 
the  general  principle  upon  which  the 
question  turns  thoroughly  investigated; 
and  it  is  evident  that  the  answer  to 
the  question  must  depend  upon  the 
right  of  control  over  the  partnership 
effects  which  the  creditor  of  a  single 
partner  acquires  by  a  judgment  and 
execution  against  him.  We  shall, 
therefore,  refer  to  this  subject  again 
when  we  come  to  speak  of  the  reme- 
dies of  the  creditors  of  individual 
partners. 


22 


338  THE   LAW    OP   PARTNERSHIP.  [CH.  VIII. 

issued  until  after  the  defendant  has  answered,  or  has  had  a 
sufficient  opportunity  to  answer.  (cZ)  The  reason  is  obvious  : 
the  court  would  not  apply  so  stringent  a  measure  on  a  mere  ex 
parte  statement  or  evidence.  But  it  is  also  obvious  that  there 
may  be  cases  —  in  partnership  as  well  as  elsewhere  —  in  which 
an  injunction  must  be  granted  at  once,  in  order  to  be  of  any 
use ;  and  where,  of  course,  delay  would  be  the  same  thing  as 
refusal.  On  this  point  the  English  cases  rest,  or  at  least  sug- 
gest, a  distinction  which  is  somewhat  technical.  If  the  act 
which  is  complained  of  is  waste,  or  distinctly  in  the  nature 
of  waste,  injunction  will  issue  at  once,  on  a  bill  and  affida- 
vits, if  they  satisfy  the  courts  that  there  is  sufficient 
*  311  *  cause,  (e)  But,  if  there  be  no  waste,  then  there  must  be 
delay  until  an  answer  is  filed,  (/)  "We  doubt  whether 
this  rule  has  much  force,  or  frequency  of  application,  in  Eng- 
land ;  and,  we  think,  it  would  have  little  or  none  here.  Unless, 
indeed,  it  should  be  construed  as  merely  a  compendious  way  of 
stating  the  true  rule  ;  which  must  be,  that  equity  will  not  issue 
an  injunction,  unless  all  the  case  is  in  and  both  sides  have  been 
heard  ;  or  unless  there  is  enough  of  statement  and  evidence 
before  the  court  to  convince  them  that  immediate  remedy  is 
demanded,  and  there  is  no  apparent  probability  of  its  working 
undue  mischief.  (</)  In  such  case,  a  temporary  or  preliminary 
injunction  will  issue,  precisely  on  the  same  grounds  and  in  the 
same  way  as  in  cases  not  of  partnership.  And  this  temporary 
or  preliminary  injunction  will  be  made  only  extensive  enough 

(d)  Anonymous,!  Ves.  476;  Law-  (/)  "  It  is  a  great  mistake,  and  one 
son  V.  Morgan,  1  Price,  303  ;  Adams  very  commonly  made,  to  imagine  that 
Eq.  (Am.  ed.)  [355-357];  3  Daniell's  all  the  numerous  cases  wherein  very 
Ch.  Pr.  (Perkins'  ed.)  1886;  Hart-  much  inconvenience,  and  even  loss, 
ridge  v.  Rockwell,  R.  M.  Charlt.  264 ;  may  be  suffered,  by  consequence  of 
Ogden  V.  Kip,  6  Johns.  Ch.  160,  161.  the  acts  sought  to  be  restrained,  are, 

(e)  As  in  case  of  the  insolvency  of  therefore,  in  the  nature  of  waste."  Per 
the  active  partner,  who  continues  to  curiam,  Cofton  v.  Horner,  5  Price,  537. 
make  contracts  in  the  name  of  the  See  also  Littlewood  v.  Caldwell,  11 
partnership.  Lawson  v.  Morgan,  1  Price,  97,  and  Hilton  v.  Granville,  4 
Price,  303.     See  Peacock  v.  Peacock,  Beav.  130. 

16  Ves.  51 ;  Hartz  v.  Schrader,  8  Ves.  (g)  See  2  Story  Eq.  §§  959a,  959  6. 

317 ;  Chavany  v.  Van  Somnier,  M.  T.  and  Adams  Eq.  357,  as  to  the  discre- 

10  Geo.    3,  3  Wood.  Lee.   416,   n.,    1  tion   which   courts   of  equity    always 

Swanst.    512,  n. ;   Read  v.   Bowers,   4  exercise  in  the  issuing  of  injunctions, 

Bro.  441 ;  Collyer  on  Part.   (Perkins'  and  the  care  with  which  the  right  of 

ed.)  §  349,  note.  all  parties  will  be  protected. 


CH.  VIII.]         OF   THE   REMEDIES   OF   PARTNERS   INTER   SE, 


59 


to  avert  immediate  and  impending  danger,  and  will  afterwards 
be  dissolved  or  modified  or  made  absolute,  as  shall  seem  to  be 
proper  upon  a  hearing  of  the  whole  case.  (7«) 

*  When  there  is  a  prayer  to  restrain  a  partner  from  *312 
acting  as  a  partner  until  an  account  and  settlement,  and 
also  for  this  account  and  settlement,  and  the  affidavit  filed  by 
the  defendant  asserts  (without  contradiction)  that  the  plaintiff 
has  possession  of  the  partnership  books,  and  that  the  defendant 
is,  for  this  cause,  unable  to  render  a  true  account,  or  to  put  in 
a  full  answer,  it  seems  that  the  bill  will  be  dismissed,  although 
improper  conduct  on  the  part  of  the  defendant  be  not  de- 
nied. ({) 


(/i)  A  special  injunction  being 
usually  granted  till  answer  or  further 
order  (Seton's  Decrees,  305,  306; 
Eden  on  Inj.  325),  a  defendant  may 
apply  to  have  it  dissolved,  not  only 
upon  putting  in  his  answer,  but  upon 
afHdavit  before  answer.  1  Newl. 
Ch.  Pr.  220;  3  Daniel  Ch.  Pr.  (Per- 
kins' ed.)  1894,  1895.  And  notwith- 
standing the  general  rule,  that  to 
obtain  or  continue  an  injunction,  affi- 
davits cannot  be  received,  in  contra- 
diction to  assertions  positively  made 
by  the  answer  (Eden  on  Inj.  108,  326  ; 
3"Daniell  Ch.  Pr.  (Perkins'  ed.)  1827, 
1883,  1884),  yet,  there  being  no  ques- 
tion of  title  between  the  parties  (id.  ; 
1  Newl.  Ch.  Pr.  227;  Adams  Eq.  356), 
in  cases  of  waste,  and  of  misconduct 
of  parties  analogous  to  waste,  affidavits 
filed  prioj-  to  the  answer  may  be  read 
against  it,  as  to  facts  of  waste  or  mis- 
management, though  it  is  otherwise  as 
to  affidavits  filed  after  the  answer. 
Id. ;  Smythe  i'.  Smythe,  1  Swanst.  252, 
2-54,  n. ;  Norway  v.  Rowe,  19  Ves.  144  ; 
Charlton  v.  Poulter,  id.  148 ;  Peacock 
V.  Peacock,  16  id.  49,  51 ;  Lawson  v. 
Morgan,  1  Price,  303 ;  Eastburn  v. 
Kirk,  1  Johns.  Ch.  444.  See  Roberts 
V.  Anderson,  2  Johns.  Ch.  202  ;  Poor 
V.  Carleton,  3  Sumn.  81,  82 ;  Smith  v. 
Cummings,  2  Pars.  Sel.  Eq.  Cas.  92; 
Lessig  V.  Langton,  Bright.  N.  P.  191 ; 
Eenton  v.  Chaplain,  1  Stock.  62.  In 
case  of  imminent  danger  of  injury  to  a 
complainant   partner,    the   court  may, 


after  appearance,  allow  a  temporary 
injunction  to  issue  upon  proposed 
amendments  to  the  bill,  granting,  at 
the  same  time,  an  order  to  show  cause 
why  the  bill  sliould  not  be  so  amended, 
and  the  injunction  continued.  Hayes 
V.  Heyer,  4  Sandf.  Ch.  485.  Where 
both  an  injunction  and  a  receiver  are 
sought,  as  in  some  cases,  the  injunc- 
tion may  be  granted,  but  the  receiver 
refused.  Hartz  v.  Schrader,  8  Ves. 
317.  The  application  for  the  injunc- 
tion, and  the  appointment  of  a  receiver, 
should  be  made  the  subject  of  two  suc- 
cessive motions.  Lawson  v.  Morgan,  1 
Price,  303. 

(i)  Littlewood  v.  Caldwell,  11  Price, 
97.  But  where  the  bill  calls  for  a  dis- 
covery which  the  defendant  cannot 
make  completely"  without  seeing  the 
partnership  books  and  accounts,  which 
are  not  in  his  possession,  but  which  he 
believes  to  be  in  the  hands  of  the 
plaintiff,  he  must  put  in  an  answer 
stating  to  that  effect,  and  then  move 
the  court  to  stay  proceedings  against 
him  for  not  putting  in  his  full  answer, 
until  he  has  been  assisted  witli  that 
inspection.  It  seems,  that,  in  such 
cases,  a  motion  by  tlie  defendant  for 
the  production  of  the  books  and  ac- 
counts, before  answer,  will  be  refused. 
Pickering  v.  Rugby,  18  Ves.  484.  See 
Kelly  V.  Eckford,  5  Paige,  548,  550; 
3  Daniell  Ch.  Pr.  (Perkins'  ed.)  2071, 
2072. 


340  THE   LAW   OF   PARTNERSHIP.  [CH.  VIII. 


4.    Of  a  Decree  for  a  Receiver. 

If  an  injunction  arrests  all  proceedings  on  the  part  of  a  part- 
ner, the  appointment  of  a  receiver  actually  ousts  him  from  all 
possession  and  control.  This  is,  therefore,  even  a  more  strin- 
gent measure  than  the  former.  And  if  a  partner  prays  that  a 
receiver  may  be  appointed,  or  that  some  person  be  authorized  to 
manage  the  concern  and  act  as  a  quasi  receiver,  the  rule  that 
the  prayer  will  not  be  granted,  unless  the  case  entitle  the  plain- 
tiff to  a  dissolution,  seems  to  be  quite  well  settled  as  a  rule  of 

practice.  (^  ) 
*  313  *  It  has,  perhaps,  some  exceptions.  If  a  wrong-doing 
partner  seeks  to  exclude  his  copartner  from  any  knowl- 
edge of  the  business,  or  from  any  share  in  the  management  of 
it,  the  injured  partner  may  have  a  receiver  to  take  and  keep 
possession  of  the  property  until  the  courts  determine  the  rights 
of  the  partners ;  and  in  the  mean  time  the  decree  may  pro- 
vide for  the  continuance  of  the  business.  It  is  not,  however, 
to  be  denied,  that  strong  authorities  insist  that  a  receiver  can 
be  appointed,  without  dissolution,  only  for  the  most  stringent 
reasons.  (Ji) 

But,  in  general,  wherever  the  main  purpose  of  the  suit  is  to 
compel  partners  to  perform  in  good  faith  their  own  agreements 
or  their  obvious  duties,  and  the  appointment  of  a  receiver  seems 
necessary  to  prevent  great  mischief  from  being  done  before  the 
main  question  can  be  settled,  we  presume  that  such  appoint- 
ment would  be  made.  (I) 

(  /)  Goodman  r.  Whitcomb,  1  Jac.  (/)  See  Const  v.  Harris,  Turner  &  R. 

&  W.  589 ;  Oliver  v.  Hamilton,  2  Anst.  496,  517 ;   3  Dan.  Ch.  Pr.   19G7  ;   Mil- 

453;    Waters  v.  Taylor,   15  Ves.   10;  bank   v.   Revett,   2    Meriv.   405,   406; 

Harrison  v.  Armitage,  4  Madd.   143;  Glassington  v.  Thwaites,  1  Sim.  &  S. 

Richards  v.  Davies,  2  Russ.  &  M.  347;  130,  and  note;  Roberts  v.  Eberhardt, 

Smith  V.  Jayes,  4  Beav.  503 ;    Henn  v.  1  Kay,  148,  23  Eng.  L.  &  Eq.  245.     In 

Walsh,  2  Edw.  Ch.  129;    Garretson  v.  Hale  v.  Hale,  3  Mac.  &  G.  79,  3  Eng. 

Weaver,  3  id.  385;   Roberts  v.  Eber-  L.  &  Eq.  191  (see  same  case,  12  Beav. 

hardt,  1  Kay,  148,  23  Eng.  L.  &  Eq.  414),  the  general  doctrine  on  this  point 

245;    Walker  v.  House,  4  Md.  Ch.  39;  was  said  to  be,  that  where  it  is  not  the 

Birdsall  v.  Colie,  2  Stock.  63 ;    1  Barb,  object  of  the  suit  to  obtain  a  dissolu- 

Ch.  Pr.  662.  tion  of   the   partnership,  but,  on  the 

(k)  Wilson  V.  Greenwood,  1  Swanst.  contrary,  to  continue  the  partnership, 

480.     See  next  note,  and  case  of  Hale  it  is  not  according  to  the  practice  of 

V.  Hale.  the  court  to  grant,  in  the  course  of  that 


CH.  VIII.]         OP   THE    REMEDIES    OF   PARTNERS    INTER    SE. 


341 


It  has  indeed  been  distinctly  decided  in  England,  that  the 
absence  of  a  prayer  for  dissolution  is  not  a  sufficient  ground 
for  a  demurrer  to  a  bill  praying  for  the  appointment  of  a 
receiver,  (m) 

The  far  greater  number  of  appointments  of  receivers  occur 
in  cases  where  a  dissolution  has  taken  place,  or  is  necessary, 
or  is  intended ;  (n)  and  one  or  more  of  the  partners  violates 
either  the  express  agreements  or  articles  of  the  partnership,  or. 
some  obvious  and  certain  duty  imposed  by  law.  (o)  The 
most  frequent  cause  —  *  and  it  is  one  that  is,  perhaps,  *  314 
always  sufficient  —  is  the  taking  exclusive  possession  by 
a  partner  of  the  property  or  books  of  the  partnership,  and  his 
refusal  to  admit  his  copartner  to  his  rights  as  to  the  property 
and   the  business,  (p)     But  the  same  reason   and  the  same 


suit,  the  appointment  of  a  receiver  and 
manager.  And  the  only  limitation 
upon  this  doctrine  adverted  to  was 
where  a  party  was  so  conducting  him- 
self that,  unless  a  manager  was  ap- 
pointed before  the  hearing,  the  part- 
nership concern  might,  in  the  mean 
time,  be  destroyed.  Upon  motion  for 
a  receiver  of  a  partnership,  the  court 
will  not  determine  the  questions  aris- 
ing between  the  partners,  tlie  only 
object  then  being  to  protect  the  assets 
until  the  determination  of  the  rights. 
Blakeney  v.  Dufaur,  15  Beav.  40,  15 
Eng.  L.  &  Eq.  76.  See  Sloan  v. 
Moore,  87  Penn.  217. 

[m)  Fairthorne  v.  Weston,  3  Hare, 
387. 

{n)  See  Fairburn  v.  Pearson,  2  Mac. 
&  G.  144.  In  tliis  case,  Lord  Chan- 
cellor Cottcnham  refused,  upon  mo- 
tion, to  appoint  a  receiver  of  a  part- 
nership, where  the  question  raised  was 
whether  the  partnersliip  had  been  dis- 
solved, but  directed  an  issue  to  try  the 
fact.  See  Goulding  v.  Bain,  4  Sandf. 
716. 

(o)  Harding  v.  Glover,  18  Ves.  281 ; 
Estwick  V.  Conningsby,  1  Vern.  118; 
Crawshay  v.  Maule,  1  Swanst.  507 ; 
Henn  v.  Walsh,  2  Edw.  Ch.  129; 
Gowan  v.  Jeffries,  2  Ashm.  296.  But, 
in  accordance  with  what  we  have 
already   seen    with   respect    to    other 


modes  of  equitable  interference,  a  re- 
ceiver will  not  be  granted  on  slight 
grounds.  Speights  v.  Peters,  9  Gill, 
472 ;  Hammil  v.  Hammil,  27  Md.  679. 
Dissolution  alone  is  not  sufficient, 
Harding  v.  Glover,  snpra;  and  there 
must  be  more  than  trifling  misconduct, 
Goodman  v.  Whitcomb,  1  Jac.  &  W. 
589,  593 ;  Const  v.  Harris,  Turner  &  R. 
518.  Thus  a  receiver  will  not  be  ap- 
pointed merely  because  partners  quar- 
rel, Texiere  v.  Da  Costa  in  Chancery, 
Nov.  1815,  cited  in  Collyer  on  Part. 
§  354,  note;  Henn  v.  Walsh,  2  Edw. 
Ch.  129;  nor  because  an  injunction  ex 
parte  has  been  granted,  Garretson  v. 
Weaver,  3  Edw.  Ch.  385.  And  the 
dissolution  which  takes  place  on  the 
refusal  of  an  appointee  under  a  will  to 
become  a  partner  is  clearly  not  a  dis- 
solution arising  from  the  exclusion  of 
the  appointee  by  the  surviving  part- 
ner; and  will,  therefore,  be  no  founda- 
tion for  a  receiver.  Kershaw  v.  Mat- 
thews, 2  Russ.  62. 

(]))  Wilson  V.  Greenwood,  1  Swanst. 
471,  483;  Blakeney  v.  Dufaur,  15 
Beav.  40,  15  Eng.  L.  &  Eq.  76  ;  Const 
V.  Harris,  Turner  &  R.  525.  See  Nor- 
way V.  Rowe,  19  Ves.  144,  159;  Katsch 
V.  Schcnck,  13  Jur.  068;  Peacock  v. 
Peacock,  16  Ves.  49 ;  Milbank  v. 
Revett,  2  Meriv.  405,  406;  Harding 
V.  Glover,   18   Ves.  281.     See  farther 


342 


THE   LAW    OF   PARTNERSHIP. 


[CH.  VIII. 


principle  apply  to  any  other  instance  of  substantial  wrong  on 
the  part  of  a  partner,  implied  or  threatened,  of  such  a  kind 
that  the  court  can  only  prevent  it  by  taking  the  property  and 
books  out  of  his  hand,  {q} 

It  is  to  be  observed,  however,  that  exclusive  possession  alone 
is  not  sufficient  cause.     This  may  result  from  the  articles,  or 

the  agreement,  or  the  plaintiff  may  not  object  to  it ;  (r) 
*  315    for  it  must  *be  an  injurious  and  unjustified  possession 

of  the  books  or  property.  And  the  ground  on  which 
receivers  are  appointed  in  such  cases  is,  that  every  partner  has 
the  same  perfect  right  to  hold  the  property  and  manage  the 
business  that  every  other  partner  has ;  and  that  the  violation 
of  this  right  is  one  of  the  greatest  wrongs  that  can  be  done  to 
a  partner,  (s) 

Speights  v.  Peters,  9  Gill,  472;  Gowan 
V.  Jeffries,  2  Ashm.  296;  Wolbert  v. 
Harris,  3  Halst.  Ch.  605;  Hall  v.  Hall, 
12  Beav.  414 ;  Boyce  v.  Burchard,  21 
Ga.  74.  Upon  apparently  this  ground 
of  exclusion,  it  seems  to  be  held,  in 
New  Yorlv,  that  if  a  general  assign- 
ment to  pay  creditors  has  been  made 
by  one  partner,  under  circumstances 
whicli  make  it  clear  that  it  is  the  act 
of  one  partner  only,  without  the  knowl- 
edge and  approval  of  the  other  part- 
ners, the  assignment  may  be  declared 
void,  and  a  receiver  appointed.  See 
Rutter  V.  Tallis,  5  Sandf.  610;  Hayes 
V.  Heyer,  3  id.  284,  293,  4  Sandf.  Ch. 
485;  Wetter  v.  Schlieper,  4  E.  D. 
Smith,  707. 

(q)  See  Gowan  v.  Jeffries,  supra,  as 
to  when  the  court  will  take  the  joint 
property  out  of  the  possession  of  the 
parties,  by  appointing  a  receiver.  See 
also  Butchart  v.  Dresser,  4  De  G.,  M. 
&  G.  542,  31  Eng.  L.  &  Eq.  121; 
Geortner  v.  Trustees,  &c.,  2  Barb.  62-5, 
028 ;  Smith  v.  Jeyes,  4  Beav.  503 ;  Hale 
V.  Hale,  4  id.  369. 

(r)  Blakeney  v.  Dufaur,  15  Beav. 
40,  15  Eng.  L.  &  Eq.  76 ;  Parkhurst  v. 
Muir,  3  Halst.  Ch.  307.  And  where 
one  partner  thus  has  the  legal  and 
rightful  possession  and  control  of  the 
partnership  funds,  the  court  interferes 
to  take  thom  out  of  his  hands  with 
great  reluctance,  and  only  for  cogent 


reasons.  Walker  v.  Trott,  4  Edw.  Ch. 
88 ;  Drury  v.  Koberts,  2  Md.  Ch.  157 ; 
Waters  v.  Taylor,  15  Ves.  10,  15. 

(s)  Gowan  v.  Jeffries,  2  Ashm.  296; 
Butchart  v.  Dresser,  4  De  G.,  M.  &  G. 
542,  31  Eng.  L.  &  Eq.  121.  Hence, 
where  it  appeared  tliat  each  of  two 
joint  adventurers  was  equally  entitled 
to  the  possession  of  the  joint  effects, 
and  one  had  enjoined  the  otiier  from 
receiving  or  disposing  of  the  same ;  on 
tlie  application  of  the  latter,  a  like 
injunction  was  granted  against  the 
former,  witliout  any  proof  of  insol- 
vency or  other  special  cause  for  depriv- 
ing him  of  the  control ;  and  on  the 
latter's  motion,  also,  a  receiver  was 
appointed,  though  his  original  com- 
plaint contained  no  pra3'er  for  a  re- 
ceiver. McCracken  v.  Ware,  3  Sandf. 
688.  If  tiie  partner  applying  for  a 
receiver  has  the  property  in  his  own 
possession,  there  will  generally  be  no 
ground  for  appointing  one.  Smitli  v. 
Lowe,  1  Edw.  Ch.  33;  though,  if  the 
defendant  be  insolvent,  and  persist  in 
negotiating  bills  of  exchange  in  the 
partnership  name,  and  in  applying  the 
money  to  his  own  purposes,  a  receiver 
may  be  appointed.  Hoffman  v.  Dun- 
can, 17  Jur.  825,  23  Eng.  L.  &  Eq.  99. 
Nor  will  a  right  to  a  receiver  exist  on 
the  part  of  a  partner,  who  has  practically 
the  sole  direction  of  the  business,  merely 
because  the  other  partner  will  not  co- 


CH.  VIII.]         OF    THE   REMEDIES   OP    PARTNERS   INTER   SE. 


343 


In  some  cases  a  receiver  has  been  appointed  to  carry  on  the 
business,  in  order  to  preserve  the  good-will  until  it  can  be 
sold,  (t)  And  the  receiver  appointed  for  this,  or,  indeed  for 
any  purpose,  sometimes  continues  to  act  for  a  considerable  time, 
as  for  one  or  two  or  more  years,  (u)  But  the  appointment  is 
in  its  nature  a  temporary  one.  (v)  Courts  sometimes  object 
very  strongly  to  a  long  contiimance  of  it,  and  cut  it  short  by 
order  of  sale  or  settlement.  (?^) 

A  difference  must  be  made  in  this  respect,  however.  Where 
the  receiver  is  appointed  to  wind  up  a  concern,  he  generally 
holds  possession  until  a  final  and  completed  settlement ;  and 
this  may  require  a  long  period.  The  receivership  of  insolvent 
banks  in  some  instances  continues  for  years,  and  the 
settlement  of  a  widely  *  extended  partnership  business  *  316 
may  require  as  much  time  as  that  of  any  bank.  But 
where  a  receiver  has  only  to  hold  possession  for  a  definite  pur- 
pose, and  carries  on  the  business  to  preserve  the  good-will  or 
for  any  similar  object,  the  court  will  hasten  the  completion  of 
his  duty  and  the  discharge  of  his  appointment  as  much  as  they 
can  without  doing  harm. 

The  application  for  a  receiver  is  always  addressed  to  the  dis- 
cretion of  the  court ;  and  is  therefore  answered  very  differently, 
as  the  merits  of  the  case,  or  the  objections  to  such  appointment, 
affect  the  court,  (x)     In  England,  it  was  said  in  one  case,  and 


operate  with  him.  Roberts  v.  Ever- 
hardt,  1  Kay,  148,  23  Eng.  L.  &  Eq. 
245. 

[t)  Martin  v.  Van  Schaick,  4  Paige, 
479.  In  tliis  case,  wliere  the  partner- 
ship was  in  a  political  newspaper,  the 
good-will  constituted  a  chief  part  of 
the  value  of  the  joint  property.  See 
Williams  v.  Wilson,  4  Sandf.  Ch.  379. 

(u)  See  Crane  v.  Ford,  Hopkins, 
114. 

[v)  Waters  i-.  Taylor,  15  Ves.  10; 
Const  V.  Harris,  Turner  &  R.  496,  518 ; 
Goodman  i-.  Whitcomb,  1  Jac.  &  W. 
592 ;  Martin  i'.  Van  Schaick,  4  Paige, 
479;  Wolbert  v.  Harris,  3  Halst.  Ch. 
605. 

(w)  Crane  v.  Ford,  supra,  where,  the 
owners  of  a  steamboat  being  in  litiga- 
tion, a  receiver   had   been   appointed 


under  whom  the  vessel  had  run  for 
two  years  ;  a  third  season  approaching, 
and  it  being  necessary  to  fit  out  the 
vessel,  or  to  let  it  lie  useless,  the  court 
thought  it  highly  inconvenient  and 
unfit  that  such  operations  should  be 
conducted  under  its  direction  for  so 
long  a  time,  and  ordered  a  sale.  [A 
receiver  appointed  by  the  courts  of  one 
State  has  no  power  to  act  in  a  foreign 
jurisdiction.  Harvey  v.  Varney,  104 
Mass.  436;  Booth  v.  Clark,  17  How. 
(U.  S.)  322.] 

(x)  The  discretion  which  the  courts 
exercise  in  the  appointment  of  a  re- 
ceiver is  well  illustrated  in  those  cases 
where  ex  parte  apphcations  are  made. 
As  a  general  rule,  a  receiver  will  not 
be  appointed  until  after  tlic  defendant 
has  answered.      Ilolden  v.  McMakin, 


344 


THE   LAW    OP    PARTNERSHIP. 


[CH.  VIII. 


that  a  case  of  embezzlement,  that  a  receiver  would  not  be  ap- 
pointed but  on  the  most  extreme  and  gross  abuse,  because  it 
would  destroy  the  business.  (//)  This  would  be  a  good  reason 
where  the  appointment  would  have  that  effect,  and  where  a 
closing  of  the  business  is  not  desired,  (z) 

But,  on  the  other  hand,  it  seems  to  be  understood  in  this  coun- 
try, (a)  and  certainly  in  New  York,  (5)  that  whenever 
*  317  partners  *  are  wholly  unable  to  agree  among  themselves 
as  to  the  disposition  and  control  of  the  property  and 
business,  and  neither  consents  to  the  possession  and  control 
which  the  other  claims  or  desires,  a  receiver  will  be  appointed 
on  application,  almost  as  a  matter  of  course,  and  as  a  first  step 
towards  a  final  settlement  of  the  affairs  of  the  partnership,  (c) 


1  Pars.  Sel.  Cas.  284 ;  3  Dan.  Ch.  Pr. 
(Perkins'  ed.)  1974.  But  in  urgent 
cases,  where  it  appears  to  the  court 
that  the  merits  of  the  case,  as  shown 
by  tiie  affidavits,  require  the  immediate 
appointment  of  a  receiver,  the  court 
may  do  so  upon  the  pLaintiff's  motion 
before  answer.     Wilson  v.  Greenwood, 

1  Swanst.  483;  Duckworth  v.  Traf- 
ford,  18  Ves.  283 ;    Gowan  v.  Jeffries, 

2  Ashra.  296  ;  3  Dan.  Ch.  Pr.  (Perkins' 
ed.)  1974.  So  also  it  is  clear  that,  as 
a  general  rule,  a  receiver  ought  not  to 
be  appointed  until  after  notice  to  all 
the  interested  parties,  unless  the  court 
can  see  that  delay  would  work  irrepa- 
rable injury  to  some  or  all  of  the  par- 
ties, when  a  receiver  may  be  appointed 
without  notice.  People  v.  Norton,  1 
Paige,  17 ;  Williamson  v.  Wilson,  1 
Bland,  418 ;    Gowan  v.  Jeffries,  supra, 

3  Dan.  Ch.  Pr.  (Perkins'  ed.)  1975,  n.; 
1  Barb.  Ch.  Pr.  667,  669;  Edw.  on 
Receivers  (Rev.  ed.),  13-16. 

(.(/)  Oliver  v.  Hamilton,  2  Anst.  453. 

(z)  Waters  v.  Taylor,  15  Ves.  10. 
See  Madgwick  v.  Wimble,  6  Beav.  495. 

(a)  See  Speights  v.  Peters,  9  Gill, 
472;  Williamson  v.  Wilson,  1  Bland, 
418,  426  ;  Walker  v.  House,  4  Md.  Ch. 
39;  Terrell  v.  Goddard,  18  Ga.  664. 
In  Birdsall  v.  Colic,  2  Stock.  63,  com- 
plainant filed  his  bill,  praying  a  disso- 
lution of  partnership,  an  account,  and 
a  receiver.  The  bill  charged  improper 
conduct  on  the  part  of  the  defendant. 


the  partner.  Defendant  answered,  de- 
nying all  charges  of  improper  conduct, 
&c.  It  was  held,  that  v;hen  a  partnership 
is  dissolved  hij  mutual  consent,  or  deter- 
mined hi]  the  will  of  either  partji ,  a  court 
of  chancery  will  not,  as  of  course,  with- 
out any  other  reason,  except  that  such 
is  the  wish  of  one  of  the  parties  inter- 
ested, assume  the  control  of  the  busi- 
ness, and  place  it  in  the  hands  of  a 
mere  stranger.  Otherwise,  if  the  part- 
nership is  not  determinable  at  will, 
and  the  court  is  resorted  to  for  the 
purpose. 

(b)  Law  V.  Ford,  2  Paige,  310;  Mar- 
ten V.  Van  Schaick,  4  Paige,  479 ; 
McCrackan  v.  Ware,  3  Sandf.  688; 
Goulding  v.  Bain,  4  id.  716  ;  Williams 
V.  Wilson,  4  Sandf.  Ch.  379  ;  Dunham 
V.  Jarvis,  8  Barb.  88 ;  Wetter  v.  Schlie- 
per,  4  E.  D.  Smith,  707. 

(c)  Perhaps  the  difference  wliich 
has  been  supposed  to  exist  between 
the  English  and  American  law  on  this 
point  (see  Gowan  v.  Jeffries,  2  Ashm. 
304)  is  after  all  rather  seeming  than 
real,  and  arises  rather  from  an  appar- 
ent contradiction  in  the  terms  of  the 
rule,  as  it  has  been  laid  down  by  the 
courts  of  the  respective  countries,  than 
from  any  substantial  difference  in 
practice.  Waters  v.  Taylor,  15  Ves. 
10,  above  cited,  note  (r),  was  decided 
upon  its  particular  facts,  the  subject- 
matter  of  the  partnership  being  of  a 
peculiar  nature.     And  the  language  of 


CH,  VIII.]         OF   THE   REMEDIES    OF    PARTNERS    INTER   SE. 


345 


Although  one  only  is  acting  partner,  having  tlie  property  in 
his  possession,  buying  and  selling,  keeping  the  accounts,  &c., 
a  receiver  will  be  appointed  to  take  tliese  things  out  of  his  hands, 
on  allegation  and  evidence  that  he  abuses  his  powers  or  neg- 
lects his  duties,  and  in  either  way  importantly  endangers  the 
interests  of  his  copartners,  {dj 

It  is  not  uncommon  for  the  appointment  of  receiver  to  fall 
upon  one  of  the  partners,  (e)      Of  course  this  is  not  done 


Chancellor  Walworth  may  not  be  ir- 
reconcilable with  that  used  by  the 
court  in  Oliver  v.  Hamilton,  2  Anst. 
453,  all  the  circumstances  being  taken 
into  consideration.  In  Oliver  v.  Ham- 
ilton, a  partner  applied  for  a  receiver, 
while  the  trade  was  going  on ;  and  it 
does  not  appear,  from  the  imperfect 
report  of  the  case  which  we  have,  that 
a  dissolution  of  the  partnership  was 
either  asked  for  or  desired.  If  it  was 
not,  then  it  was  a  case,  where,  as  we 
have  seen  {iwte,  p.  *313),  the  court 
always  interferes  with  great  reluc- 
tance, both  from  a  regard  to  the  inter- 
ests of  the  parties,  and  because  it  is  no 
part  of  its  proper  jurisdiction  to  as- 
sume for  an  indefinite  period  and  pur- 
pose the  carrying  on  of  trade.  On  the 
other  hand,  in  Law  v.  Ford,  2  Paige, 
310,  and  Marten  v.  Van  Schaick,  4 
Paige,  379,  the  leading  Xew  York  cases 
on  the  subject,  a  receiver  was  asked 
for  to  wind  up  the  affairs  of  the  part- 
nership, a  dissolution  having  already 
taken  place,  or  being  desired  of  the 
court.  But  where  there  is  a  dissolu- 
tion, then,  both  in  England  and  the 
United  States,  any  substantial  wrong 
done  or  threatened  to  the  joint  inter- 
ests is  sufficient  ground  for  the  appoint- 
ment of  a  receiver.  And  in  neither 
countrj'  will  a  receiver  be  granted  for 
slight  reasons,  merely  because  there  is 
an  apprehension  of  danger  or  loss,  or 
because  partners  quarrel. 

(d)  Jeffreys  v.  Smith,  1  Jac.  &  W. 
298;  Crawshay  v.  Maule,  1  Swanst. 
495;  Bentley  v.  Bates,  4  Younge  &  C. 
182 ;  Winget  v.  Heathcote,  cited  id. 
187;  Hart  v.  Clark,  19  Beav.  349,  27 
Eng.  L.  &  Eq.  561 ;  Shepherd  v.  Oxen- 
ford,  Kay  &  J.  Ch.  491.     See  Roberts 


V.  Eberhardt,  1  Kay,  148,  23  Eng.  L.  & 
Eq.  245 ;  Norway  v.  Rowe,  19  Ves. 
144 ;  Christian  v.  Lenhouse,  cited  id. 
157,  159. 

(e)  Wilson  v.  Greeenwood,  1  Swanst. 
471,  484;  Waters  r.  Taylor,  2  Ves.  & 
B.  299,  306 ;  Jeffreys  v.  Smith,  1  Jac. 
&  W.  298;  Ex  parte  Stoveld,  1  Glyn  & 
J.  303,  307;  Blakeney  v.  Dufaur,  15 
Beav.  40, 15  Eng.  L.  &  Eq.  76  ;  Brenan 
V.  Preston,  2  De  G.,  M.  &  G.  813,  21 
Eng.  L.  &  Eq.  604  ;  Hoffman  v.  Dun- 
can, 18  Jur.  69,  23  Eng.  L.  &  Eq.  99. 
In  Hubbard  v.  Guild,  1  Duer,  6G2,  the 
court  expressed  the  opinion,  "  that,  in 
all  cases  where  the  dissolution  of  a 
partnership  is  occasioned  solely  by  the 
insolvency  of  one  of  the  partners,  the  sol- 
vent partner  ought  to  be  appointed 
receiver,  when  his  capacity  and  integ- 
rity are  unquestioned."  See  Freeland 
V.  Stansfield,  16  Jur.  792,  13  Eng.  L.  & 
Eq.  336.  And,  in  the  appointment  of  a 
receiver,  the  recommendations  of  those 
most  interested,  and  who  are  most 
likely  to  sustain  injury  without  one, 
will  generally  be  most  regarded.  The 
being  a  near  relation  of  either  party  is 
not  in  itself  an  absolute  disqualifica- 
tion ;  but  it  must  be  allowed  to  have 
its  weight  when  connected  with  other 
circumstances.  Williamson  v.  Wilson, 
1  Bland,  418,  427.  The  general  rule, 
however,  is,  that  no  person  should  be 
appointed  a  receiver  who  is  a  party  to 
the  cause,  and  not  wholly  disinter- 
ested in  the  subject-matter  of  the  suit. 
3  Dan.  Ch.  Pr.  (Perkins'  ed.)  1971; 
Edw.  on  Receivers  (Rev.  ed.),  473. 
And  though  generally,  by  the  order  of 
the  court  directing  the  appointment,  a 
proper  salary  is  directed  to  be  allowed 
the  receiver,  yet,  if  he  is  an  interested 


346  THE   LAW    OF  PARTNERSHIP.  [CH.  VIII. 

*  318   where   there   *  are   charges    and    countercharges,   and 

a  conflict  of  interests  and  rights.  But  where  a  partner 
prays  for  a  receiver,  and  the  other  partner  makes  no  suggestion 
of  wrong  against  the  plaintiff,  or  of  mischief  which  would  arise 
from  his  receiving  the  appointment,  there  are  many  obvious 
reasons  for  giving  it  to  him.  No  one  knows  or  ought  to  know 
as  well  as  he  the  condition  of  the  partnership,  and  what  meas- 
ures are  required  to  preserve  or  promote  its  interests.  Indeed, 
his  relation  to  the  firm  affords  the  strongest  reasons  for  ap- 
pointing him,  unless  there  grow  out  of  the  same  relation 
stronger  reasons  against  the  appointment. 

In  one  case  where  a  partner  thus  appointed  used  the  money 
of  the  partnership  in  his  own  business  and  made  profits,  the 
other  partner  was  not  permitted  to  have  a  share  of  them.  (/) 
It  would  seem  that  an  extraordinary  indulgence  was  granted 
to  the  receiver  in  that  case.  Still,  the  case  is  not  quite  similar 
to  those  in  which  a  partner,  in  wrong  of  the  firm,  makes  money 
out  of  a  business  which  belongs  to  it,  or  to  those  in  which  a 
surviving  partner  who  by  law  takes  all  the  effects  and  has  all 
the  power  of  the  partnership,  but  only  for  the  purpose  of  settle- 
ment, and  then  continues  the  business  for  his  own  profit.  (^) 
Where  a  partner  is  receiver  to  hold  the  property  and  business, 
if  he  has  money  of  the  firm  in  hand,  he  may  earn  interest  upon 
it  on  his  own  responsibility   (unless  prohibited  or  otherwise 

directed  by  the  decree),  and,  as  the  partnership  may 

*  319    charge  him  with  the  money  and  with  the  interest,  *  and 

is  not  liable  for  any  loss  of  it,  it  is  enough  if  he  allows 
full  interest ;  always  provided  nothing  in  the  character  of  the 
case  or  in  the  appointment  makes  this  use  of  the  money 
illegal.  (7i) 

party,  namely,  a  partner,  where  the  regulate  the  conduct  and  liabilities  of 
suit  is  between  partners,  he  will  not  be  receivers.  We  have  already  seen, 
permitted  to  have  any  salary  or  emolu-  supra,  pp.  *  317  and  *  318,  that,  when  a 
ment.  3  Dan.  Ch.  Pr.  (Perkins'  ed.)  person  is  himself  interested  in  the 
1972,  1976,  1984.  See  cases  cited  supra,  subject-matter  over  which  he  has  con- 
in  this  note.  trol  as   receiver,  he  will   not   usually 

(/)  Whitesides  t'.  Lafferty,  3  Humph,  be  allowed  to   derive   any  benefit   or 

150.  emolument   from   his   position.      And 

((/)  ^«^e,  p.  *  314,  note  (/)).  see    Edw.  on  Receivers   (Rev.  ed.),  p. 

(A)  Whitesidesr.  Lafferty,3Humph.  573,    59G;    and  tlie  remarks  of   Lord 

150.     It  may  well  be  doubted  whether  Eldon,  there  quoted,  in  Shaw  v.  Rhodes, 

this  case  is  consistent  with  the  general  2  Russ.  539. 
and  well-established  principles   which 


CH.  VIII.]         OP   THE   REMEDIES   OF   PARTNERS    INTER   BE.  347 


If  a  surviving  partner  abuses  his  power,  and  the  representa- 
tives of  the  deceased  apply  for  a  receiver,  the  same  principles 
and  rules  would  be  applied  as  in  any  case  in  which  one  of  the 
partners  who  has  a  rightful  possession  and  management  makes 
a  wrongful  use  of  his  possession,  (i)  If  equal  protection  can 
be  given  to  the  representatives  of  the  deceased,  by  requiring 
security  from  the  surviving  partner,  that  order  may  issue 
instead  of  the  appointment  of  a  receiver  ;  ( j)  but  not  necessa- 
rily. (^)  If  the  surviving  partner  insists  upon  carrying  on  the 
business,  and  employing  therein  the  assets  of  the  deceased,  the 
court  will  interfere,  and  appoint  a  receiver,  if  that  seems  to  be 
the  best  remedy.  (Z)  Where  all  the  partners  are  dead,  upon 
a  suit  between  their  representatives  a  receiver  will  be  appointed, 
almost  as  a  matter  of  course,  (m) 

An  injunction  is  sometimes  granted,  or  a  receiver  appointed 
by  the  court  directly  on  application  and  affidavits.  Where  the 
parties  agree  to  the  person,  there  can  be  no  objection  to 
this.  The  *  English  rule  is,  to  refer  the  case  to  a  mas-  *  320 
ter,  who  will  make  an  appointment,  after  a  hearing  of 
both  parties,  if  they  wish  to  be  heard,  and  will  report  his  ap- 
pointment to  the  court  for  confirmation,  unless  that  be  waived 
or   is   obviously   unnecessary,  (n)      And   this   we  think   the 


(/)  Wilson  V.  Greenwood,  1  Swanst. 
480 ;  Crawshay  v.  Maule,  id.  507  ; 
Gratz  V.  Bayard,  11  S.  &  R.  41,  48  ; 
Walker  v.  House,  4  Md.  Ch.  39; 
Jacquin  v.  Buisson,  11  How.  Pr.  385, 
394  ;  Collins  v.  Young,  28  Eng.  L.  & 
Eq.  14 ;  Clegg  v.  Fishwick,  1  Mac. 
&  G.  294.  See  Hartz  v.  Sclirader, 
8  Ves.  817 ;  Evans  v.  Evans,  9  Paige, 
178 ;  Kenton  v.  Chaplain,  1  Stock. 
62,  70  ;  Hubbard  v.  Guild,  1  Duer,  662. 

(j)  Estwick  V.  Coningsby,  1  Vern. 
118;  Higginson  v.  Air,  1  Desaus.  427, 
429. 

(k)  In  Law  t-.  Ford,  2  Paige,  310, 
where  the  suit  was  between  living 
partners,  a  receiver  was  appointed, 
notwithstanding  that  the  partner  who 
was  in  possession  of  the  partnership 
books  and  effects  was  willing  to  give 
security  for  the  faithful  application  of 
the  effects  in  payment  of  the  debts. 

(1)  Madgwick  v.  Wimble,  6  Beav. 


495 ;  Clegg  v.  Fishwick,  1  Mac.  &  G. 
294  ;  Walker  v.  House,  4  Md.  Ch.  39. 

(711)  The  ground  of  the  appointment 
of  a  receiver  in  such  a  case  is  thus 
stated  by  Lord  Kenyon,  in  Phillips  v. 
Atkinson,  2  Bro.  C.  C.  (Perkins'  ed.) 
272  :  "  Where  there  is  a  copartnership, 
there  is  a  confidence  between  the  par- 
ties, and,  if  the  one  dies,  the  confidence 
remains,  and  he  shall  receive ;  but, 
when  both  are  dead,  there  is  no  con- 
fidence between  the  representatives, 
and,  therefore,  the  court  will  appoint 
a  receiver."  Walker  v.  House,  4  Md. 
Ch.  39,  43. 

()/)  The  master's  judgment  as  to 
the  proper  person  is  never  disturbed, 
unless  some  substantial  objection  be 
shown.  If  such  objection  be  sliown, 
the  court  will  then  refer  it  back  to 
the  master  to  review  his  report.  3 
Dan.  Ch.  Pr.  (Perkins'  ed.)  1976,  1979, 
1981  ;    Edw.  on  Receivers  (Rev.  ed.), 


348 


THE   LAW    OF   PARTNERSHIP. 


[CH.  viir. 


safer  practice,  and  suppose  it  to  be  frequently  adopted  in  this 
country,  (o) 

The  powers  and  duties  of  a  receiver,  when  appointed  in  a  suit 
between  partners,  are  essentially  the  same  as  when  he  is  ap- 
pointed pending  a  controversy  between  other  parties.  He  is 
always  the  officer  of  the  court,  and,  as  such,  takes  into  his  pos- 
session the  partnership  property,  (p)  receives  the  issues  and 
avails  thereof,  and  is  bound  to  account  for  such  receipts  when- 
ever the  court  requires,  (g')  Not  unfrequently  he  not  only 
receives  and  gets  in  outstanding  funds,  but  also  superintends 
and  carries  on  the  partnership  business,  (r) 

The  rules  by  which  the  receiver  is  to  govern  his  action 
*  321  in  any  *  given  instance,  and  the  methods  or  principles 
by  which,  in  each  particular  case,  he  is  to  manage  and 
carry  on  the  partnership  business  and  collect  and  receive  and 
dispose  of  its  funds,  cannot  be  described  in  general  terms. 
They  are,  for  the  most  part,  dependent  upon  the  decree  ap- 
pointing him ;  in  which  his  powers  and  duties  are  generally 
defined  and  enumerated  with  much  minuteness,  (s) 


ch.  4,  pp.  95,  96.  See  Lottimer  v. 
Lord,  4  E.  D.  Smitli,  183;  1  Barb. 
Ch.  Pr.  669,  673. 

(o)  In  some  of  the  States,  as  it 
seems,  the  court,  without  any  refer- 
ence, will  directly  receive  and  act 
upon  the  nominations  of  the  parties 
of  suitable  persons  for  receiver.  Wil- 
liamson V.  Wilson,  1  Bland,  418,  427 ; 
Gowan  v.  Jeffries,  2  Ashm.  296,  307. 

{p)  The  general  principle  as  to  the 
property  which  the  receiver  will  take 
into  possession,  by  virtue  of  his  ap- 
pointment, is  that  he  will  assume  not 
only  every  thing  liable  to  be  taken 
under  an  execution  at  law,  but  also 
every  thing  that  is  considered  in  equity 
as  assets.  3  Dan.  Ch.  Pr.  (Perkins' 
ed.)  1970;  Edw.  on  Receivers  (Rev. 
ed.),  6.  Hence,  the  receiver  of  a 
partnership  will  take,  as  part  of  the 
assets  of  the  firm,  real  estate  held  in 
severalty  by  the  different  partners, 
but  puroliased  and  used  for  partner- 
ship purposes,  and  paid  for  with  part- 
nership funds.  Smith  v.  Danvcrs,  5 
Sandf.  669. 

(q)  2  Story  Eq.  §§  831-833 ;  3  Dan. 
Ch.  Pr.  (Perkins'  ed.)  1949,  1976,  1977  ; 


Wolbert  v.  Harris,  3  Halst.  Ch.  605, 
622.  A  receiver  appointed  in  a  part- 
nership suit,  even  without  any  formal 
assignment,  becomes  trustee  of  the 
assets  for  all  the  firm  creditors ;  and, 
while  this  trust  continues,  one  partner 
cannot  give  a  preference,  nor  can  a 
creditor  gain  one  by  judgment.  Edw. 
on  Receivers  (Rev.  ed.),  341;  Waring 
V.  Robinson,  1  Hoff.  Cii.  524;  William- 
son V.  Wilson,  1  Bland,  418,  435,  436  ; 
Walker  v.  House,  4  Md.  Ch.  39,  51. 

()■)  Ante,  pp.  *  315,  *  316,  and  notes  ; 
3  Dan.  Ch.  Pr.  (Perkins'  ed.)  2006.  In 
the  case  of  Banks  v.  Gould,  decided 
by  Chancellor  Kent,  and  cited  in  Edw. 
on  Receivers  (Rev.  ed.),  316,  et  seq., 
inasmuch  as  the  firm  had  two  estab- 
lishments, one  at  Albany  and  the 
other  in  New  York,  two  receivers 
were  appointed.  The  writer  above 
cited  remarks,  however,  that  it  may 
be  a  question  whether  tlie  course 
should  not  have  been  to  have  had  one 
receiver,  with  liberty  to  appoint  an 
agent.  See  cases  cited  in  Edw.  on 
Receivers  (Rev.  ed.),  324. 

(s)  Smith  on  Receivers,  186 ;  2 
Story  Eq.  §  833 ;  3  Dan.  Ch.  Pr.  (Per- 


CH.  VIII.]         OP   THE   REMEDIES   OF   PARTNERS   INTER   SE.  349 

By  the  same  decree,  partners  or  other  persons,  who  have 
done  or  are  supposed  to  threaten  wrong,  are  usually  restrained 
from  any  acts  which  would  interfere  with  the  duties  of  the 
receiver,  or  in  any  way  render  the  appointment  less  useful  and 
effectual.  (/)  In  England,  we  believe,  the  receiver  is  not 
authorized  to  bring  suits  at  law  or  in  equity,  unless  merely  to 
collect  debts,  and  not  always  for  that,  (it)  But  in  this  coun- 
try the  power  is  frequently,  not  to  say  generally,  given  to  him, 
to  bring  any  actions  necessary  for  the  proper  discharge  of  his 
duties,  (v)  and  provision  is  made  for  the  indemnification,  out 
of  the  effects  in  his  hands,  of  those  in  whose  names  he  brings 
such  actions,  (^w) 

SECTION  V. 

OF    TORTS    BETWEEN    PARTNERS. 

Pleadings  in  equity,  in  a  suit  between  partners,  would  be 
more  properly  considered  in  a  treatise  on  Chancery  Practice 
and  Pleading.  Little  variation  from  the  ordinary  rules 
and  practice  seems  *  to  be  required  by  the  fact  that  the  *  322 
cause  of  action  between  the  parties  arises  from  their 
relation  as  copartners.  Some  points,  which  might  be  consid- 
ered under  this  head,  are  treated  of  under  the  particular  topics 
with  which  they  seem  to  be  more  particularly  connected.  Thus, 
in  the  chapter  on  Account,  we  shall  endeavor  to  show  who 
may  file  a  bill  for  an  account,  who  must  be  made  parties,  and 
what  pleas  are  held  to  be  a  good  bar  to  such  a  bill,  and  equity 
topics  are  discussed  in  other  places.     Here,  therefore,  we  will 

kins'  ed.)  1987,    1988;    Edw.   on    Ee-  (c)  See  the  remarks  of  Ames,   C. 

ceivers    (Rev.    ed.),   5.     See   Skip   v.  J.,  4  R.  I.   173,   188.     See  Iddings  v. 

Harwood,   where  a  receiver   was   ap-  Bruen,  4  Sandf.  Ch.  417,  422 ;  Green 

pointed  for  a  brewery,  3  Dan.  Ch.  Pr.  v.  Bostwick,  1  id.  185,  186. 
(Perkins' ed.)  1968,  note;  1  Dick.  114.  (w)  3  Dan.  Ch.  Pr.   (Perkins'  ed.) 

(0  See   supra,   Skip    v.    Harwood;  1977,1991;  Edw.  on  Receivers  (Rev. 

and,  for  a  general  form  of  the  decree  ed.),  136,  342,  343;    Seton's  Decrees, 

appointing  a  receiver  of  a  partncrsliip,  323,  324.     A  receiver  cannot  maintain 

Edw.    on    Receivers    (Rev.    ed.),   341.  an  action  of  trover,  in  his  own  name, 

See  also  Seton's  Decrees,  323.  for  partnership   effects   converted  be- 

(m)  Estwick  V.  Conningsby,  1  Vern.  fore  his  appointment:  he  must  sue  in 

118;    Dacie  v.  John,  McCleland,  575;  the    name    of   the    firm.      Yeager    v. 

2  Story  Eq.  §§  833,  834 ;  Seton's  De-  Wallace,  44  Penn.  294. 
crees,  323. 


350 


THE    LAW    OF    PARTNERSHIP. 


[CH.  VIIT. 


only  add,  that,  if  the  fact  of  tlie  partnership  is  disputed  in  a 
suit  in  equity  purporting  to  be  between  partners,  a  court  of 
equity  may  direct  an  issue  to  ascertain  the  truth ;  (a;)  and,  it 
seems,  may  even  order  that  the  parties  themselves  be  exam- 
ined at  the  trial,  {y)  But  such  an  issue  will  not  be  directed, 
unless  the  point  is  very  doubtful.  (2) 

So  far  as  tliere  are  personal  torts,  they  can  hardly  have  any 
relation  to  the  partnership  ;  and  neither  party  can  be  affected 
in  right,  obligation,  or  remedy,  by  the  fact  that  he  is  a  part- 
ner, (a)  Of  torts  in  relation  to  the  partnership  or  its  prop- 
erty, nearly  all  will  be  comprehended  either  in  fraud  or  waste  ; 
for  both  of  which  the  remedy  in  equity  is  prompt  and  effica- 
cious, {b)  as  we  have  already  seen. 
*  323  *  Some  question  may  exist  whether  the  rules  of  law, 
in  cases  of  tenancy  in  common,  do  not  apply  in  this 
respect  to  cases  of  partnership.  A  tenant  in  common  may 
maintain  trover  against  a  cotenant  for  a  destruction,  total  or 
partial,  of  the  common  property  by  him.  {c)     It  has  been  held, 


{x)  Peacock  v.  Peacock,  16  Ves. 
49;  Ex  parte  Langdale,  18  id.  800; 
Binford  v.  Dommett,  4  id.  756;  Ja- 
cobsen  v.  Hennekenius,  5  Bro.  P.  C. 
482,  1  Bro.  P.  C.  (Dublin  ed.)  432.  In 
tliis  last  case,  the  issue  directed  to  be 
tried  was  whether  a  party  was  a  real 
or  a  nominal  partner. 

(y)  De  Tastet  v.  Bordenave,  Jac. 
516.  But  see,  on  this  point,  2  Dan. 
Ch.  Pr.  (Perkins'  ed.)  1298. 

(z)  Forster  v.  Hale,  5  Ves.  308,  322; 
Metcalf  V.  Royal  Exchange  Ass.  Co., 
Barnard.  343.  As  to  the  constitutional 
right  which  citizens  may  have,  in  the 
different  States,  to  have  matters  of 
fact,  alleged  in  the  bill  and  denied  by 
the  answer,  tried  by  a  jury,  see  Sedg- 
wick Const.  Law,  642-548;  2  Dan. 
Ch.  Pr.  1289,  note  (1);  Adams  Eq. 
[376],  815,  note. 

[a)  Where  one  partner,  by  violence, 
forces  his  copartner  out  of  the  business 
premises  of  the  firm,  and  threatens 
such  copartner  with  violence  and  dan- 
ger to  his  life,  if  the  latter  should 
venture  again  to  enter  the  premises, 
and  it  is  necessary  for  such  copartner 
to  enter  and  use  the  premises  for  the 


purposes  of  carrying  on  his  ordinary 
business  as  partner,  the  court  will 
permit  the  latter  to  exhibit  articles 
of  peace  against  the  former.  Regina 
V.  Mallinson,  16  Q.  B.  367,  1  Eng'!  L. 
&  Eq.  289. 

(5)  The  plaintiff  and  defendant 
were  partners ;  and  it  appeared,  by 
the  complaint,  that  the  action  was 
brought  to  recover  damages  for  the 
fraudulent  removal  by  the  defendant 
of  a  stock  of  goods  belonging  to  the 
firm.  An  order  of  arrest  was  applied 
for  upon  affidavits  setting  forth  the 
fraud.  Duer,  J.,  refused  to  grant  the 
order ;  holding  that  the  action  was  not 
maintainable,  and  that  the  plaintiff 
had  no  proper  remedy  but  in  a  suit  for 
an  injunction  and  a  receiver.  Ap- 
proved by  the  court  in  Cary  v.  Wil- 
liams, 1  Duer,  667. 

(c)  BuUer  N.  P.  34 ;  2  Saund.  on 
PI.  &  Ev.  1163;  Cowan  v.  Burgess, 
■Cooke,  58;  Seldon  v.  Hickock,  2 
Caines,  167 ;  Tubbs  v.  Richardson, 
6  Vt.  442;  Hurd  v.  Darling,  14  id. 
214;  Herrin  v.  Eaton,  13  Me.  193; 
Guyther  v.  Pettijohn,  6  Ired.  388. 


CH.  VIII.]         OF   THE   REMEDIES   OP   PARTNERS   INTER   SE. 


351 


that  a  sale  of  tlie  whole,  without  authority,  may  be  regarded  as 
such  destruction,  {d)  But  no  tenant  in  common  can  maintain 
trover  grounded  on  the  mere  possession  of  his  coteiiant,  how- 
ever exclusive  this  cotenant  insists  ujson  making  it,  for  the 
technical  reason  that  each  tenant  in  common  is  entitled 
to  the  possession  of  the  property,  (e)     Nor  should  *  we    *  324 


{(I)  Tlie    doctrine,    as    at    present 
settled  by  the  English  authorities,  is, 
that  the  mere  sale  of  a  chattel  by  one 
of  two    tenants   in   common   is  not  a 
conversion  for  which  his  cotenant  can 
maintain   trover.     The   disposition   of 
the  chattel  must  be  such  as  amounts 
to  a  destruction  of  it.     See  Mayhew  v. 
Herrick,   7   C.    B.   229.     In  this  case, 
the   point   was   elaborately   discussed, 
and    all    the    leading    authorities    re- 
viewed.    See    Higgins   v.   Thomas,   8 
Q.  B.  908;    Jones  v.  Brown,  38  Eng. 
L.    &   Eq.   304 ;    Barton   v.    Williams, 
5  B.  &  Aid.  395,  402,  403;   Farrar  v. 
Beswick,  1  M.  &  W.  685,  088 ;  Jackson 
V.  Anderson,  4  Taunt.  24;  Fennings  v. 
Grenville,    1   id.    241 ;    Heath  v.  Hub- 
bard, 4  East,  110;    Graves  v.  Sawcer, 
T.  Raym.  15;   1  Chitty  P.  C.  90,  91, 
179,    note;   2    Saund.  PI.  &  Ev.   (5th 
Am.  ed.)  pt.  2,  1164,  1166,  1168.     In 
this   country,  the  rule   has   been   fre- 
quently laid  down,   without  qualifica- 
tion, that  a   tenant   in  common  may 
bring  trover  against  his  cotenant,  for 
a  conversion,  by  a  sale,  of  the  entire 
property  held  in  common.     Wilson  v. 
Reed,  3  Johns.  175;    Hyde  v.   Stone, 
9  Cowen,  230,  7  Wend.  354  ;  Tyler  v. 
Taylor,  8  Barb.  585;   Farr  v.  Smith, 
9  Wend.  338;  White  v.  Osborne,  21  id. 
72  ;  Odiorne  v.  Lyford,  9  N.  H.  511 ; 
White  V.  Phelps,  12  id.  386;  Thomson 
V.  Cook,  2  South.  580;  Weld  v.  Oliver, 
21  Pick.  559  ;    Starnes  v.  Quin,  6  Ga. 
84  ;  Rains  v.  McNairy,  4  Humph.  356  ; 
Smyth   V.   Tankersley,   20    Ala.    212; 
Perminter  v.  Kelly,  18  id.  716;  Cowles 
V.   Garrett,  30  id.  341.     See,  however, 
Tubbs    V.     Richardson,    6     Vt.    442; 
Sanborn  v.   Merrill,   15   id.  700;    Pitt 
V.  Petway,  12  Ired.  69.     Perhaps,  how- 
ever, notwithstanding  the  language  of 
some  cases,  and  the  actual  adjudication 


in  others,  the  rule  in  this  country  is, 
after  all,  to  be  considered  as  sub- 
stantially the  same  with  the  English 
rule.  That  is,  in  both  countries,  a 
sale  of  the  common  property  by  one 
cotenant  may  be  per  se  a  conversion,  — 
is  always  admissible  evidence  of  it, — 
but  is  not  necessarily  a  conversion  upon 
which  trover  may  be  founded,  unless 
it  is  tantamount  to  a  destruction  of  the 
subject  of  the  tenancy.  See  St.  John 
V.  Standring,  2  Johns.  468 ;  Mersereau 
V.  Norton,  15  Johns.  179 ;  Bell  v. 
Lagmans,  1  Monroe,  40;  Hinds  v. 
Terry,  Walker,  80. 

[e)  Co.  Litt.  200;  BuUer  N.  P.  34; 

1  Salk.  290;  HoUiday  v.  Carasell,  1 
T.  R.  658 ;  Fennings  v.  Grenville,  1 
Taunt.  241 ;  Jones  v.  Brown,  38  Eng. 
L.  &  Eq.  304 ;    St.  John  v.  Standring, 

2  Johns.  468 ;  Mersereau  v.  Norton, 
15  id.  179;  Gilbert  v.  Dickerson,  7 
Wend.  449;  Tyler  v.  Taylor,  8  Barb. 
585 ;  Weld  v.  Oliver,  21  Pick.  559,  562  ; 
Cole  V.  Terry,  2  Dev.  &  B.  252  ;  Fight- 
master  V.  Beasly,  7  J.  J.  Marsh.  415 ; 
Dain  v.  Cowing,  22  Me.  347 ;  Weeks 
V.  Weeks,  5  Led.  Eq.  Ill,  119.  See 
Lowe  V.  Miller,  3  Gratt.  205  ;  Agnew 
V.  Johnson,  17  Penn.  St.  373.  In 
Illinois,  the  common-law  rule  is  so  far 
modified  by  statute  as  to  allow  one 
tenant  in  common  to  support  trover 
against  a  cotenant  who  assumes  ex- 
clusive control  over  the  joint  property. 
Benjamin  v.  Stremple,  13  111.  460. 
See  2  111.  Stat.  (1863)  960. 

The  general  principle  holds  after  the 
bankruptcy  of  a  partner,  and  his  as- 
fignees  cannot  maintain  trover  against 
the  other  partners,  their  representa- 
tives, or  assigns.  Fox  v.  Hanbury, 
Cowp.  445;  Smith  v.  Stokes,  1  East, 
363;  Smith  v.  Oriell,  id.  368;  Salo- 
mons V.  Nissen,  2  T.  R.  674,  682. 


352  THE   LAW    OP   PARTNERSHIP.  [CH.  VIII. 

think  that  trover  would  lie  by  a  partner,  against  his  co- 
partner, for  constructive  destruction  by  a  sale  of  the  whole 
thing,  because,  by  the  law  of  partnership,  a  partner  has  this 
power  of  sale.  (/)  Nor  should  we  think  it  would  lie  in  gen- 
eral for  the  actual  destruction  of  a  thing  by  a  copartner.  For, 
although  a  partner  has  no  legal  right  to  destroy  any  thing,  — 
unless  by  possibility  even  that  should  be  fairly  incident  to  the 
business  of  the  partnership,  —  yet,  if  he  does  destroy  it,  this 
might  be  taken  as  an  appropriation  by  him,  to  be  charged  to 
him  on  account ;  and  this  charge  would  then  be  settled  like 
others,  only  by  a  settlement  of  accounts. 

It  has  been  held  in  this  country,  that  detinue  may  be 
maintained  by  a  surviving  partner  against  the  representatives 
of  a  deceased  partner,  for  the  books  of  account  of  the  firm  ;  (^) 
and  there  is  a  similar,  though  perhaps  not  quite  an  equal,  reason 
for  allowing  the  same  action,  by  a  partner,  against  a  partner 
who  keeps  wrongful  possession  of  the  books.  We  deem  the 
reason  insuihcieut  in  both  cases,  and  the  remedy  itself  unnec- 
essary. Indeed,  detinue  is  almost  wholly  disused.  And  the 
remedies  of  equity  are  so  completely  adequate,  wherever  a 
partner  is  injured  by  the  wrong-doing  of  his  copartner  in 
matters  relating  to  the  partnership,  that  we  doubt  whether  any 
resort  to  law  in  such  cases  can  be  necessary,  or  will  be  sanc- 
tioned by  the  courts. 

(/)  Montjoys  v.  Holden,  Litt.  Sel.  dences  of  debt  belonging  to  the  firm, 

Cas.  447 ;    Hyde  v.   Stone,  9   Cowen,  and  was  entitled  to  the  exclusive  cus- 

230.     See  Furlong  v.  Bartlett,  21  Pick,  tody  and   control   of  them  ;   that   the 

401 ;    Wilson  v.   Reed,  3   Johns.    175,  books  of  account  were  incidents  to  the 

178.  debts   or  choses   in   action  ;    and  that 

[g)  Murray  v.  Mumford,  6  Cow.  whoever  was  entitled  to  the  one  was, 
441.  Tlie  ground  taken  by  the  court  of  course,  to  the  other.  See  Clowes 
in  this  case  was,  that  a  dissolution  of  v.  Hawley,  12  Johns.  487.  [A  bill  in 
a  partnership  did  not,  ipso  facto,  de-  equity  by  one  copartner,  against  one 
stroy  the  joint  tenancy  of  the  partners  of  three  other  copartners,  to  recover 
in  the  partnership  property,  and  create  liis  share  of  a  sum  of  money  obtained 
a  tenancy  in  common,  but  the  partner-  by  the  other  three  by  mistake  in  set- 
ship  continued,  for  the  purpose  of  tlement  at  the  time  of  dissolution,  is 
settling  the  partnership  affairs ;  that,  demurrable  for  non-joinder  of  the 
in  case  of  dissolution  by  death,  the  other  two.  Johnston  v.  Freer,  61  Ga. 
surviving  partner  was  entitled  to  aH  313.] 
the  choses  in   action,  and  other  evi- 


CH.  IX.]    REMEDIES   BY   PARTNERS    AGAINST   THIRD   PARTIES.       353 


CHAPTER  IX. 

OF   REMEDIES   BY   PARTNERS   AGAINST   THIRD    PARTIES. 
SECTION   I. 

OF  REMEDIES  FOR  BREACH  OF  CONTRACT. 

As  a  general  rule,  a  partnership  has  the  same  remedy,  and 
in  the  same  form,  against  a  third  party,  that  one  person  has 
against  another,  (a)  We  need  only  advert  to  the  exceptions  to 
this  rule,  or  the  qualifications  it  has  received.  One  of  these, 
derived  from  the  principle  that  no  person  can  sue  himself,  or, 
in  other  words,  that  the  same  person  cannot  be  plaintiff  and 
defendant  of  record,  we  have  already  referred  to.  (6) 

It  must  be  true,  that  a  firm  cannot  bring  an  action  against 
a  third  party,  or  any  paper,  or  any  indebtedness  which  has 
been  discharged  in  any  way  by  one  of  the  firm,  so  that  there 
is  a  perfect  defence  against  one  of  the  plaintiffs,  (c)    For,  if  he 

(a)  If  coplaintiffs  sue  for  a  debt  a  partner  refuses  to  join  as  plaintiff, 
due  to  them  as  partners,  they  must  he  may  be  made  a  party  defendant, 
declare   as    partners ;    or,    perhaps,   it     Hill  v.  Marsh,  46  Ind.  218.] 

may  be  sufficient  to  prove  their  part-  (c)  A   release  by  one  partner  is  a 

nership.      Woodworth    v.    Fuller,    24  bar  to  any  action  by  the  firm,  even 

111.  109.  •  though  made  puis  darrein  continuance. 

(b)  Ante,  p.  *289;  Bosanquet  v.  Phillips  v.  Clagett,  11  M.  &  W.  84 
"Wray,  6  Taunt.  597;  Mainwaring  v.  Rawstorne  v.  Gandell,  15  id.  304 
Newman,  2  B.  &  P.  120;  Moffat  v.  Campbell  v.  MuUett,  2  Swanst.  569 
Van  Millenger,  id.  124,  n. ;  Portland  Bristow  y.  Taylor,  2  Stark.  50;  Porter 
Banky.  Hyde,  2  Pairf.  196;  Englis  v.  v.  Taylor,  6  M.  &  S.  156;  Arton  v. 
Furniss,  4  E.  D.  Smith,  587;  Green  Booth,  4  J.  B.  Moore,  192;  Furnival  ?;. 
V.  Chapman,  27  Vt.  236 ;  Rogers  v.  Weston,  7  id.  356 ;  Salmon  v.  Davis, 
Rogers,  5  Ired.  Eq.  31 ;  Lacy  v.  Le  4  Binney,  375 ;  Emerson  v.  Knower, 
Brun,  6  Ala.  904;  Griffith  v.  Chew,  8  8  Pick.  68;  Pierson  v.  Hooker,  3  Johns. 
S.  &  R.  30,  31;  Tindal  v.  Bright,  G8;  Bruen  v.  Marquand,  17  id.  58; 
Minor,  103;  Banks  v.  Mitchell,  8  Yerg.  Gates  v.  Pollock,  5  Jones,  344  ;  Smith 
111 ;  Miller  v.  Thorn,  R.  M.  Charlt.  v.  Stone,  4  Gill  &  J.  310 ;  McBride  v. 
180;  Cole  v.  Reynolds,  18  N.  Y.  74  Hagan,  1  Wend.  326 ;  Doremus  i'.  Mc- 
(though  otherwise  by  statute  in  New  Cormick,  7  Gill,  49;  Wallis  v.  Wal- 
York)  ;  Eastman  v.  Wright,  6  Pick,  lace,  6  How.  (Miss.)  254;  Halsy  v. 
31G.     [Under  the   code  in  Indiana,  if  Fairbanks,  4  Mass.  206.    But,  as  the 

23 


354  THE  LAW   OF   PARTNERSHIP.  [CH.  IX. 

*  326  must  be  *  one  of  the  plaintiffs,  the  action  cannot  pro- 
ceed if  it  cannot  be  maintained  by  him.  Wliether  this 
objection  passes  away  when  the  partner  discharging  the  debt  is 
only  dormant  and  secret,  or  nominal,  is,  in  fact,  the  same  as 
that  considered  before,  when  treating  of  the  relations  of  two 
firms  with  a  common  partner.  There  is  this  difference,  however. 
A  secret  partner,  who  actually  is  one,  or  a  nominal  partner 
who  is  set  forth  as  one,  may  lawfully  discharge  any  debt  due  to 
the  firm ;  and,  therefore,  we  should  say  such  an  action  would 
not  lie,  unless  the  discharge  had  been  fraudulent  as  against  the 
firm,  and  the  fraud  brought  home,  in  some  way,  to  the  debtor. 
As  matter  of  usage  and  practice,  a  firm  having  paper  which 
they  cannot  sue,  because  one  of  themselves  would  necessarily 
be  plaintiff  and  defendant,  may  indorse  the  paper  to  a  third 
party,  and  there  seems  to  be  no  objection  to  his  bringing  an 
action  upon  it  at  law.  (c?) 

It  has  been  questioned,  in  some  cases,  whether  the  death  of 
the  person  who  is  a  partner  in  both  the  firms  removes  the  bar 
to  an  action  between  them.  This  is  denied  by  some  authori- 
ties ;  but  we  have  doubts  whether  there  be  a  positive  rule  to 
this  effect,  (e)  As  the  bar  of  a  common  partner  affects  not 
the  contract  but  the  remedy,  when  the  death  of  the  common 

authority  of  a  single  partner  to  release  a  mere  assignment  of  a  chose  in  action, 

or  receive  payment  arises  only  from  Hill  v.   McPherson,    15   Mo.  204.     In 

the  partnership,  it  is  necessarily  lim-  Timrall  v.  O'Bannon,  7  B.  Mon.  603, 

ited  to  the  partnership  scope,  in  the  the   same   doctrine  is  held,   tliough  it 

ordinary  methods  of  business.  does  not  clearly  appear  that  the  note 

[d]  Davis  v.  Briggs,  39  Me.  304 ;  there  was  not  negotiable. 
Thayer  v.  Buffum,  11  Mete.  398;  (e)  In  Bosanquet  y.  Wray,  6  Taunt. 
Pitcher  v.  Burrows,  17  Pick.  3*31;  507,  it  is  said,  the  death  of  the  partner 
Parker  v.  Macomber,  18  Pick.  509 ;  does  not  remove  the  bar,  as  that  "  goes 
Temples.  Seaver,  11  Cush.  314  ;  Smith  to  the  root  of  the  contract."  This  as- 
V.  Tustin,  5  Cow.  688;  Blake  i>.  sertion  is  repeated  by  the  text  writers, 
Wlieadon,  2  Hayw.  109  ;  Babcock  Collyer  on  Part.  §  642,  Story  on  Part. 
V.  Stone,  3  McLean,  172 ;  Hey  wood  v.  §  234,  Gow  on  Part.  119,  120,  and  in 
Wingate,  14  N.  H.  73.  So  in  Penn  v.  many  cases.  See  De  Tastet  v.  Shaw, 
Stone,  10  Ala.  209,  though  the  in-  1  B.  &  Aid.  664;  Burly  v.  Harris,  8 
dorsee  was  also  assignee  of  the  part-  N.  H.  233,  235.  See  also  Addison  on 
ner's  share  both  of  assets  and  Ha-  Cont.  732 ;  but  it  does  not  seem  to 
bilities,  and  so  ultimately  liable  to  have  been  expressly  decided  until  Mil- 
contribute  ;  because  this  did  not  ren-  ler  v.  Thorn,  R.  M.  Charlt.  180.  It  is 
der  him  a  partner.  But,  if  the  note  is  not,  however,  clear  from  authority  or 
not  negotiable,  it  's  subject  to  the  on  principle  that  this  rule  is  uni- 
same  defences  in  the  hands  of  the  in-  versal. 
dorsee  as  in  those  of  the  payee,  being 


CH.  IX.]     REMEDIES    BY    PARTNERS    AGAINST    THIRD    PARTIES.       355 

partner  removes  this  technical  bar,  we  should  say  the  survivors 
might  sue.  (ee)  As  a  general  rule,  it  must  be  true,  that  no 
action  can  be  sustained  by  a  copartnership,  properly  setting 
forth  the  names  of  the  partners,  if  either  of  tliem  is 
disabled  from  bringing  that  suit.  *And  the  cases  must  *  327 
be  few,  if  any  exist,  in  which  the  law  indulges  the  firm 
with  suppressing  the  name  of  the  disabled  partner,  and  so 
bringing  the  action.  In  the  case  of  an  alien  enemy,  the  rule- 
seems  to  be  established ;  and,  as  a  consequence  of  it,  no  part- 
nership, of  which  one  member  is  an  alien,  can  bring,  in  either 
of  the  countries  to  which  the  partners  belong,  any  action  during 
a  war  between  those  countries.  (/)  How  it  would  be  if  one 
partner  —  all  being  citizens  of  one  of  the  belligerents — resided 
in  the  country  of  the  other,  is  a  question  of  some  difficulty. 
The  true  principle  must  be,  that  the  rights  of  the  partnership 
were  unaffected  by  their  residence  alone,  if  there  were  nothing 
of  adherence  to  the  enemy.  (_(/)  But  it  might  be  very  difficult 
to  make  this  distinction  applicable,  where  the  foreign  residence 
of  the  partner  was  permanent,  or  even  long.  (^Ji)     A  different 


(ee)  This  is  expressly  held  in  Lacy 
V.  Le  Brun,  0  Ala.  904. 

(/)  McConnel  v.  Hector,  3  B.  &  P. 
113;  Albretcht  y.  Sussnian,  2  Ves.  & 
B.  323;  and  see  O'Mealey  v.  Wilson, 
1  Camp.  482.  All  causes  of  action 
which  accrued  prior  to  the  war  are 
suspended  during  the  war.  But,  if  the 
cause  of  action  arises  during  the  war, 
it  seems  that  the  firm  are  precluded 
from  suit  at  any  time,  if  their  partner 
be  affected  with  a  hostile  character 
when  the  contract  was  made.  Thus 
in  Griswold  v.  Waddington,  16  Johns. 
438,  the  plea  of  alien  enemy  was  held 
a  bar  to  an  action  brought  by  a  firm 
after  return  of  peace  on  a  balance  ac- 
crued during  war,  one  partner  — 
though  a  native  of  the  country  wliere 
the  suit  was  brought  —  being  resident 
in  the  belligerent  country  when  the 
balance  accrued.  And,  by  the  doctrine 
of  the  courts  both  of  England  and 
America,  it  would  seem  that  the  right 
to  contract  is  destroyed  eo  insUtnti  war 
is  declared.  See  The  Venus,  8  Cranch, 
253. 


[g)  Collyer  on  Part.  §  647,  citing 
Roberts  v.  Hardy,  3  Maule  &  S.  533 ; 
but  see  next  note. 

{h)  Roberts  v.  Hardy,  3  Maule  & 
S.  533  ;  O'Mealey  v.  Wilson,  1  Canip. 
482  ;  The  Julia,  8  Cranch,  195 ;  The 
Rapid,  8  Cranch,  160,  161.  In  Gris- 
wold V.  Waddington,  16  Johns.  479, 
Kent,  C.  J.,  says  of  the  prohibition  of 
intercourse :  "  It  reaches  to  all  inter- 
change or  transfer  or  removal  of  prop- 
erty, to  all  negotiation  and  contracts, 
to  all  communication  and  all  locomotive 
intercourse ;  to  a  state  of  utter  occlu- 
sion to  any  intercourse  but  one  of  open 
hostility,  to  any  meeting  but  in  actual 
combat."  This  utter  and  rigid  veto 
on  all  intercourse  arises  eo  instanli  war 
is  declared.  See  The  Venus,  8  Cranch, 
253.  In  2  Wildman's  International 
Law,  45,  it  is  said  that  "  domicile  by 
residence  in  the  enemy's  country  is 
considered  as  adherence  to  the  enemy, 
inasmuch  as  it  increases  his  strength 
through  contribution  of  taxes  and 
other  means,  and  consequently  imposes 
a  hostile  character  on  the  person  domi- 


856  THE   LAW   OF   PARTNERSHIP.  [CH.  IX. 

question,  previously  adverted  to,  arises,  where,  by  the  law  of  a 
foreign  land,  husband  and  wife  may  form  a  mercantile  part- 
nership, or  both  be  members  of  one.     At  home,  they  could,  of 

course,  bring  any  action.     But,  in  England  and  in  this 
*  328    country,  a  wife  cannot  join  *  with  her  husband  in  any 

such  action  ;  and  it  is  said  that  an  action  by  such  a  firm 
cannot  be  maintained,  (z)  It  is,  however,  possible  that  the 
recent  legislation  of  some  of  our  States,  giving  to  the  married 
woman,  so  far  as  her  property  is  concerned,  almost  the  status 
of  a  single  woman,  might  be  construed  to  permit  such  an 
action.  The  rule  that,  whenever  the  lex  loci  comes  into  ques- 
tion, the  lex  loci  fori  shall  determine  all  questions  of  remedy, 
might  oppose  such  an  action.  But  this  rule  has  only  been  ap- 
plied to  such  questions  as  arise  under  the  statute  of  limitations, 
and,  perhaps,  those  of  infancy  ;  (^j)  and,  on  the  other  hand,  the 
question  of  disability  to  make  the  contract  is  determined  by 
the  law  of  the  place  of  the  contract.  On  the  whole,  we  should 
expect  that  an  American  court  would  say,  either  that  the  wife 
might  sue  with  the  husband,  because  of  her  unquestionable 
right,  at  home,  or  that  she  could  neither  sue  nor  be  regarded  in 
this  country  as  a  partner,  and  that  her  name  might  be  omitted. 
But  the  simpler,  and  certainly  the  safer,  way  would  be,  to 
indorse  the  paper  over,  if  it  were  negotiable,  to  some  third 
person  who  could  be  made  plaintiff. 

As  there  is  no  doubt  that  a  firm  can  indorse  their  paper  to 
any  third  party,  who  may  then  sue  it,  so  we  suppose  it  clear 
that  they  may  indorse  it  over  to  one  of  their  number,  who  may 
then  bring  the  suit  in  his  own  name,  (/c)     Nor  do  we  see  why 

ciled."    It  should  seem,  therefore,  that  sell  v.  Swan,  16  Mass.  314.      In  Esta- 

mere  residence,   if  it   clearly   appear,  brook  v.  Smith,  6   Gray,  670,  it   was 

^Yill,  if  not  shown  to  be  compulsory,  held,   that    a    partner   might   transfer 

amount  to   adherence   to  the  enemy  a  partnership  note  by  indorsement  in 

and  support  the  plea  of  alien  enemy.  the  partnership  name  to  his  copartner, 

(/)  Collyer  on  Part.    §    646,  citing  but  could  not  by  an  indorsement  in  his 

Cosio  V.  De  Bernales,  Ryan  &  M.  102.  own ;   though   it   was  argued  that  to 

There  is,  however,  no  case  which  de-  require  the  name  of  the  copartner  as 

cides  this  question.     See  the  next  and  indorser  on  the  note  was   to   compel 

following  notes.  him  to  indorse  to  himself.     But  it  has 

{J)  Thompson  v.  Ketcham,  8  Johns,  been  held,  that  where  the  indorsement 

189.  by  the  firm  was  merely  colorable,  to 

(k)  Bailey  v.  Lyman,  1  Story,  396  ;  avoid   the   objection   that  the   maker 

Bolton  V.  Puller,  1  B.  &  P.  546;  God-  was  a  partner,  it  was  held  still  to  be 

dard  v.   Lyman,   14  Pick.   268  ;  Rus-  the  note  of  the  firm,  and  that  no  action 


CH.  IX.]     REMEDIES   BY  PARTNERS   AGAINST   THIRD   PARTIES        357 


this  indorsement  may  not  be  made  by  the  partner  who  is  in- 
dorsee. It  is  every  day's  practice  to  make  a  note  payable  to 
the  maker's  own  order.  There  is  no  such  practice  of  indorsing 
to  the  order  of  the  indorser,  because  he  must  then  indorse 
again,  in  order  to  designate  and  authorize  a  third  person  to 
bring  suit,  and  this  he  can  do  as  well  at  first.  But,  wliere 
there  is  any  reason  for  a  payee's  indorsing  to  his  own 
order,  we  see  no  objection  to  it;  and  we  should  *say  *  329 
there  could  be  none  to  a  partner's  writing  as  indorser 
the  name  of  the  firm,  and  as  indorsee  his  own.  (Z)  This  power, 
however,  is  confined  to  negotiable  paper.  In  many  of  our 
States,  the  common  law  as  to  choses  in  action  has  been  materi- 
ally modified ;  but,  where  it  remains  in  force,  no  partner  can 
transfer  and  assign  his  interest  in  a  chose  in  action  to  the 
other  partner  or  partners,  so  that  the  transferee  may  bring  his 
action  at  law  in  his  own  name,  (w)  In  equity  it  would  be 
otherwise  ;  (w)  but  such  a  transfer,  for  consideration,  would 
authorize  the  transferee  to  use  the  name  of  the  transferring 
partner,  at  law,  nor  could  he  interfere  with  the  suit  in  any 
way.  (o) 


could  be  maintained  upon  it  by  the 
indorsee.  Tipton  v.  Nance,  4  Ala. 
194.  If  the  indorsement  be  in  the 
name  of  one  partner  only,  it  passes  no 
interest.  Mclntire  v.  McLaurin,  2 
Humph.  71. 

(/)  Burnham  v.  Whittier,  5  N.  H. 
334 ;  Kirby  v.  Coggswell,  1  Caines, 
505;  and  see  Estabrook  v.  Smith,  6 
Gray,  570.  In  Towle  v.  Harrington, 
1  Gush.  146,  a  note  was  made  by  one 
firm  to  another,  there  being  a  common 
partner  in  both.  After  the  death  of 
the  common  partner,  the  survivor  in- 
dorsed the  note  to  liimself.  The  in- 
dorsement was  held  void,  but  only 
because  the  note  survived  to  him  as 
partner,  and  his  indorsement  to  him- 
self was  null.  But  a  partner's  right 
to  indorse  with  tlie  partnership  name 
the  partnersliip  paper  to  himself  seems 
impliedly  admitted. 

(m)  Tiie  common  law  (witiiout 
statutory  provision)  has  nowliere  been 
so  modified  that  tlie  mere  assignee  of 
a  chose  in  action  can  sue  in  his  own 


name.  A  mere  assignment,  therefore, 
by  one  partner  to  liis  copartner  of  a 
partnership  demand,  gives  no  right  to 
tlie  assignee  to  sue  in  his  own  name. 
Tate  V.  Mut.  Fire  Ins.  Go.,  13  Gray, 
79;  Russell  v.  Swan,  16  Mass.  314, 
and  cases  cited  in  note  (p),  infra. 

(n)  An  assignee  has  not,  however, 
a  resort  to  equity,  merely  because  he 
cannot  sue  in  his  own  name ;  for,  as 
courts  of  law  admit  him  to  sue  in  the 
name  of  his  assignor,  his  remedy  at 
law  is  complete,  and  equity  will  not 
entertain  his  claim  unless  inequitable 
defences  are  set  up  in  his  assignor's 
name.  See  1  Pars,  on  Gont.  (5tli  ed.) 
224,  note  {d),  and  cases  there  cited  and 
examined  ;  especially  Ontario  Bank  v. 
Mumford,  2  Barb.  Gh.  596. 

(o)  Eastman  v.  Wright,  6  Pick.  316, 
322.  By  the  assignment,  all  property 
is  divested  from  the  assignor,  who 
becomes  thereby  a  merely  nominal 
party,  with  no  interest  for  a  release 
to  act  upon,  and  the  release  is  there- 
fore merely  null.     Rawstorne  u.  Gan- 


358 


THE   LAW   OF   PARTNERSHIP. 


[CH. IX. 


It  must  be  the  general  rule,  that  all  those  who  were  partners 
at  the  time  a  debt  was  contracted,  are  those  to  whom  it  is  due,  and 

they  should  join  in  any  action  to  recover  the  debt,  (p)  And 
*  330  it  is,  *  moreover,  an  unquestioned  rule,  that  no  agreement 

between  partners  can  alter  the  liability  or  mode  of  lia- 
bility of  their  debtor,  without  his  assent.  Thus,  by  no  assign- 
ment of  a  debt  due  to  the  partnership  by  one  of  the  partners, 
can  he  acquire  the  right  to  sue  it  in  his  own  name,  (ij-)  If, 
however,  the  assent  of  the  debtor  sufficiently  appear,  and  be  on 
a  good  consideration,  an  action  may  be  maintained  by  the  part- 
ner who  is  assignee,  in  his  own  name,  (r)  When  such  valid  as- 
sent is  given,  the  action  by  the  assignee  in  his  own  name,  is  upon 
a  new  contract  substituted  for  the  old  one  on  principles  similar 
to  those  of  novation ;  (s)  the  discharge  of  the  debtor  from  his 


dell,  15  M.  &  W.  304.  But  notice 
must  also  be  given  the  debtor,  as  with- 
out tliis,  which  is  practically  a  revo- 
cation of  the  partner's  authority  to 
receive  or  discharge  the  debt,  the 
debtor  has  a  right  to  presume  each 
partner  still  possessed  of  that  authority 
which  the  mere  fact  of  partnership 
confers. 

ip)  Jell  V.  Douglass,  4  B.  &  Aid. 
374;  Dob  v.  Halsey,  16  Johns.  34; 
Hewes  v.  Bayley,  '20  Pick.  96 ;  Gushing 
V.  Marston,  12  Gush.  431  ;  Gage  v. 
Eollins,  10  Mete.  348;  Halliday  v. 
Doggett,  6  Pick.  359 ;  Pearson  v. 
Parker,  3  N.  H.  366;  Parker  v.  Gregg, 
3  Foster,  416 ;  Horbach  v.  Huey,  4 
Watts,  455 ;  Allen  v.  White,  Minor, 
365 ;  Snodgrass  ?'.  Broadwell,  2  Litt. 
353 ;  Wright  v.  Williamson,  2  Penning. 
978 ;  Wilson  v.  Wallace,  8  S.  &  R.  53 ; 
Tate  V.  Mut.  Fire  Ins.  Go.,  13  Gray, 
79  ;  Speake  v.  Prewilton,  6  Tex.  352 ; 
Jones  V.  Gates,  9  B.  &  G.  532;  Garrett 
t'.  Handley,  3  B.  &  G.  462;  Gooke  v. 
Seely,  2  Exch.  746  ;  Driver  v.  Burton, 
17  Q.  B.  989;  Greeley  v.  Wyetli,  10 
N.  H.  15. 

(q)  Huey  V.  Horbach,  4  Watts,  455; 
Clark  V.  Howe,  23  Me.  560 ;  Degroot 
V.  Darby,  7  llich.  117 ;  Gushing  v. 
Marston,  12  Gush.  431  ;  Russell  v. 
Swan,  16  Mass.  314  ;  dictum  in  Raden- 
hurst  V.  Bates,  3  Bing.  470 ;  Wood  v. 


Rutland  Ins.  Co.,  31  Vt.  552.  But  it 
seems  to  have  been  thought  that  on 
dissolution  a  sole  right  of  action  might 
vest  in  remaining  partners,  without 
any  assent  or  new  promise  by  the 
debtor.  Gollyer  on  Part.  §  658,  citing 
Evans  v.  Silverlock,  Peake,  21  ;  At- 
kinson V.  Laing,  Dowl.  &  R.  N.  P.  16. 

1  Lindley,  Partn.  403,  remarks  that 
this  case  "  is  more  than  questionable." 
We  should  say  that  Mr.  Collyer's 
proposition  is  without  authority,  and 
that  there  is  no  such  exception  as 
"  severance  by  dissolution,"  to  the 
necessity  of  joinder  of  all  the  partners 
on  a  partnership  demand.  In  Louisi- 
ana, however,  it  seems  that  the  liqui- 
dating partner  on  a  dissolution  of  the 
firm  may  maintain  an  action  in  his 
own  name,  only  setting  forth  the  fact 
that  the  transaction  arises  out  of  the 
business  of  the  firm.  White  v.  Jones, 
14  La.  Ann.  G81. 

()•)  Degroot  v.  Darby,  7  Rich.  117  ; 
Cook  V.  Beech,  10  Humph.  412  ;  Howell 
V.  Rej-nolds,  12  Ala.  128;  McLanahan 
V.  Ellery,  3  Mass.  269;  Moore  v.  Hill, 

2  Peake,  10;  Stevens  v.  Lunt,  19  Me. 
70,  72;  Wood  v.  Rutland  Ins.  Co.,  31 
Vt.  552;  Aspinwall  v.  Lond.  &  N.  W. 
R.  R.  Co.,  11  Hare,  325  ;  Armsby  v. 
Farnam,  16  Pick.  318. 

(s)  See  Pars,  on  Gont.,  vol.  i.  pp. 
217-222,  5th  ed. 


CH.  IX.]     REMEDIES    BY    PARTNERS    AGAINST   THIRD    PARTIES.       359 

liability  to  the  firm  forming  the  consideration  of  the  new  prom- 
ise, (i)  Where,  however,  the  assignment  is  by  an  old  firm  to 
a  new  one  which  includes  the  old,  there  would  seem  to  be  but 
two  parties  in  question  ;  for  the  old  firm  and  the  new  one  are 
one  quoad  this  contract,  and  the  promises  of  discharge  of  the 
old  liability,  and  of  payment  of  the  new  one  by  the  firm  and 
the  debtor  respectively,  are  mutually  considerations  one  for  the 
other,  (u)  In  like  manner  a  new  contract  may  arise  by  the 
implied  assent  of  the  debtor,  who  has  paid  one  or  more 
of  several  joint  creditors  *  their  respective  shares,  to  pay  *  331 
the  other  his  separate  share,  and  the  latter  may  main- 
tain his  separate  action  therefor,  (v) 

Persons  who  leave  the  firm  and  cease  to  be  partners  may 
transfer  the  debt  so  as  to  retain  no  interest  in  it ;  but  still  their 
names  should  be  used,  (w)  On  the  other  hand,  those  who  come 
into  the  firm  after  the  debt  is  created  may  acquire  an  interest 
in  it,  and  the  debt  will  be  collected  for  their  benefit ;  but  still 
their  names  cannot  be  used,  (x)  This  is  true  even  where  the 
debt  was  originally  contracted  with  the  understanding  that 
it  should  be  a  continuing  contract,  contemplating  successive 
changes  in  the  house,  and  intended  to  go  through  them  all  and 
be  always  a  debt   to  the  house,  whoever  may  be  its   copart- 


(t)  This  new  promise  may  be  ex- 
press, as  in  Howell  v.  Reynolds,  12 
Ala.  128,  and  Wood  v.  Rutland  Ins. 
Co.,  31  Vt.  582 ;  or  implied,  as  it  was 
in  Cook  V.  Beech,  10  Humph.  412, 
from  the  debtor's  drawing  a  bill  for 
the  amount  of  the  debt  in  favor  of 
the  assignee ;  or  from  his  admissions, 
as  in  Degroot  v.  Darby,  7  Rich.  117. 

(m)  See  Armsby  v.  Farnam,  16  Pick. 
318. 

(v)  Garrett  v.  Taylor,  1  Esp.  N.  P. 
117  ;  Kirkman  v.  Newstead,  id.  ;  Baker 
V.  Jewell,  6  Mass.  4G0 ;  recognized  in 
Medbury  v.  Watson,  6  Mete.  257  ;  Blair 
V.  Snover,  1  Halst.  153 ;  Holland  v. 
Weld,  4  Greenl.  255 ;  Horbaeh  v.  Huey, 
4  Watts,  455;  Beach  v.  Hotchkiss, 
2  Conn.  697.  In  Austin  v.  Walsh,  2 
Mass.  401,  A.  &  B.  jointly  consigned 
a  cargo,  directing  the  master  to  keep 
the  proceeds  till  called  on.  Before 
the  vessel  returned,  A.  &  B.  agreed  to 


divide,  and  the  master  subsequently 
paid  A.  his  share.  B.  demanded  his 
of  the  master,  who  refused,  but  offered 
to  "  pay  the  true  owner."  It  was  held 
that  this  would  be  construed  as  a  di- 
rect promise  to  i)ay  B.,  and  that  he 
might  sue  accordingly.  So  also  Burn 
V.  Morris,  3  Caines,  54. 

(w)  Pease  v.  Hirst,  10  B.  &  C.  122  ; 
Dobbin  v.  Foster,  1  Car.  &  K.  823.  In 
Atkinson  v.  Laing,  1  Dowl.  &  R.  N.  P. 
10,  a  contrary  doctrine  was  held  by 
Lord  Tenterden  ;  but  see  this  case  ex- 
amined, supra,  p.  *  330,  n.  (q). 

(r)  Pease  v.  Hirst,  10  B.  &  C.  122; 
Wilsford  V.  Wood,  1  Esp.  182 ;  where 
an  incoming  partner,  whose  entry  had 
been  antedated  on  the  partnership 
deed,  was  not  allowed  to  join  in  an 
action  on  a  contract  made  prior  to  his 
entry,  but  subsequent  to  the  date  of 
the  deed. 


360 


THE   LAW    OF   PARTNERSHIP. 


[CH.IX. 


ners.  (y)  Intimately  connected  with  this  topic  is  the  question, 
how  far  a  guaranty,  bond  of  indemnity,  and  the  like,  is  construed 
as  covering  matters  subsequent  to  a  change  of  the  firm  by  the 
retirement  or  accession  of  a  partner  or  partners  ;  and  when  it 
ceases  to  have  any  operation  after  such  change.  We  give  the 
authorities  on  this  subject  in  the  note.  (2)     It  will  be  seen  that 


iy)  Pease  v.  Hirst,  10  B.  &  C.  122. 
In  this  case,  a  note  was  made  to  A., 
B.,  C,  I).,  &  E.,  partners  in  a  banking- 
house,  as  security  for  advances  to  be 
made  by  them.  A.  and  B.  left  the 
firm,  and  new  members  entered  it ; 
and  advances  were  also  made  by  the 
new  firm.  The  note  was  handed  by 
the  old  firm  to  the  new,  but  not  in- 
dorsed. An  action  thereon  by  the 
old  firm  for  the  new  advances  was 
held  rightly  brought  by  them,  and  by 
tliem  only  ;  the  security  covering  the 
new  advances  being  evidently  intended 
to  be  a  continuing  one. 

(z)  The  earliest  case  is  that  of 
Wright  V.  Russell,  3  Wils.  532.  Here 
a  bond,  conditioned  for  the  faithful 
service  of  W.  Baird  as  clerk,  was 
made  to  the  plaintiff,  Wright.  Wright 
subsequently  took  a  partner.  Baird 
then  left  his  service,  but  re-entered 
that  of  the  new  firm  ;  and,  while  in 
their  service,  committed  a  breach  of 
trust  by  embezzling  the  money  of  the 
firm.  In  an  action  of  debt  on  the 
bond,  judgment  was  given  for  the  de- 
fendant ;  De  Grey,  C.  J.,  saying  :  "  The 
law  is,  that  a  surety  shall  not  be  bound 
beyond  the  terms  of  his  engagement, 
as  understood  at  the  time  he  entered 
into  it.  Here  Wright,  by  his  own  act, 
takes  in  a  partner.  From  that  mo- 
ment the  suretyship  is  at  an  end.  If 
there  is  one,  there  may  be  twenty 
partners  taken  in.  Is  the  surety  liable 
if  Baird  disobeys  the  orders  of  any 
one  of  these  partners'?  Or  can  the 
surety  be  called  upon  to  insure  the 
money  of  all  of  the  partners  1  Certainly 
rot."  In  Barclay  v.  Lucas,  1  T.  R. 
291,  however.  Lord  Mansfield  held, 
that  bonds  of  this  nature  were  given 
to  the  house,  and  not  to  the  individual ; 
and  that,  therefore,  they  extended  the 


application  of  the  bond  to  a  new  firm, 
if  the  old  name  was  preserved.  In 
this  case,  considerable  reliance  was 
placed  on  the  recital  by  which  the 
partners  were  to  take  the  clerk  into 
their  employ,  "in  their  shop  and 
counting-house."  And,  in  another  case, 
it  was  admitted  to  be  the  common 
understanding  among  merchants,  that 
the  firm,  and  not  the  individual  part- 
ners, were  meant  to  be  guaranteed 
from  loss  :  per  Mansfield,  C.  J.,  in 
Weston  V.  Barton,  4  Taunt.  673.  But 
the  case  of  Barclay  v.  Lucas  seems 
clearly  not  law.  In  Barker  v.  Parker, 
1  T.  R.  287,  where  the  bond  guaran- 
teed faithful  service  to  "  A.  B.,  and 
his  executors,"  Lord  Mansfield  held, 
that  this  did  not  cover  breaches  com- 
mitted by  the  clerk  while  in  the  ser- 
vice of  the  executors  of  A.  B.,  who 
kept  on  in  the  same  business  after  the 
death  of  their  testator.  He  attempted 
to  sustain  Barclay  v.  Lucas,  by  the 
distinction  that  the  change  in  that 
case  was  only  by  the  accession  of  a 
new  partner,  the  old  firm  still  contin- 
uing. But  this  distinction  is  expressly 
against  the  case  of  Wright  v.  Russell, 
supra,  and  must  fall  with  the  case  of 
Barclay  v.  Lucas,  which  rests  solely 
upon  it,  if  the  case  of  Wright  v.  Rus- 
sell be  law.  Of  this  there  is  now 
little  doubt.  In  Myers  v.  Edge,  7 
T.  R.  254,  Lord  Kenyon  said  :  "  I  very 
much  approve  of  the  case  from  Wil- 
son ; "  and  decided  the  case  before 
him  on  its  authority.  Story,  Part. 
§  250,  note  3,  says  :  "  Barclay  v.  Lucas 
was  a  case  which  was  supposed  to 
contain  language  importing  a  pro- 
vision of  this  [a  continuing]  character; 
but  great  doubts  may  well  be  enter- 
tained whether  the  case  can  be  main- 
tained upon  any  such  interpretation." 


CH.  IX.]     REMEDIES   BY   PARTNERS    AGAINST   THIRD   PARTIES.      361 


the  general   rule,  as  now   established,   *  is   that  such    *  332 
change  discharges  a  bond  of  indemnity.     And  the  prin- 
ciple is  applied  with  equal  force  to  simple  guaranties,  (a) 
*  And   on    the    same    ground    any   change   in    a   firm    *  333 
materially  altering  its  character  discharges  the  surety, 
although  the  members  of  the  firm  remain  unchanged.  (J)     So 
where  there  is  an  alteration,  by  removal  or  accession,  in  the  par- 
ties whose  conduct  is  guaranteed,  the  bond  is  discharged  of 
farther  operation,  (c)     And  a  contract  with  an  ostensible  part- 
ner, which  has  particular  reference  to  his  individual  skill,  has 
been  held  not  to  survive  to  the  dormant  partner.  (tZ) 

From  the  cases  cited  in  the  notes  to  the  last  paragraph  and 
from  the  nature  of  partnership,  we  should  draw  the  general 


So  in  Weston  v.  Barton,  4  Taunt.  G73, 
it  was  said  by  Mansfield,  C.  J. :  "  The 
propriety  of  Barclay  v.  Lucas  has 
been  very  much  questioned."  In  this 
last  case,  the  condition  was  for  re- 
payment to  five  bankers  of  any 
money  advanced  by  these  five,  or  any 
or  either  of  them  ;  and  it  was  held, 
that  even  this  did  not  cover  advances 
made  by  the  survivors  after  one  had 
died,  Mansfield,  C.  J.,  saying  :  "  There 
may  be  many  very  good  reasons  for 
such  a  construction.  It  is  very  proba- 
ble that  sureties  may  be  induced  to 
enter  into  sucli  a  security  by  a  con- 
fidence which  they  repose  in  the 
integrity,  diligence,  caution,  and  ac- 
curacy of  one  or  two  of  the  partners. 
In  tlie  nature  of  things,  there  cannot 
be  a  partnership,  consisting  of  several 
persons,  in  which  there  are  not  some 
persons  possessing  these  qualities  in  a 
greater  degree  than  the  rest ;  and  it 
may  be  that  the  partner  dying  or 
going  out  is  the  very  person  on  whom 
the  sureties  relied."  Tlie  same  was 
lield  in  Arlington  v.  Merrick,  2  Saund. 
412  ;  Strange  v.  Lee,  3  East,  484. 

[a)  Myers  v.  Edge,  7  T.  R.  254; 
Spiers  v.  Houston,  4  Bligh,  n.  s.  515  ; 
Ex  parte  Kensington,  2  Ves.  &  B.  79  ; 
Holland  v.  Teed,  7  Hare,  50.  So  in 
Ex  parte  McGee,  9  Ves.  6!)7,  an  agree- 
ment to  pay  bills  into  a  banking-house 
was  held  discharged  by  the  bankruptc}' 
of  the  partners,  and  an  action  was  held, 


to  lie  against  the  assignees  in  bank- 
ruptcy for  bills  paid  subsequently  to 
that  event.  In  the  case  of  Dry  v. 
Davy,  10  Adol.  &  E.  30,  it  was  even 
held,  that  the  retirement  of  a  dormant 
partner  put  an  end  to  a  guaranty.  If 
the  dormant  partner  was  not  known 
to  the  guarantor,  she  could  only  claim 
that  the  guaranty  was  at  an  end  be- 
cause she  had  contracted  with  the 
partners  in  interest,  and  not  in  name 
merely.  This  position,  however,  does 
not  bring  the  case  within  the  reason 
of  personal  confidence  reposed  actu- 
ally, or  by  legal  intendment,  in  the 
known  members  of  the  firm,  as  as- 
signed by  Lord  Mansfield  in  Weston 
V.  Barton,  supra,  and  followed  in  Ar- 
lington V.  Merrick,  and  Strange  v. 
Lee,  supra;  and  the  authority  of  this 
case,  therefore,  finds  no  support  in 
those. 

(6)  Thus,  in  Dance  v.  Girdler,  1 
Bos.  &  P.  N.  s.  34,  the  incorporation 
of  the  obligees  had  this  effect. 

(c)  Simson  v.  Cook,  1  Bing.  452; 
Univ.  of  Cambridge  v.  Baldwin,  5  M. 
&  W.  580;  Bellairs  v.  Elsworth,  3 
Camp.  53;  Russell  v.  Perkins,  1  Mass. 
368  ;  London  Ass.  Co.  v.  Bold,  6  Q.  B. 
514. 

(d)  Robson  v.  Drummond,  2  B.  & 
Ad.  303.  And  see  Stevens  v.  Ben- 
ning,  1  Kay  &  J.  168,  G  De  Gex,  M.  & 
G.  223. 


362  THE   LAW   OF   PARTNERSHIP.  [CH.  IX. 

conclusion,  tliat  a  bargain  with  a  firm  expires  with  the  dissolu- 
tion of  the  firm,  or  with  any  change  in  it,  and  is  not  assignable 
or  transferable  by  the  firm  to  one  of  the  partners,  or  to  a 
stranger.  For  this  the  obvious  reason  may  be  given,  that  any 
contract  with  a  firm  may  be  supposed  to  be  made  with  the  per- 
sons composing  it ;  because  they  are  partners.  It  may  be 
impossible  to  say  that  the  bargain  was  made  on  the  credit, 
pecuniary  or  moral,  of  this  one  or  that  one.  The  party  has 
a  right  to  say  that  he  made  it  with  all,  because  they  were  all 
there,  and  each  contributed  what  he  did,  whether  of  money, 
skill,  or  character. 

Only  those  who  are  named  as  parties  in  contracts  under  seal 
can  sue  upon  such  contracts,  (e)  But  it  has  been  held,  that 
where  a  deed  was  made  to  a  partnership  by  the  name  of  the 
firm,  the  then  existing  partners  might  sue  upon  it,  and  parol 
evidence  was  admitted  to  show  who  those  were.  (/)  And  in 
another  case  a  bond  to  the  trustees  of  a  trading  company,  to 
secure  the  faithful  services  of  a  clerk,  was  held  to  remain  in 
full  force  so  long  as  the  clerk  acted  in  that  capacity,  notwith- 
standing the  fluctuations  of  the  company.  (^)  Where  the 
partners  have  substituted  a  deed  for  a  simple  contract,  the  lat- 
ter is  merged  in  the  former,  and  those  only  who  are  parties  to 
the  deed  can  sue  upon  it.  (^) 

The  same  limitation  of  the  parties  to  the  action  to  those 
whose  names  appear  on  the  instrument  prevails  in  the  case 
of  negotiable  paper,  and  all  those  parties   must  sue.  (7i)     If 

(e)  Cabell   r.    Vaughan,    1    Saund.  (ff)  Metcalf  v.  Bruin,  12  East,  400 ; 

291,  /;   Metcalfe  v.  Eycroft,  6  Maule  2  Camp.  422. 

&   S.  75;    Vernon  v.  Jefferys,  2  Str.  (.9)  Evans  i\  Bennett,  1  Camp.  303, 

1146;   Lefevre  v.  Boyle,  3  B.  &  Ad.  note.       "There    has    been    no    case 

877 ;    Ehle   v.  Purdy,  6   Wend.    629 ;  where,   the   hitcrest   being    the   same 

Petrie  v.  Bury,  3  B.  &  C.  354 ;  Ex  parte  as  that  secured  by  deed,  it  has  been 

Williams,   Buck,   13,   15,  note;    Scott  holden    that    assumpsit    would     lie," 

V.  Godwin,   1  B.  &  P.  74.     Thus  it  is  Lord  Ellenborough,  Schack  v.  Autorg, 

said,  in  Montague  v.  Smith,  13  Mass.  1   Maule   &  S.  574;   but  the  interest 

405:  "When  covenants  are  made  by  intended   to   be   secured   by   the    two 

or  between   two   or  more  parties,  al-  must  be  identical.     See  Twopenny  v. 

though  the  covenant  be  for  the  benefit  Young,   3  B.  &  C.  208,  and  Dean  v. 

of   a   third  person,  mentioned  in  the  Newliall,  8  T.  R.  168;  Solly  r.  Eorbes, 

instrument,  the  action  must,  neverthe-  2  Brod.  &  Bing.  38. 

less,  be  brought  by  the  parties."  (h)  In   actions   on  bills  and  notes, 

(/)  Moller  V.    Lambert,   2    Camp,  only  the   parties  thereto  can,  but  all 

548 ;  1  Lindley  on  Part.  386.  these  must,  sue.     Guidon  v.  Robson, 


Cir.  IX.]     REMEDIES   BY   PARTNERS    AGAINST   THIRD   PARTIES.      363 


the  note  be  indorsed  *in  blank,  then,  of  course,  all  or   *  334 
any  of  the  partners  may  sue  thereon,  (f) 

If  a  simple  contract  be  made  with  one  partner  for  the  benefit 
of  the  firm,  it  may  be  sued  by  all,  (/)  and  cannot  be  sued 
excepting  by  all  the  partners,  unless  there  be  some  express 
language  or  circumstances  which  make  it  a  bargain  with  one 
only  ;  (/c)  whereas  such  contracts,  in  cases  where  the  parties  to 
be  benefited  and  the  one  making  the  contract  do  not  stand  in 
the  relation  of  partners,  may  generally  be  sued  either  by  the 
party  whose  name  is  used,  (^)  or  by  the  parties  actually 
interested,  though  their   names  be    not   used.  (??i)     But   this 

2  Camp.  302;  Bawden  v.  Howell,  3 
Man.  &  G.  638;  Pease  v.  Hirst,  10 
B.  &  C.  122;  Siffkin  v.  Walker,  2 
Camp.  307 ;  Whitney  v.  McKechnie, 
1  Bosw.  427.     In  Boswell  v.  Dunning, 

5  Ilarring.  231,  because  the  note  was 
indorsed  in  full  to  a  firm,  bj'  the  firm 
name,  proof  was  required  of  the  part- 
nership. 

(0  Ord  V.  Portal,  3  Camp.  239; 
Attwood  V.  Rattenbury,  6  J.  B  Moore, 
579  ;  Machell  v.  Kinnear,  1  Stark.  499. 
But  if  it  appear  affirmatively,  by  the 
defendant,  that  the  note  was  delivered 
to  third  persons,  in  the  first  place  the 
plaintiflTs  must  show  a  delivery  to 
themselves  b}'  such  holders.     Id. 

(j)  Garrett  v.  Handley,  4  B.  &  C. 
664;   Alexander  v.  Barker,  2  Cromp. 

6  J.  133;  Skinner  v.  Stocks,  4  B.  & 
Ad.  437  ;  Cook  v.  Seely,  2  Exch.  746  ; 
Halliday  v.  Daggett,  6  Pick.  359; 
Creel  v.  Bell,  2  J.  J.  Marsh.  309  ;  For- 
tune V.  Brazier,  10  Ala.  793 ;  Stevens 
V.  Lunt,  19  Me.  70;  Wright  i:  Wil- 
liamson, 2  Penn.  978  ;  Pearson  v.  Par- 
ker, 3  N.  H.  366.  This  is,  indeed, 
the  case  in  all  implied  contracts,  that 
arise  in  the  course  of  the  partnership 
business ;  for,  as  the  implied  promise 
must  follow  the  consideration,  it  is 
raised  to  the  firm  from  whom  the 
consideration  moves.  Boggs  v.  Curtin, 
10  Serg.  &  R.  211 ;  Lee  v.  Gibbons, 
14  id.  Ill  ;  Ulmer  v.  Cunningham,  2 
Greenl.  118,  119;  Addison  on  Cont. 
743;  1  Pars,  on  Cont.  (5th  ed.)  26. 

(k)  Sims  V.  Bond,  5  B.  &  Ad.  389  ; 
Garrett  v.  Handley,  3  B.  &  C.  462 ; 


Oliver  v.  Burton,  17  Q.  B.  989 ;  War- 
ner V.  Griswold,  8  Wend.  665;  Piatt 
V.  Halen,  23  id.  456;  Ewing  v.  French, 
1  Blackf.  353  ;  Ward  v.  Leviston,  7  id. 
466 ;  Doremus  i\  Seldon,  19  Johns. 
213;  Burn  v.  Morris,  3  Caines,  54; 
Munroe  i'.  Ezzel,  11  Ala.  603.  Thus, 
in  Wood  V.  O'Kelly,  8  Cush.  406, 
where  the  question  whether  a  mes- 
meric doctor  should  join  as  coplaintiff", 
in  an  action  for  medical  services,  his 
partner,  the  woman  who  slept  in  the 
clairvoyant  state,  and  with  whom  he 
divided  the  net  profits  after  paying 
expenses,  the  court  below  ruled,  that, 
if  the  woman  was  a  silent  partner,  she 
need  not  be  joined.  In  the  court 
above,  it  was  not  necessary  to  consider 
the  question.  The  court,  however, 
said :  "  It  is  not  necessary  that  a 
dormant  partner  should  be  joined 
with  the  ostensible  partners  of  a  firm, 
in  an  action  against  a  person  who  dealt 
only  with  the  ostensible  partners." 

(/)  Ward  V.  Leviston,  7  Blackf. 
466;  Rodwell  v.  Ridge,  1  Car.  &  P. 
220 ;  Skinner  v.  Stocks,  4  B.  &  Aid. 
437 ;  Desher  v.  Holland,  12  Ala.  513 ; 
Warner  v.  Griswold,  2  Wend.  665 ; 
Lapham  v.  Green,  9  Vt.  407  ;  Curtis 
V.  Belknap,  21  id.  433;  Sims  v.  Bond, 
5  B.  &  Ad.  393;  Colburn  v.  Phillips, 
13  Gray,  64,  06;  Sims  v.  Brittain,  4 
B.  &  Ad.  375. 

(vi)  Arden  v.  Tucker,  4  B.  &  Ad. 
815;  Rodwell  v.  Ridge,  1  Car.  &  P. 
220;  Lapham  v.  Green,  9  Vt.  407; 
Cothay  v.  Fennel,  10  B.  &  C.  671  ; 
Alexander  v.  Barker,  2  Cromp.  &  J. 


364  THE   LAW   OF   PARTNERSHIP.  [CH.  IX. 

*  335  differs  from  the  case  supposed  in  the  last  *  paragraph, 
thus  :  A  promise  to  a  present  firm,  with  the  understand- 
ing that  others  may  come  in  and  profit  by  it,  is  still  no  bargain 
with  those  others.  They  are  not  known,  and  are  indeed  un- 
certain as  yet.  But  a  bargain  witli  one  of  a  firm  for  the  interest 
and  benefit  of  all  the  firm  is  a  present  bargain  with  all  the 
firm.  And  thus  the  rule  remains  good  that  those,  and  only 
those,  with  whom  the  bargain  is  made  can  sue  upon  it.  The 
exception  where  a  bargain  is  made  under  seal  with  one  for  the 
interest  and  benefit  of  others,  in  which  case  only  those  named  as 
parties  can  sue,  arises  from  the  peculiar  law  of  specialties,  which 
prevents  any  persons  not  named  from  coming  in  as  parties. 

But  where  a  written  but  not  sealed  contract  is  entered  into 
with  one  partner,  it  not  appearing  on  the  face  of  the  contract 
that  he  was  acting  on  behalf  of  the  firm,  he  may  sue  alone,  on 
that  contract.  In  such  a  case,  the  action  may  be  maintained 
either  in  the  name  of  the  person  with  whom  alone  the  contract 
was  ostensibly  made,  or  in  that  of  the  parties  who  can  be 
shown  to  be  really  interested,  (n) 

Partnership  contracts  for  insurance  are  governed  by  the 
same  rule,  that  those  and  only  those  by  whom  the  bargain  is 
made  can  sue  upon  it,  excepting  so  far  as  the  rule  is  modified 
by  the  law  of  insurance,  which,  under  certain  circumstances, 
permits  persons  by  whose  authority  and  for  whose  benefit  a 
policy  is  made,  to  sue,  although  their  names  are  not  men- 
tioned, (o)  By  that  law,  the  persons  named  in  the  policy  may 
sue,  and  they  alone  can  sue,  unless  the  policy  is  made  "  for  all 
whom   it   may   concern,"  or    contains   other    general   words 

133,    138 ;    Kobson   v.   Drummond,   2  can    maintain    no    action,    Mellen    v. 

B.  &  Ad.  303,  307,  308,  per  Parke  and  Whipple,  1  Gray,  317,  321,  322 ;  Col- 

Littledale,  JJ. ;  Stacy  v.  Decey,  2  Esp.  burn  v.  Phillips,   13  id.  61,   66  ;    with 

169,  n. ;    Skinner  v.    Stocks,  4   B.   &  one  or  two  well-defined  exceptions.  Id. 

Aid.  437  ;    Garrett  v.   Ilandley,  4   B.  (h)  Curtis  v.  Belknap,  21  Vt.  433. 

&  C.  664  ;    Curtis  i'.  Belknap,  21   Vt.  And  see  Skinner  v.  Stocks,  4  B.  &  Aid. 

433 ;   Creel  v.  Bell,  2  J.  J.  Marsh.  309 ;  437 ;    Cothay  v.  Fennell,  10  B.  &  C. 

Pitts  V.  Mower,  18  Me.  361;  Story  on  671;    per  Littledale,  J.,  in  Robson  v. 

Agency,  §  160,  and  cases  cited ;  Halli-  Drummond,  2  B.  &  Ad.  303 ;    Phillips 

day  V.  Doggett,  6  Pick.  359;  Ward  v.  v.  Pennywit,  1  Pike  (Ark.),  59. 

Leviston,  7  Blackf.  466;   Edmund  v.  (o)  Grove  v.  Dubois,  1  T.  R.  112; 

Caldwell,  15  j\Ie.  340.     But  the  party  Gumming  v.  Forrester,  1  Maule  &  S. 

for   whose   benefit  the    contract  was  497 ;     Hagedorn    i'.    Oliverson,    2    id, 

made   must    also    be    the    one    from  426 ;   2   Pars,  on  Maritime  Law,   29, 

whom  the  consideration  moves,  or  he  and  note  3. 


CH.  IX.]     EEMEDIES   BY   PARTNERS   AGAINST  THIRD   PARTIES.      365 


of  equivalent  import,  (p)  The  *  reason  of  this  is,  that  *  336 
the  insurers  are  entitled  to  know  whom  they  insure,  or 
else  to  know  that  they  insure  unknown  persons,  that  they  may 
make  their  terms  accordingly,  {cj)  An  insurance  by  one  part- 
ner in  his  own  name  and  without  general  words,  although  on 
property  belonging  to  the  firm,  covers  only  his  interest,  and 
the  firm  cannot  maintain  an  action  on  such  a  policy,  (r) 
Whether  the  partner  insured,  in  an  action  for  the  whole  loss, 
averring  in  his  declaration  an  entire  interest,  can  upon  proof 
of  the  firm  ownership  recover  any  thing,  and,  if  any  thing, 
whether  his  pro  rata  share  only,  or  the  whole,  has  been  vari- 
ously decided.  Some  of  the  cases,  including  a  decision  of  the 
United  States  Supreme  Court,  given  by  Marshall,  C.  J.,  which 
is  entitled  to  the  highest  respect,  holding  that  he  cannot 
recover  at  all ;  (s)  others,  that  he  may  to  the  extent  of  his 
interest  as  a  partner;  {t)  and  others  still,  that  he  may  recover 
the  whole  loss,  (ii) 


(p)  Finney  v.  Bedford  Com.  Ins. 
Co.,  8  Mete.  348 ;  Turner  v.  Burrows, 
5  Wend.  541 ;  Jefferson  Ins.  Co.  v. 
Cotheal,  7  id.  72;  Finney  v.  Warren 
Ins.  Co.,  1  Mete.  16;  1  Phillips  on  Ins. 
§§  391,  392;  2  Duer  on  Ins.  §  20; 
Graves  v.  Boston  M.  Ins.  Co.,  2  Cranch, 
419. 

{q)  Dumas  v.  Jones,  4  Mass.  647. 

(r)  Graves  v.  Boston  M.  Ins.  Co., 
2  Cranch,  419 ;  Pearson  v.  Lord,  6 
Mass.  81;  Turner  v.  Burrows,  5  Wend. 
541.  See  also  Bell  v.  Ansley,  16  East, 
141 ;  Hibbert  v.  Martin,  1  Camp.  538  ; 
Cohen  v.  Hannam,  5  Taunt.  101 ;  Law- 
rence V.  Sebor,  2  Caines,  203. 

(s)  In  Graves  v.  Boston  M.  Ins.  Co., 
2  Cranch,  419,  it  was  held,  that  a  part- 
ner insuring  for  an  individual  and 
entire  interest  can  recover  nothing, 
but  must  suffer  a  nonsuit,  on  its  ap- 
pearing that  he  was  only  jointly  inter- 
ested in  the  property  ;  the  loss  being  a 
joint  one,  which  he  could  neither  in- 
sure nor  recover  for  separately,  either 
in  whole  or  pro  rata.  The  same  doc- 
trine is  hold  in  Cohen  v.  Ilannam,  5 
Taunt.  101,  denying  the  authority  of 
Page  V.  Fry,  2  B.  &  P.  240. 

(t)  Dumas  v.  Jones,  4  Mass.  G47; 


Turner  v.  Burrows,  5  Wend.  541 ;  Page 
V.  Fry,  2  Bos.  &  P.  240 ;  Irving  v.  Ex- 
celsior Fire  Ins.  Co.,  1  Bosw.  507 ; 
Murray  v.  Col.  Ins.  Co.,  11  Johns.  302, 
311. 

(u)  In  Horn  v.  Clarkson,  1  Caines, 
276,  and  Lawrence  v.  Sebor,  2  id.  203, 
the  courts  admit  a  recovery  in  such 
case  for  the  entire  value  insured. 
[Where  one  partner  sells  and  transfers 
his  interest  to  his  copartner,  and  re- 
tires from  the  firm,  an  action  cannot  be 
maintained  by  tlie  joint  insurers  in 
case  of  loss.  Dix  v.  Mercantile  Ins. 
Co.,  22  111.  272 ;  Murdock  v.  Chenango 
Co.  Mut.  Ins.  Co.,  2  Comst.  (N.  Y.) 
210.  On  the  contrary,  it  has  been  held 
that  in  such  cases  the  action  must  be 
joint,  and  that,  if  the  transfer  is  con- 
sented to  by  the  insurers,  the  remain- 
ing partners  suing  in  the  name  of  the 
firm  may  recover  the  whole  loss ;  if 
without  their  consent,  the  amount  of 
their  interest.  Hobbs  v.  Memphis  Ins. 
Co.,  1  Sneed  (Tenn.),  444.  And  where 
a  surviving  partner,  by  tlie  articles, 
becomes  sole  owner,  he  may  recover 
in  his  own  name  for  the  whole  loss, 
though  the  insurers  were  ignorant  of 
the  agreement.    Wood  v.  Rutland,  &c. 


366  THE   LAW    OF   PARTNERSHIP.  [CH.  IX. 

There  is  no  doubt  that  a  contract  made  with  a  firm,  and 
therefore  with  all  the  members  of  a  firm,  may  be  exchanged 
for  any  other  by  the  act  or  consent  of  all  the  parties.  Thus, 
a  sale  is  made  to  a  firm,  who  owe  for  it.  But  the  merchandise 
is  transferred  by  the  firm  to  one  partner,  who  agrees  to  pay 
for  it.  By  this  alone  the  obligation  of  all  the  partners  is  not 
in  the  slightest  degree  affected.  But  if  the  seller,  upon  being 
applied  to,  consents  to  the  arrangement,  and  agrees  to  dis- 
charge the  firm  and  take  this  partner  alone  as  his  debtor,  we 

should  think  the  arrangement  would  be  valid  in  law, 
*  337    although  some  doubt  might  arise  from  the  *  fact  that, 

as  this  partner  was  already  bound  with  all  the  rest,  his 
new  promise  is  no  consideration  for  the  discharge  of  the  rest. 
By  the  principle  of  novation,  if  the  new  debtor  is  altogether  a 
new  person,  his  promise  is  sufficient  consideration ;  and,  as  the 
separate  promise  of  a  partner  would  bind  his  separate  property 
to  this  debt  (we  shall  presently  consider  the  question  whether 
partnership  debtors  can  claim  any  of  the  private  property  of 
partners  until  their  private  debts  are  discharged),  we  should 
incline  to  believe  that  this  would  be  consideration  enough,  (w) 

Where  no  objection  of  this  kind  comes  in,  it  is  certain  that 
such  a  transfer  would  be  effectual  ;  (a;)  as  if  a  sale  were  made 
by  a  firm  and  the  debts  transferred  to  one  partner,  and  the 
debtor,  being  discharged  by  the  other  partners,  agreed  to  pay 
that  one  ;  (y)  or  if  a  guaranty  were  made  to  a  firm,  and  trans- 
ferred to  one  partner ;  or  made  to  one  partner,  and  by  him 
transferred  to  a  firm ;  and  the  guarantor,  for  any  sufficient 
consideration,  agreed  to  the  transfer. 

Ins.  Co.,  31   Vt.   552.     On   the   other  Chenango  Co.  Mut.  Ins.  Co.,  2  Comst. 

hand,  where  a  sole  trader  takes  a  part-  (N.  Y.)  53.] 

ner,  with  the  consent  of  the  insurers,  (w)  See    ante,  p.   *329,   note   {p)  ; 

and  tliat  the  policy  shall  be  good  to  p.  *331,  note  {]/). 

the  firm,  it  has  been  held  that  no  action  (x)  See  ante,  p.  *  329,  note  (p). 

can  be  maintained  by  either  partner  (>/)  Cook  r.  Beech,  10  Humph.  412 ; 

severally,  or  by  both  jointly,  but  the  Degroot  v.  Darby,  7  Rich.  117;  Howell 

remedy  must  be  in  equity.     Bodle  v,  v.  Reynolds,  12  Ala.  128. 


CH.  IX.]     REMEDIES   BY   PARTNERS   AGAINST   THIRD   PARTIES.      367 

SECTION   II. 
OF   THE  EEMEBIES  OF    PARTNERS   AGAINST   THIRD  PARTIES,   FOR   TORTS. 


It  is  plain  that  there  may  be  torts  against  a  firm  jointly,  as 
well  as  against  any  or  all  the  partners.  And  there  is  no  rea- 
son why  the  firm  may  not  as  such  sue  the  wrong-doer  at 
law.  (2)  But  the  *  rule  would  doubtless  be  strictly  applied,  *  338 
that  damages  could  be  recovered  only  for  the  joint  in- 
jury sustained,  (a)  Thus  an  action  would  lie  for  seducing 
away  one  in  their  employ,  (b)  for  turning  any  business  from 
them  by  fraud  and  falsehood,  or  for  any  fraud  against  the 
whole  firm,  or  for  slander  of  them  as  merchants,  (c)  or  for 


{z)  Addison  v.  Overend,  6  T.  R. 
766 ;  Cabell  v.  Vaughan,  1  Wms. 
Saund.  291,  m.  and  notes;  Glover  v. 
Austin,  6  Pick.  209 ;  Bloxam  v.  Hub- 
bard, 5  East,  407  ;  Cooke  v.  Bachellor, 
3  Bos.  &  P.  150 ;  Foster  v.  Lawson, 
3  Bing.  452;  Taylor  v.  Church,  4  Seld. 
452, 1  E.  D.  Smith,  479 ;  Sewall  v.  Cat- 
lin,  3  Wend.  291;  Patten  r.  Gurney, 
17  Mass.  186,  followed  in  Medbury  v. 
Watson,  6  Mete.  246,  257,  258.  A  dor- 
mant partner  may  join  in  trover. 
Robinson  v.  Mansfield,  13  Pick.  139. 
The  rule  is  often  laid  down  tliat  part- 
ners may  join  in  an  action  ex  delicto  for 
an  injury  affecting  their  joint  interest. 
Best,  J.,  in  Foster  v.  Lawson,  3  Bing. 
455.  It  is  more  correct  to  say  that 
they  must.  Patten  v.  Gurney,  17 
Mass.  185;  cases  cited  supra;  Ward 
V.  Branipston,  3  Lev.  362.  If  they  do 
not  join,  it  can,  however,  only  be  taken 
advantage  of  by  plea  in  abatement. 
Deal  V.  Bogue,  20  Penn.  St.  228 ;  Gib- 
son V.  Stevens,  7  N.  H.  352,  358;  1 
Chitty  PI.  65;  Gow  on  Part.  136  ;  Pick- 
ering v.  Pickering,  11  N.  H.  141 ;  Night- 
ingale V.  Scammell,  6  Cai.  50G ;  Anony- 
mous, W.  Jones,  253.  Or  the  court 
may  abate  tlie  writ  ex  officio.  Hart  v. 
Fitzgerald,  2  Mass.  509. 

(u)  Barratt  v.  Collins,  10  J.  B. 
Moore,  446 ;  Haythorn  v.  Lawson,  3 
Car.  &.  P.  196;  Pechell  v.  Watson, 
8  M.  &  W.  691.     Thus  in  Garland  v. 


Noble,  1  J.  B.  Moore,  187,  it  was  held, 
that  on  a  submission  to  arbitration  of 
all  matters  in  dispute  between  a  part- 
nership and  an  individual,  only  the 
joint  claims  of  the  firm  were  in  issue. 
The  same  was  the  case  in  Barratt  v. 
Collins,  supra.  See  the  cases  in  note 
(h),  infra. 

{bj  Story  on  Part.  §  258. 

(c)  Lewis  V.  Chapman,  19  Barb. 
252,  where  a  postscript  to  a  letter  say- 
ing "confidential;  had  to  hold  over  a 
few  days  for  the  accommodation  of  L. 
&  H.,"  was  held  libellous  if  false,  when 
addressed  to  the  creditors  of  L.  &  H. ; 
but  held  in  the  Court  of  Appeals  to  be 
for  the  jury  to  determine  as  a  question 
of  interest,  16  N.  Y.  369;  i^oster  v. 
Lawson,  3  Bing.  452  ;  Cooke  v.  Bach- 
ellor, 3  Bos.  &  P.  150;  Sewall  v. 
Catlin,  3  Wend.  291  ;  Haythorn  v. 
Lawson,  3  Car.  &  P.  196;  Buraage 
V.  Prosser,  4  B.  &  C.  247  ;  Williams  v. 
Beaumont,  10  Bing.  270;  Taylor  v. 
Church,  1  E.  D.  Smith,  279,  4  Seld. 
452 ;  Le  Fanu  v.  Malcomson,  1  H.  L. 
Cas.  637.  In  this  last  case,  a  charge  of 
cruelty  to  employe's  was  held  an  in- 
jury to  the  firm  in  their  trade,  for 
which  they  could  sue  jointly.  See 
also  Davis  i-.  Davis,  1  Nott  &  McC. 
290;  Backus  v.  Richardson,  5  .lolins. 
483,  485;  Ware  v.  Clowny,  24  Ala. 
707;  Babonneau  v.  Farrell,  15  C.  B. 
360,  28  Eng.  L.  &  Eq.  339. 


368 


THE   LAW   OF   PARTNERSHIP. 


[CH. IX. 


conversion  of  the  property  of  the  firm  ;(d)  or,  indeed,  for  any 
injury  Avrongfully  inflicted,  whether  by  negligence  or  with 
wrongful  intent,  (e)  So,  too,  if  vn  injury  affected  two  or  more 
members  of  a  firm  jointly,  and  not  the  rest,  those  who  were 

jointly  injured  could  sue  jointly.  (/) 
*  399        *  It  might  not  always  be  easy  to  draw  the  line  between 

damages,  which  were  recoverable  in  such  an  action, 
because  they  were  joint,  and  those  which  were  not  recoverable, 
because  they  were  not  joint,  (g)  Thus,  if  a  libel  charged  in- 
solvency or  dishonesty  upon  any  one  partner,  he,  of  course, 
could  sue  ;  but,  in  strict  law,  he  could  not  recover  in  this 
several  suit  for  any  damage  done  to  the  firm  of  which  he  was 
a  member,  and  not  even,  we  should  say,  for  his  share  of  this 
damage.  For  this  the  firm  must  sue,  and,  in  this  suit,  they 
could  recover  only  for  the  damage  all  sustained  jointly,  (^h) 


(d)  In  trover  or  trespass  for  injuries 
to  the  joint  property,  the  partners  can 
(and  must)  join.  Wilson  v.  Comine, 
2  Johns.  280;  Patten  v.  Gurney,  17 
Mass.  185,  187,  per  Parker,  C.  J.  ; 
Glover  v.  Austin,  6  Pick.  209. 

(e)  Weller  v.  Baker,  2  Wils.  414, 
423;  Patten  v.  Gurney,  17  Mass.  185; 
Medbury  v.  Watson,  6  Mete.  257,  258. 
Thus  case  lies  by  a  firm  against  an 
officer  if  he  improperly  give  up  prop- 
erty attached  at  their  suit.  Commer- 
cial Bank  v.  Wilkins,  9  Greenl.  28. 

(/)  This  question  seems  most  gen- 
erally to  have  arisen  where  the  joint 
property  has  been  seized,  or  sold  and 
delivered,  on  execution  against  one 
partner,  for  his  separate  debt.  In  fact, 
it  would  seldom  arise  in  any  other 
way,  except  perhaps  in  the  case  of  col- 
lusion, between  one  partner  and  some 
third  party,  to  slander  or  defraud  the 
firm;  since  the  injury,  to  admit  of  a 
joint  action  as  partners  by  two  or  more 
members  of  the  firm  to  the  exclusion 
of  another  member,  must  touch  them 
in  their  partnership  property,  or  inter- 
est in  that  property,  and  yet  not  affect 
the  excluded  partner,  by  reason  of  the 
act  by  whicli  the  injury  is  caused  being 
justifiable  as  to  him,  or  one  for  which 
he  is  responsible.  In  many  of  the 
States,  it  is  held,  that  the  sheriff  may 


seize,  and  deliver  to  the  purchaser,  the 
specific  property  of  the  firm,  and  that 
the  purchaser  thereby  becomes  tenant 
in  common  with  the  other  partners  of 
that  property  :  as  in  Maine,  New  York, 
Alabama,  Iowa,  Illinois,  North  Caro- 
lina, Texas,  Michigan,01uo,  New  Jersey. 
So  in  England  ;  but  see  next  chapter. 
In  case,  therefore,  the  purchaser  should 
undertake  to  convert  the  property  by 
a  destruction  of  it,  or,  as  is  held  in 
some  courts,  by  a  sale,  trover  would  lie 
against  him,  as  against  any  tenant  in 
common,  by  the  other  partners  exclud- 
ing the  debtor  partner.  Wilson  v. 
Reed,  3  Johns.  175 ;  Mayhew  v.  Her- 
rick,  7  C.  B.  229,  per  Maule  and  Cress- 
well,  JJ. ;  White  v.  Osborne,  21  Wend. 
72 ;  Hyde  v.  Stone,  7  id.  354. 

(«7)  In  trover  by  one  partner  against 
a  sheriff  who  has  sold  the  whole  prop- 
erty on  a  levy,  for  the  separate  debt 
of  the  copartner,  in  tiie  absence  of  pre- 
cise proof  of  his  interest  the  partner 
may  recover  a  moiety,  Walsh  v. 
Adams,  3  Denio,  125;  Deal  v.  Bogue, 
20  Penn.  St.  228  ;  or  the  proportion  of 
his  original  interest  in  the  goods,  if 
this  appear,  Deal  v.  Bogue,  id. 

{h)  One  partner  can  recover  for  a 
libel  on  him  in  the  way  of  his  trade, 
although  the  libel  also  affects  the  firm. 
Harrison  v.  Bevington,  8   Car.  &   P. 


CH.  IX.]     REMEDIES   BY   PARTNERS   AGAINST  THIRD   PARTIES.      369 

Possibly  the  principle  of  exemplary  damages,  which,  although 
called  in  question  by  high  authority,  is,  we  think,  certainly 
admissible  in  some  actions  for  tort,  and,  possibly  in  all,  might 
come  in  aid  of  the  plaintiff,  and  help  to  remove  the  diffi- 
culty, (i)  If  a  third  person  colluded  with  a  partner  to 
defraud  *  the  firm,  there  would  be  very  great  difficulty  *  3-10 
in  permitting  the  whole  firm,  including  the  fraudulent 
partner,  to  sue  this  third  person  ;  and,  also,  some  difficulty  in 
maintaining  a  suit  by  the  other  partners  for  the  damage  done 
to  the  firm.  (/)  This  latter  action,  however,  has  been  sus- 
tained, and  we  have  no  authority  for  supposing  the  former 
maintainable.  But  what  damages  could  be  recovered  in  such 
an  action,  whether  all  that  the  firm  sustained,  or  only  the 
proportion  of  the  suing   partners,  we  are  not  informed,  (k) 


708;  Robinson  v.  Marchant,  7  Q.  B. 
918  ;  and  even  though  tlie  %m  has  al- 
ready recovered  for  its  injury  through 
the  same  libel.  Taylor  v.  Church,  1 
E.  D.  Smith,  279.  See  Le  Fanu  v. 
Malcomson,  1  H.  L.  Cas.  637,  where 
the  libel  referred  to  occurrences  "  in 
some  of  the  Irish  factories,"  and  tlie 
plaintitf  was  allowed  by  innuendo  to 
show  tiuit  this  was  applied  to  him- 
self, though  his  name  did  not  appear 
therein.  The  question  of  damages 
being  one  for  the  jury,  it  was  intimated 
by  Coleridge,  J.,  that  where  on  the  face 
of  the  declaration  the  damage  is  partly 
joint,  and  partly  several,  the  course  in 
such  a  case  would  be  to  limit  the  proof 
at  the  trial.  Robinson  v.  Marchant, 
7  Q.  B.  923;  Taylor  i-.  Church,  1  E. 
D.  Smith,  279,  affirmed  on  error,  4 
Seld.  452  ;  Foster  v.  Lawson,  3  Bing. 
452.  Perhaps  the  doctrine  on  this  sub- 
ject may  be  briefly  stated  thus :  An 
action  on  such  libel,  either  by  tlie  firm, 
or  the  single  partner,  or  by  both,  will 
lie  ;  both  may  declare  without  proof  of 
special  damage,  and  the  jury  will  be 
presumed  to  have  confined  themselves 
to  the  injury  of  the  party  plaintiff.  If 
they  allege  special  damage,  the  proof 
■will  be  limited  at  the  trial.  If  the 
libel  be  such  that  the  respective  injury 
cannot  be  distinguished,  the  defect 
must  be  specially  demurred  to.    Inju- 


ries, however,  to  the  personal  feelings, 
cannot  of  course  be  included  in  a  joint 
suit  by  the  firm.  Haythorne  v.  Law- 
son,  3  Car.  &  P.  196. 

(/)  Taylor  v.  Church,  1  E.  D.  Smith, 
279,  4  Seld.  452,  and  cases  cited ;  and 
see  Lewis  v.  Chapman,  19  Barb.  2.52. 
Also,  see  Symonds  v.  Carter,  32  N.  H. 
458 ;  Cramer  v.  Noonan,  4  Wis.  231 ; 
Fry  V.  Bennett,  4  Duer,  247. 

(j)  Longman  i'.  Pole,  Moody  &  M. 
223.  In  the  Metropolitan  Saloon  Om- 
nibus Co.  v.  Hawkins,  4  Hurlst.  &  N. 
87,  92,  Longman  v.  Pole  was  cited  and 
afiirmed  ;  and  it  was  even  said  by  Wat- 
son, B.  :  "  But  it  is  clear  that  an  ordi- 
nary partnersliip  would  have  a  right  to 
maintain  an  action  against  one  of  its 
members,  for  injury  to  their  real  or  per- 
sonal property,  and  for  all  wrongs  done 
to  them." 

(k)  By  the  analogy  of  cases  in  tro- 
ver against  sheriffs  for  sales  of  the 
entire  property  of  the  firm,  it  would 
seem  that  the  extent  of  the  recovery 
might  be  for  the  shares  of  the  innocent 
partners.  But  as  the  defendant  is 
guilty  of  acquisition  of  tlie  property 
by  a  fraud,  though  against  the  plaintiffs 
only,  this  would  perhaps  estop  him 
from  claiming  any  property  tliere- 
under ;  for  tlie  law  would  not  permit 
him  to  divide  his  own  fraud. 


24 


370  THE   LAW   OF   PARTNERSHIP.  [CH.  IX. 

"We  should  have  said,  that  an  action  by  all  the  partners,  includ- 
ing the  fraudulent  partner,  and  using  his  name  only  for  the 
benefit  of  the  innocent  partners,  and  recovering,  therefore, 
only  the  share  of  damage  sustained  by  the  innocent  part- 
ners, (^)  might  have  satisfied  the  justice  of  the  case,  and  the 
technical  rules  of  law,  quite  as  well. 

We  know  nothing  in  the  law  of  partnership  which  limits  the 
power  of  equity  in  giving  the  partnership  relief  against  third 
parties.  We  mean,  that  in  all  cases  of  this  kind,  the  same 
reasons  for  giving  relief  would  be  required,  and  the  same 
selection  of  remedy,  whether  by  injunction,  discovery,  specific 
performance,  or  otherwise,  as  in  similar  cases  which  did  not 
concern  partnership.  (?m)  There  is,  however,  one  question 
which  has  arisen,  where  a  partnership  has  prayed  for  an  in- 
junction, to  prevent  a  several  creditor  of  a  partner  from  inter- 
fering with  the  partnership  property,  which  comes  up  as  a 
question  of  the  remedies  of  partnerships  against  third  persons. 
It  is,  in  fact,  however,  a  question  as  to  the  rights  and  remedies 
of  third  persons  against  the  partnership  ;  and  this  gen- 
*  341  eral  subject  we  will  not  proceed  to  consider,  *  adding 
only  to  this  section,  that  where  the  partnership  is  itself 
illegal,  or  where  the  action  or  the  object  of  the  action  is 
illegal,  no  suit  can  be  maintained  by  a  partnership,  any  more 
than  it  could  be  by  an  individual,  under  the  same  circum- 
stances, (w)  It  has,  however,  been  held  that,  when  one  part- 
ner seeks  in  equity  a  settlement  of  the  partnership,  the  fact 
that  the  firm  was  established  for  a  fraudulent  purpose  is  no 
defence,  (nw)     But  this  is  not  certain. 

(/)  See  tlie  preceding  note.  8  Hare,  281  ;   Douglas  v.  Horsfall,  2 

(m)  Hood  V.  Aston,   1    Russ.  416;  Sim.  &  S.  184. 
Jervis  v.  White,  7  Ves.  413;  Motley  i\  {n)  Biggs  v.  Lawrence,  3  T.  R.  454, 

Dounman,  3  Mylne  &  Cr.  1 ;   Knott  v.  where  the  partnership  was  formed  for 

]\Iorgan,  2  Keen,  213 ;    Small  v.   At-  smuggling. 

wood,   Younge,  456;    Fenn   v.  Craig,  (nn)  Harvey  v.  Varney  (2  Browne), 

3  Younge  &  C.  21G ;    Clay  r.  Rufford,  98  Mass.   118;    [but   see   Sampson  w. 

Shaw,  101  Mass.  145.] 


CH.  X.]  REMEDIES   OP  THIRD   PERSONS,  ETC.  371 


CHAPTER  X. 

OP  THE  REMEDIES   OP  THIRD  PERSONS   AGAINST  THE  PARTNERSHIP- 
AND    AGAINST    PARTNERS. 

SECTION    I. 

OF  THE  APPROPRIATIOX  OF  THE  PROPERTY  TO  THE  DEBTS. 

The  remedies  of  third  parties  against  the  firm  and  its  mem- 
bers are  generally  the  same  as  those  which  exist  in  relation  to 
individuals.  Similar  actions  at  law,  and  similar  suits  in  equity, 
with  such  variation  as  the  nature  of  the  case  suggests  and 
requires  ;  similar  attachment,  whether  direct  or  foreign  attach- 
ment, or  garnishee  process,  and  similar  levy  and  execution ; 
but  always  subject  to  one  modification  or  exception,  which  has 
caused  much  conflict  and  uncertainty  in  practice,  and  of  which 
all  the  etfects  and  all  the  rules  are  not  yet  determined.  This 
exception  arises  from  the  fact  that  there  may  be  creditors  of 
the  partnership,  and  creditors  of  the  several  partners ;  and 
the  rights  and  claims  of  these  two  classes  of  creditors  are 
conflicting. 

In  the  days  of  Salkeld  and  Lord  Raymond,  one  hundred  and 
fifty  years  ago,  the  extreme  inadequacy  and  incompleteness  of 
the  law  of  partnership  are  proved  by  the  fact,  that  a  creditor  of 
a  partner  got  at  once  by  execution  the  share  of  the  indebted 
partner  in  the  partnership  property.  If  there  were  two  part- 
ners,—  and  at  that  time  it  would  seem  that  there  were  seldom 
more, —  a  creditor  of  one  got  judgment  and  execution  against 
him,  and  levied  it  upon  the  partnership  property,  of  which  the 
sheriff  (altliough  he  seized  the  whole)  sold  one-half.  If  there 
were  three,  he  sold  one-third ;  if  four,  one-quarter,  (a)     The 

(a)  Heyden  v.  Hey  den,  1  Salk.  392  ;  Mariott  v.  Sliaw,  Comyn,  277  ;  Bac- 
Jacky   V.  Butler,   2   Ld.  Raym.  871;    hurst  v.  Clinkard,  1  Sliow.  169. 


372  THE   LAW   OF   PARTNERSHIP.  [CH.  X. 

progress  of  the  change  is  not  very  distinctly  exhibited 
*343  *in  the  reports;  but  it  began  early, (5)  and  it  has  long 
since  been  the  well-established  rule  and  practice,  that 
no  private  creditor  of  a  partner  could  take,  by  his  execution, 
any  thing  more  than  that  partner's  share  in  whatever  surplus 
remained  after  the  partnership  effects  had  paid  the  partner- 
ship debts,  (c) 

There  are  two  entirely  distinct,  and  indeed  opposite,  ways  of 
viewing  a  commercial  partnership.  One  of  them  regards  it  as 
a  modified  tenancy  in  common  ;  the  other  regards  it  as  a  modi- 
fied corporation.  It  is  certain  that  a  partnership  is  neither  a 
tenancy  in  common  nor  a  corporation  ;  and  it  is  equally  cer- 
tain that  it  has  some  of  the  attributes  and  qualities  of  each  of 
these  forms  of  joint  ownership.  The  question,  which  lies  at 
the  bottom  of  the  difhculties  presented  by  our  present  topic, 
seems  to  us  to  be  this :  Which  of  these  two  things  does  part- 
nership most  nearly  approach  ? 

Exactly  so  far  as  a  partnership  is  a  tenancy  in  common,  it 
has  no  existence  as  a  body  by  itself,  and  has  no  property,  and 
no  debts  or  creditors.     Just  so  far  as  it  is  a  corporation,  it  has 

(6)  It  seems  to  have  been  received  548;  Ex  parte  Smith,  16  Johns.  102; 
in  the  time  of  Lord  Mansfield.  In  Walsh  v.  Adams,  3  Denio,  125 ;  Lyn- 
Fox  V.  Hanbury,  Cowp.  4-45,  the  sale  don  v.  Gorhara,  1  Gallison,  367  ;  Tap- 
by  the  sheriff  was  limited  to  the  share  pan  v.  Blaisdell,  5  N.  H.  193,  per 
of  the  partner  after  the  settlement  of  Richardson,  C.  J. ;  Gibson  v.  Stevens, 
all  the  partnership  accounts  ;  to  as-  7  N.  H.  352 ;  Morrison  v.  Blodgett,  8 
certain  which,  an  account  was  taken  N.  H.  244,  254;  Newman  v.  Bean,  1 
on  a  reference  before  a  Master  in  Post.  93 ;  Hill  y.  Wiggin,  11  id.  292; 
Chancery.  But  in  Parker  v.  Pister,  Church  y.  Knox,  2  Conn.  523;  Witter 
3  Bos.  &  P.  288  ;  Chapman  v.  Koops,  v.  Richards,  10  id.  41 ;  Tilley  v.  Phelps, 
id.  289,  this  equitable  process  by  a  18  id.  294;  Rice  v.  Austin,  17  Mass. 
court  of  law  was  emphatically  refused  206  ;  Brewster  v.  Hamraitt,  4  Conn, 
by  Lord  Alvanly.  See  the  history  of  540 ;  Smith  v.  Barker,  1  Fairf .  458 ; 
the  change,  examined  in  Ex  parte  Commercial  Bank  v.  Wilkins,  9  Greenl. 
Smith,  16  Johns.  102,  note  ;  3  Kent  38 ;  Douglas  v.  Winslow,  20  Me.  89 ; 
Comm.  65,  note  (a);  Am.  Jur.,  Oct.  Doner  f.  Stauffer,  1  Barr,  198;  Deal  u. 
1841,  art.  3.  Bogue,  20  Penn.  St.  228 ;  Greene  v. 
(c)  Washburn  v.  Bank  of  Bellows  Greene,  1  Oliio,  244  ;  Place  v.  Sweet- 
Falls,  21  Vt.  278,  284;  Matlock  v.  zer,  16  Ohio,  142;  Sutcliffe  v.  Dohr- 
Matlock,  5  Ind.  403  ;  Andrews  v.  Keith,  man,  18  id.  181 ;  Winsten  v.  Ewing,  1 
34  Ala.  722 ;  Rodriguez  i'.  Heffernan,  Ala.  29 ;  Lucas  r.  Laws,  27  Penn.  St. 
5  Johns.  Ch.  417  ;  Murray  v.  Murray,  211 ;  Hubbard  v.  Curtis,  8  Iowa,  1,  14  ; 
id.  60 ;  Delmonico  c.  Guillaume,  2  Ridgway  v.  Clare,  19  Beav.  11 ;  [Ross 
Sandf .  Ch.  366 ;  Smith  r.  Jackson,  2  v.  Henderson,  Sup.  Ct.  N.  C,  4  L.  & 
Edw.  Ch.  28;  U.  S.  v.  Hack,  8  Pet.  Eq.  Reptr.  211.] 
275 ;   Moody  v.  Payne,  2  Johns.  Ch. 


CH.  X.]  REMEDIES   OF  THIRD   PERSONS,  ETC.  373 

ail  independent  existence,  and  its  own  property,  and  its  own 
debts.  And  precisely,  as  in  recent  times,  it  has  been 
found  necessary,  in  this  *  country,  where  so  much  busi-  *  344 
ness  is  done  by  corporations,  to  impart  to  corporations 
many  of  the  qualities  of  partnership  ;  and  just  as  during  the  dif- 
ficult and  tedious  process  of  adjusting  this  new  condition  of 
joint  ownership  and  joint  action,  many  mistakes  were  made  and 
much  mischief  done,  until  the  just  medium  was  found,  and  the 
reconciling  principle  which  best  protects  the  interests  of  all 
concerned  ;  so,  in  reference  to  partnership,  we  apprehend  that 
mischief  has  been  caused  by  the  difficulty  of  adjusting  its  true 
relation  to  a  corporation,  or,  in  other  words,  in  determining 
the  degree  in  which  the  law  will  acknowledge  a  voluntary  mer- 
cantile partnership  as  a  quasi  independent  body,  and  the  con- 
sequences which  it  will  derive  from  this  acknowledgment. 

We  have  no  doubt  whatever  that  the  rule  now,  as  has  been 
said,  perfectly  established,  which  shuts  out  the  creditors  of  the 
several  partners  from  the  partnership  property,  until  that  has 
paid  the  partnership  debts,  is  derived  directly  from  this  acknowl- 
edgment ;  and  it  would  seem  to  be  an  inevitable  consequence  of 
any  recognition  of  a  partnership  as  a  body  by  itself,  having  its 
own  creditors  and  its  own  effects ;  and  we  are  also  confident 
that  most  of  the  difficulties  which  still  embarrass  this  subject 
will  be  removed  by  a  more  distinct  recognition,  and  more  direct 
application,  of  the  same  principle. 

Not  many  years  since,  there  began, —  perhaps  not  with  Lord 
Eldon,  but   confirmed   by    him,  ((^) — a   way  of    explaining 

(d)  Lord  Hardwicke  held,  that  a  and  I  approve  of  that  decision."  "The 
partner,  or  his  representatives,  had  a  grounds  on  which  I  went  in  Ex  parte 
specific  lien  upon  the  partnership  stock  Kuffin  were  these :  Among  partners 
for  his  surplus.  West  v.  Skip,  1  Ves.  clear  equities  subsist,  amounting  to 
Sen.  289.  See  Dodington  v.  Hallett,  1  something  like  a  lien.  The  property 
Ves.  Sen.  498,  499 ;  by  Lord  Eldon,  in  is  joint;  the  debts  and  credits  are 
Ex  parte  Younge,  2  Ves.  &  B.  242,  jointly  due.  They  have  equities  to 
because  the  parties  were  part-owners  discharge  each  of  them  from  liability, 
and  not  partners.  Tlie  theory,  as  up-  and  then  to  divide  tlie  surplus  accord- 
held  by  later  authorities,  is  undoubt-  ing  to  their  proportions ;  or,  if  there  is 
edly  founded  on  the  remarks  of  Lord  a  deficiency,  to  call  upon  eacli  other  to 
Eldon,  in  Ex  parte  RuflSin,  6  Ves.  119,  make  up  that  deficiency  according  to 
followed  by  Ex  parte  Williams,  11  Ves.  their  proportions.  But  while  they  re- 
4.  In  the  latter  case,  he  said :  "  I  main  solvent,  and  the  partnership  is 
have  frequently,  since  I  decided  the  going  on,  the  creditor  has  no  equity 
case  of  £•:?  parte  Ruffin,  considered  it,  against    the    effects    of    the    partner- 


374 


THE   LAW   OF   PARTNERSHIP. 


[CH.  X. 


*  345  the  rights  *  and  determining  the  remedies  of  partners, 
by  supposing  a  kind  of  lien  on  the  partnership  property, 
by  the  partners,  and  a  kind  of  lien  by  the  creditors  on  the  part- 
ners' lien.  This  is  not  the  language  used  ;  but,  it  is  said,  that 
partners  have  a  lien  on  the  property  for  the  payment  of  the 
debts,  and  that  creditors  have  a  quasi  lien,  and  by  means  of 
this,  and  through  the  lien  of  the  partners,  they  worked  out 
their  effectual  remedy  against  the  property,  (e) 

This  theory  is  certainly  obscure,  and  hardly  capable  of  being 
definitely  stated ;  nor  does  it  appear  to  lead  in  any  direct  or 
distinct  way  to  the  result,  for  the  sake  of  which  it  seems  to 
have  been  constructed.  There  is  no  doubt  that  creditors  of 
the  firm  have  an  equitable  preference,  or  right,  which  courts 
of  equity  enforce.  (/)  But  we  do  not  see  that  much  is  gained 
by  regarding  this  as  a  lien.  (^) 


ship."  "  But  still,  in  either  of  these  eases 
[dissolution  by  efflux  of  time,  the 
death  of  one  partner,  the  bankruptcy 
of  one,  or  by  dry,  naked  agreement], 
the  community  of  interest  remains 
that  is  necessary,  until  the  aflPairs  are 
wound  up ;  and  that  requires  tliat 
what  was  partnership  property  before 
shall  continue,  for  the  purposes  of  a 
distribution,  —  not  as  the  rights  of  the 
creditors,  but  as  the  rights  of  tiie  part- 
ners themselves,  require.  And  it  is 
through  the  operation  of  administering 
the  equities,  as  between  the  partners 
themselves,  that  the  creditors  have 
that  opportunity  ;  as,  in  the  case  of 
deatli,  it  is  the  equity  of  the  deceased 
partner  that  enables  the  creditors  to 
bring  forward  the  distribution."  Also, 
Ex  parte  Rowlandson,  2  Ves.  &  B.  173; 
Ex  parte  Fell,  10  Ves.  348.  See  Con- 
well  V.  Sandidge,  8  Dana,  278,  279. 

(e)  Story  on  Part.  §§  3G0,  361. 

(f)  Ex  parte  Williams,  11  Ves.  6  ; 
Ex  parte  Ruffin,  6  Ves.  126,  127  ;  Ex 
parte  Kendall,  17  Ves.  626  ;  Hoxie  v. 
Carr,  1  Sumner,  181-2 ;  Ex  parte  Row- 
landson, 2  Ves.  &  B.  172;  Appeal  of 
York  Co.  Bank,  32  Penn.  St.  446; 
Baker's  Appeal,  21  id.  76 ;  Doner  v. 
Stauffer,  1  Barr,  198 ;  Wilson  v.  Loper, 
13  B.  Mon.  414 ;  Jones  v.  Lusk,  2  Mete. 


(Ky. )  356;  Stout  ij.  Fortune,  7  Iowa, 
183;  Campbell  v.  Mullett,  2  Swanst. 
575  ;  Cross  on  Lien,  198  ;  Washburn  v. 
Bank  of  Bellows  Falls,  19  Vt.  278. 
Authorities  upon  the  point  might  be 
multiplied  almost  indefinitely.  This 
is  the  recognized  and  decided  law  of 
all  the  New  England  States.  Most  of 
the  otlier  States  have  also  recognized 
it;  and  no  one  has  expressly  denied 
its  existence  or  obligation,  so  far  as 
we  know,  with  the  exception  of  Penn- 
sylvania and  Georgia.  See  Witter 
V.  Richards,  10  Conn.  37 ;  Egberts 
V.  Wood,  3  Paige,  517 ;  McCulloch  v. 
Dashiell,  1  Harris  &  G.  96  ;  Hall  v. 
Hall,  2  McCord  Ch.  302;  Wooddrop 
V.  Wards,  3  Desaus.  203 ;  Smith  v. 
Johnson,  2  Edw.  28 ;  Commercial  Bank 
V.  Wilkins,  9  Greenl.  28.  Further  see 
Pearson  v.  Keedy,  6  B.  Mon.  128 ; 
Black  V.  Bush,  7  id.  210;  Ladd  v.  Gris- 
wold,  4  Gilman,  25 ;  Reese  v.  Bradford, 
13  Ala.  837;  Matlock  v.  Matlock,  5 
Ind.  403 ;  Miller  ;;.  Estill,  5  Ohio  St. 
508;  Allen  v.  Centre  Vale  Co.,  21 
Conn.  130;  [Williams  v.  Gage,  49 
Miss.  777 ;  Gordon  v.  Kennedy,  36 
Iowa,  167.]  In  Pennsylvania,  it  was 
denied  in  Bell  v.  Newman,  5  Serg.  & 
R.  78;  In  re  Sperry,  1  Ashm.  347  ;  and, 
in   Georgia,  in  Ex  parte  Stebbins,  K. 


iff)  See  Mayer  v.  Clark,  40  Ala.  259. 


CH.  X.] 


REMEDIES   OF   THIRD    PERSONS,   ETC. 


375 


It  seems  to  be  admitted  by  Mr.  Justice  Story,  who  build 
upon  this  theory  ahnost  all  the  remedy  of  the  creditors,  that 
partners  have  no  lien,  unless  in  case  of  insolvency  or 
dissolution  ;  or,  *  certainly,  that  the  creditors  do  not  get    *  346 
their  qiiaisi  lien,  unless  in  these  cases.     It  is  not  easy  to 
see  how  either  insolvency  or  dissolution  creates  any  lien,  al- 
though, in  these  new  circumstances,  new  rights  arise,  or,  at 
least,  are  developed,  and  come  into  prominence,  and  the  courts 
of  equity  recognize  and  enforce  them.     And  this  we  suppose  to 
be  what  is  meant.  (^) 

We  apprehend  that  there  is  a  simpler  view  of  this  subject, 
which  is  at  least  equally  efficient,  and  is  open  to  no  important 


M.  Charlt.  77  (tliough  this  case  was 
decided  under  a  statute,  and  was  ex- 
ceptional in  its  circumstances) ;  and 
questioned  in  Cleghorn  r.  Ins.  Bank  of 
Columbus,  0  Ga.  319.  But  it  is  now 
otherwise  in  both  States.  The  right 
has  been  recognized  in  Pennsylvania, 
in  Appeal  of  York  Co.  Bank,  32  Penn. 
St.  446,  and  other  cases  cited  ;  and,  in 
Georgia,  in  Hoskins  v.  Johnson,  24  Ga. 
625,  630,  where  it  is  called  an  equity. 
In  the  case  of  Burtus  v.  Tisdall,  4 
Barb.  588,  Strong,  J.,  says :  "  It  is 
clearly  settled  that  the  joint  creditors 
have,  tlien,  the  ^rsi  equitable  claim  upon 
the  whole,  for  the  satisfaction  of  their 
debts."  Sometimes  tlie  copartnership 
property  is  called  a  trust  fund  for  the 
benefit  of  creditors ;  and  sometimes  it 
has  been  said  that  the  copartnership 
creditors  have  a  lien,  or  quasi  lien, 
upon  it.  But,  whatever  may  be  the 
exact  nature  and  extent  of  these  rights, 
it  is  certain  that  the  joint  debts  have 
a  claim  of  priority  of  payment  out  of 
the  whole  of  the  joint  funds. 

(9)  If  the  private  creditor  levies  on 
the  joint  property,  and,  on  an  account 
being  taken  to  find  the  amount  cov- 
ered bj'  the  levy  —  viz.,  the  debtor's 
share  —  if  it  appear  that  there  is 
enough  to  satisfy  both  the  joint  and 
separate  creilitors,  the  former  cannot 
be  said  to  be  preferred.  If  there  is 
not  enough  to  satisfy  both,  tlien  there 
is  an  insolvency,  and  tlie  joint  cred- 
itors are  preferred.     So,  in  the  case  of 


marshalling  of  assets.  This,  there- 
fore, seems  to  be  the  sense  in  which 
the  numerous  cases  are  to  be  taken 
which  admit  the  equitable  lien  only 
in  case  of  insolvency.  Washburn  v. 
Bank  of  Bellows  Falls,  19  Vt.  278; 
Hubbard  v.  Curtis,  8  Iowa,  1 ;  Jones 
V.  Lusk,  2  Mete.  (Ky.)  356;  Stout  v. 
Fortune,  7  Iowa,  183  ;  Burtus  i-.  Tis- 
dall, 4  Barb.  571 ;  Pearson  v.  Keedy, 
6  B.  Mon.  128  ;  Story  Eq.  Jur.  §  676  ; 
Griffith  V.  Buck,  13  Md.  102 ;  Campbell 
V.  Mullett,  2  Swanst.  551.  As  the 
joint  creditor  has  no  lien  or  equity  till 
dissolution  and  insolvency,  any  bona 
fide  assignment  prior  thereto  would 
seem  to  convert  the  joint  into  separate 
property,  and  removes  it  from  the 
operation  of  the  lien.  Cross  on  Lien, 
198;  Ex  parte  Ruffin,  6  Ves.  119; 
Ex  parte  Williams,  11  Ves.  3 ;  Hunt 
V.  Waterman,  2  R.  I.  298;  Smith  v. 
Edwards,  7  Humph.  106 ;  Miller  v. 
Estill,  5  Ohio  St.  508;  Campbell 
V.  Mullett,  2  Swanst.  575;  Ex  parte 
Fell,  10  Ves.  347;  Griffith  v.  Buck, 
13  Md.  102;  Rogers  r.  Nichols,  20 
Tex.  719;  Stout  v.  Fortune,  7  Iowa, 
183  ;  Jones  v.  Lusk,  2  Mete.  (Ky.)  356  ; 
Holmes  v.  Hawes,  8  Led.  Eq.  21 ; 
Wilson  V.  Soper,  13  B.  Mon.  414 ; 
Reese  v.  Bradford,  13  Ala.  846 ;  Ex 
parte  Peake,  1  Madd.  358.  [So  where 
one  partner  sells  out  to  another  who 
assumes  the  debts.  City  of  Maynoketa 
V.  Willey,  35  Iowa,  323.  See  also 
Giddings  v.   Palmer,    107    Mass.    269. 


376  THE    LAW   OF   PARTNERSHIP.  [CH.  X. 

objection.  It  is  that  which  we  have  already  intimated.  A  part- 
nership is  a  legal  body  by  itself;  we  do  not  say  it  is  a  corpo- 
ration, because  it  wants  some  of  the  most  essential  elements  of 
incorporation.  But  we  say  it  is  a  body  by  itself,  and  is  so 
recognized  by  the  law  for  some  purposes,  and  should  be  — 
always   in  a   proper   way  and   to  a   proper   degree  —  for  all 

purposes.  And  among  these  purposes  is  the  placing  of 
*  347    its  relation  to  its  creditors  on  the  basis  of  *  contracting 

its  own  debts,  and  having  its  own  creditors,  and  possess- 
ing its  own  property,  which  it  applies  to  the  payment  of  its 
debts.  After  this  relation  is  exhausted,  or  after  this  work  is 
done,  there  is  a  resolution  of  this  body  into  its  elements.  Then 
come  up  the  new  relations  between  those  who  were  the  mem- 
bers of  this  body  and  those  who  were  its  creditors.  If  the 
joint  debts  have  been  so  paid,  in  full,  there  are  no  joint  cred- 
itors, and  they  who  were  partners  own  the  remaining  property, 
free  from  all  encumbrance,  except  each  other's  rights,  and  they 
share  this  remainder  between  them.  If  the  funds  of  the  part- 
nership were  insufficient  to  pay  its  debts,  they  who  were  its 
members  are  now  the  debtors  of  those  who  were  before  only 
the  creditors  of  the  partnership ;  and,  like  other  debtors,  must 
pay  their  debts  by  whatever  means  they  can.  (Ji) 

The  law  does  not  now  make  this  recognition  in  the  plain  and 
simple  way  we  have  stated,  and  drawn  from  it  all  those  infer- 
ences to  which  it  would  seem  to  lead.  Thus,  long  after  it  was 
established  that  the  creditors  of  the  partnership  had  a  priority 
of  right  to  the  partnership  effects  over  private  creditors  of  the 
partners,  it  was  quite  as  well  established  that  the  creditors  of 
the  partnership  could  levy  upon  the  private  effects  of  the  part- 
ners, just  as  freely  as  their  private  creditors  could  ;  thus  giving 
to  the  creditors  of  the  partnership  a  double  change,  —  priority 

After  dissolution,  if  one  partner  pur-  delectus  personanim,  the  necessity  of  a 

chase  the  interest  of  the  other,  agree-  joint  suit  by    or    against    tiiem,   the 

ing  to  assume  tlie  debts,  he  becomes  doctrines  of  equitable  preference,  ^nd 

the  principal  debtor,  of  wliom  the  re-  of  the  joint   and   several  liability  of 

tiring  partner  is  surety  ;  and  creditors  of  partners,   are   well   explained   on   this 

the   firm,  having  knowledge    of    this  basis,  without  resorting  to  the  theory 

equity,  are  bound  to  regard  it  in  their  of  quasi  and  dependent  lien.     In  many 

subsequent  dealings  with  the  parties,  of   the  cases  involving  the  claims  of 

Shelden  v.  Shelden,  Sup.  Ct.  Mich.  25  the  joint  creditors  on  the  partnership 

Am.  L.  R.  292.]  fund,  the  word  "  lien  "  is  not  used,  but 

(h)  Various   attributes    of    a   part-  the  right  of  the  partnership  creditor  is 

nership  favor   this   view.      Thus,   the  termed  a  trust ;  and,  in  some  cases,  is 


CH.  X.] 


REMEDIES   OF   THIRD   PERSONS,  ETC. 


377 


in  one  respect,  and  equality  in  the  other.  It  seems,  however, 
to  have  become  a  rule  in  the  settlement  of  bankrupt  and  insol- 
vent concerns,  to  apply  a  more  just  and  reasonable  principle  ; 
namely,  to  give  to  the  creditors  of  the  partnership  all  the  effects 
of  the  partnership  if  necessary  for  their  debts,  leaving  only  the 
surplus,  if  these  debts  were  paid  to  the  private  creditors  ;  and 
to  give  to  the  several  private  creditors  the  private  assets  of  the 
several  partners,  applying  only  the  surplus  to  the  debts 
of  the  partnership,  (i)  There  was  some  *  fluctuation  back  *  348 
and  forth  ;  but  this  principle  finally  prevailed  in  England, 
and,  as  almost  all  insolvencies  were  settled  there  in  chancery, 
this  may  be  considered  as  their  method  of  settling  such 
estates,    (j)     In   this  country  there  were   some,  but  rather 


held  operative  directly  on  the  fund, 
and  not  through  the  medium  of  the 
partner's  lien.  Tillinghast  i'.  Champ- 
lin,  4  R.  I.  173 ;  Burtus  v.  Tisdall,  4 
Barb.  571,  588. 

(/)  This  was  first  held  in  a.  d. 
1715,  in  Ex  parte  Crowder,  2  Vern. 
706  ;  followed  by  Ex  parte  Cooke,  2 
P.  Wms.  500. 

ij)  The  older  rule  in  bankruptcy, 
giving  a  full  satisfaction  out  of  the 
separate  estate  to  the  separate  cred- 
itors, was  first  broken  in  upon  by  Lord 
Thurlow,  in  Ex  parte  Hayden,  1  Bro. 
Ch.  454,  which  introduced  the  im- 
portant modification  that  the  separate 
estate  might  be  had  recourse  to,  by 
the  partnership  creditors,  M'henever 
there  was  neither  joint  estate  nor  a 
solvent  partner.  This  somewhat 
anomalous  rule,  making  the  nature 
of  the  debt  depend  on  the  presence 
or  absence  of  joint  assets  (see  per 
Lord  Eldon,  in  Ex  parte  Pinkerton, 
6  Ves.  814,  note),  seems  farther  to 
have  been  extended,  by  Lord  Thurlow 
in  Ex  parte  Hodgson,  2  Bro.  Ch.  5, 
to  an  absolute  equality  as  to  the  sep- 
arate estate  between  the  joint  and 
separate  creditors ;  and,  apparently, 
this  continued  to  be  the  rule  till  the 
decision  of  Lord  Rosslyn  in  Ex  parte 
Elton,  3  Ves.  238,  a.  d.  1796,  when 
the  principle  of  the  old  rule  of  e.x- 
clusive  satisfaction  of  the  separate 
creditors  from  the  separate  estate  — 
the  partnership  creditors    coming    in 


only  for  the  surplus  —  was  restored, 
and  was  followed  for  some  time. 
Ex  parte  Clay,  6  Ves.  813;  Ex  parte 
Kensington,  14  Ves.  448.  For  the 
history  of  this  fluctuation,  see  Allen 
V.  Wells,  22  Pick.  453;  BardweU  v. 
Perry,  19  Vt.  292,  where  it  is  con- 
cisely set  forth ;  Murray  i'.  Murray, 
5  Johns.  Ch.  60,  where  it  is  given  at 
greater  length.  The  earlier  rule,  re- 
stricting the  joint  creditors  from  re- 
course to  the  separate  estate,  was 
adopted  from  bankruptcy  into  equity, 
receiving  only  the  modification  that 
if  no  joint  estate  subsisted,  and  there 
was  no  solvent  partner,  the  firm 
creditors  might  come  upon  the  sep- 
arate fund  pari  passu  with  the  separate 
creditors.  See  accordingly  Cowell  v. 
Sikes,  2  Russ.  191  ;  Gray  v.  Chiswell, 
9  Ves.  118;  Ex  parte  Kendall,  17  Ves. 
514.  In  Gray  v.  Ciiiswell,  it  was  de- 
cided expressly  that  separate  creditors 
were  entitled  to  be  paid  first  out  of 
the  separate  fund,  if  there  was  any 
joint  fund,  however  small,  for  the 
joint  creditors  to  follow  ;  Lord  Eldon 
remarking  that  it  was  the  first  time 
the  case  had  been  presented  in  equity, 
thougli  in  bankruptcy  the  question 
was  familiar.  But  in  Devaynes  v. 
Noble,  1  Meriv.  529,  562,  564,  it  was 
held,  by  Sir  William  Grant,  that 
though  the  common  law  had,  unlike 
tiie  law-merchant,  made  all  partner- 
ship contracts  joint,  equity,  following 
the   law-merchant,   would    hold   them 


378 


THE   LAW   OP   PARTNERSHIP. 


[CH.  X. 


*  349  faint,  *  attempts  to  establish  the  same  princii)le.  Re- 
cently these  have  been  renewed  with  more  vigor  and 
more  success.  And  we  believe  that  a  principle  which  is  so 
obviously  just  and  reasonable  and  consistent  wnth  the  true 
theory  of  partnership,  will  before  long  be  settled  and  estab- 
lished with  us.  (k) 


several,  by  operating  through  its  juris- 
diction to  correct  a  mistake,  to  reform 
the  contract.  Hence,  he  held,  that 
equity  would  admit  a  partnership 
creditor  to  come  directly  upon  tlie 
separate  estate,  without  regard  to  the 
accounts  between  the  partner  and  his 
firm.  His  ruling  was  confirmed  by 
Lord  Brougham  on  appeal.  2  Russ. 
&  M.  495.  It  had  been  already  fol- 
lowed in  Sumner  v.  Powell,  2  Meriv. 
37 ;  and  since  in  Wilkinson  v.  Hender- 
son, 1  Mylne  &  K.  582 ;  also,  in  Thorpe 
V.  Jackson,  2  Younge  &  C.  553,  where 
it  was  held,  that  the  same  rule  applied 
also  to  joint  debtors  not  partners  in 
trade.  And  this  seems  to  be  the  un- 
doubted law  in  England,  Story  Eq. 
Jur.  §  676 ;  Redfield,  J.,  in  Washburn 
V.  Bank  of  Bellows  Falls,  19  Vt.  278 ; 
and,  to  some  extent,  in  this  country. 
But  this  rule  is  confined  solely  to 
cases  where  the  partnership  creditors 
seek  to  come  upon  the  separate  assets 
of  one  partner,  and  there  are  no  com- 
peting separate  creditors.  See  the 
cases  cited  accordingly;  also,  Hills  v. 
M'Rae,  9  Hare,  297  ;  Harris  v.  Farwell, 
13  Beav.  403;  Brett  v.  Beckwith,  8 
Lond.  Jur.  n.  s.  3L  But  if  there  are 
separate  creditors,  it  seems  to  be  the 
present  equity  doctrine  that,  as  to 
equitable  assets,  if  there  be  no  joint 
fund  or  solvent  partner,  whether  the 
separate  estate  be  solvent  or  not,  the 
separate  creditors  must  first  be  satis- 
fied out  of  their  fund,  and  the  joint 
creditors  take  only  the  surplus,  if  any, 
Ridgway  v.  Clare,  19  Beav.  311 ;  Addis 
V.  Knight,  2  Meriv.  117;  Croft  v. 
Fyke,  3  P.  Wms.  112  ;  while,  if  both 
estates  are  solvent,  the  joint  creditors 
can  come  upon  either ;  or,  if  the  joint 
fund  be  solvent,  and  the  separate  in- 
solvent, the  joint  creditors  can  follow 
the  latter,  as,  by  their  payment,  the 


separate  estate  has  a  credit  to  that 
amount  in  the  joint  estate,  which  the 
separate  creditors  can  pursue.  Ridg- 
way V.  Clare,  19  Beav.  311;  Ex  parte 
Sperry,  1  Ashm.  357  ;  Walker  v.  Eyth, 
25  Penn.  St.  216  ;  Lawrence  v.  Trus- 
tees of  Orphan  House,  2  Denio,  577  ; 
Patterson  v.  Brewster,  4  Edw.  Cli.  3.52. 
(/r)  The  preference  of  the  separate 
creditors,  as  a  rule  of  equity,  is  af- 
firmed by  Chancellor  Kent.  Murray 
V.  Murray,  5  Johns.  Ch.  60 ;  3  Kent 
Comm.  65,  citing  Wilder  v.  Kceler, 
3  Paige,  167,  Morgan  i\  His  Creditors, 
20  Mart.  (La.)  599;  McCulIoh  y.  Dash- 
iell,  1  Harris  &  G.  96;  Payne  v. 
Matthews,  6  Paige,  19  ;  Hall  v.  Wood, 
2  McCord  Ch.  302  ;  Bowden  i'.  Schat- 
zell,  1  Bailey  Eq.  360;  Cammack  v. 
Johnson,  1  Green  Ch.  163.  [The 
joint  estate  of  a  partnership  is  first 
liable  for  the  joint  debts,  and  the 
separate  estate  of  tlie  respective  part- 
ners for  their  separate  debts ;  and 
neitlier  class  has  a  right  to  go  to  the 
fund  previously  belonging  to  the  other, 
imtil  the  creditors  having  preference 
are  fully  paid.  In  re  jNIcLean,  U.  S. 
Dist.  Ct.  15  N.  B.  R.  333;  Murril  v. 
Neil,  8  How.  (U.  S.)  421;  Bass  v. 
Estill,  50  Miss.  300.]  So  also  see 
Patterson  v.  Brewster,  4  Edw.  Ch. 
.352;  Crockett  v.  Grain,  33  N.  H.  452  ; 
North  R.  Bank  v.  Stewart,  4  Bradf. 
254  ;  Ganson  v.  Lathrop,  25  Barb.  455  ; 
Morrison  v.  Kentz,  15  111.  193;  Hub- 
bard I'.  Curtis,  8  Iowa,  1.  Elsewhere 
the  more  modified  doctrine  is  main- 
tained, that  tlie  partnersliip  creditors 
will  be  admitted  pari  passu,  only  when 
they  have  no  joint  fund.  Bridge  v. 
McCullough,  27  Ala.  661 ;  Rodgers  v. 
Meranda,  7  Ohio  St.  179;  [Brock 
V.  Bateman,  25  Ohio  St.  609  ;]  or  there 
is  no  solvent  partner,  Daniel  v.  Town- 
send,  21  Ga.  155.     While  in  the   later 


CH.  X.] 


REMEDIES   OP   THIRD   PERSONS,  ETC. 


379 


There  is  perhaps  no  great  practical  objection  in  permitting 
the  creditors  of  the  partnership  to  go  at  once  for  their  payment 
to  the  partners  personally,  and  their  private  property,  where 
there  is  no  insolvency  of  the  partnership  ;  because,  if  a  partner 
is  obliged  to  pay  such  a  debt,  he  may  charge  his  payment  to 
the  firm,  and  so  be  allowed  it  on  the  general  settlement,  or  in 
account.  This  is  the  present  rule  and  practice  ;  each  partner 
•being  liable  in  solido,  although  the  whole  partnership  is  solvent 
and  accessible,  and  the  action  must  be  brought  against 
all.  (Z)  *  But  it  would  be  more  consistent  with  the  *  350 
true  theory,  and  in  all  respects  a  better  rule,  we  think, 
if  the  creditors  of  the  partnership  were  in  no  case  —  fraud,  of 
course,  excepted  —  permitted  to  proceed  against  the  private 
effects  of  a  partner  severally,  until  they  had  exhausted  all  those 
means  of  the  partnership  which  were  accessible  to  them,  and 
available  without  too  much  cost  or  difficulty,  (m') 


cases  in  New  York,  &c.,  it  is  held, 
that  the  lien  of  a  firm  creditor  for  a 
partnership  debt,  by  a  judgment 
thereon,  will  not  be  relieved  against 
in  favor  of  a  later  judgment  of  a 
separate  creditor.  Meech  v.  Allen, 
17  N.  Y,  300;  AVisham  v.  Kay,  1 
Stockton,  353. 

In  Allen  v.  AVells,  22  Pick.  450; 
Bardwell  v.  Perry,  19  Vt.  292,  the 
doctrine  goes  somewhat  under  the 
peculiar  priority  law  of  each  State, 
which  makes  priority  in  time  of  at- 
tachment the  sole  test  at  law.  In 
equity,  however,  the  rule  is  clearly 
maintained  that  the  partnership  cred- 
itors will  come  in  pari  passu  with  the 
separate  creditors,  but  that  equity  will 
interpose  to  see  that  those  who  may 
have  recourse  to  two  funds  shall  ex- 
haust one  before  going  upon  the  other 
on  which  anotlier  creditor  relies  solely. 
This  same  ground  is  followed  in  Camp 
V.  Grant,  21  Conn.  41 ;  Emanuel  v. 
Bird,  19  Ala.  596.  [In  Massachusetts, 
by  trustee  process,  a  creditor  of  the 
firm  may  attach  the  private  property 


of  one  of  the  partners,  in  a  suit  against 
the  firm ;  and  a  subsequent  attach- 
ment by  a  separate  creditor,  in  a  suit 
against  the  partners  for  his  individual 
debt,  will  not  supersede  the  prior  at- 
tachment. Stevens  v.  Perry,  113 
Mass.  380.  Contra,  in  New  Hampshire. 
Bowker  v.  Smith,  48  N.  H.  Ill ;  Jar- 
vis  V.  Brooks,  23  N.  H.  136.  In  Ohio, 
trustee  process  will  not  lie  in  such  a 
case.  ]\Iyers  v.  Smith,  Sup.  Ct.  Ohio, 
3  L.  &  Eq.  Reptr.  360.] 

(/)  In  cases  at  law,  there  never  has 
been  a  doubt  of  the  immediate  liabil- 
ity of  each  partner  to  have  the  judg- 
ment against  the  firm  fully  satisfied 
from  his  assets,  or  of  his  liability  In 
solido.  WooUey  v.  Kelly,  1  B.  &  C. 
68  ;  Herries  v.  Jamieson,  5  T.  R.  556; 
Ld.  Eldon  in  Ex  parte  Ruffin,  6  Ves. 
119;  Abbot  v.  Smith,  2  W.  Bl.  949, 
per  De  Grey,  C.  J. ;  Jones  v.  Clay- 
ton, 4  JNIaule  &  S.  349  ;  Villa  v.  Jonte, 
17  La.  Ann.  9  ;  Nicholson  v.  Janeway, 
1  Green  (N.  J.),  285. 

(m)  See  ante,  pp.  *348,  *349,  and 
notes. 


380  THE   LAW    OF   PARTNERSHIP.  [CH.  X. 


SECTION    II. 

OF  THE  SUIT,  ATTACHMEXT,  AND  LEVY  OF  A  PKIVATE  CREDITOR  AGAINST 
A    PARTNER    PERSONALLY    INDEBTED    TO    HIM. 

When  we  come  to  the  question  of  the  rights  and  remedies  of 
a  private  creditor  of  one  partner  in  respect  to  that  partner's 
share  of  the  partnership,  we  shall  find  much  uncertainty  still 
remaining.  We  apprehend,  however,  that  a  careful  adherence 
to  two  principles  will  remove  most  of  the  difficulty.  One  of 
these  is,  that  a  creditor  of  any  debtor  can  secure  to  himself, 
and  for  his  own  benefit  by  attachment  and  levy,  only  the  prop- 
erty, interest,  or  right  which  his  debtor  has  ;  (?i)  the  other  is, 
that  this  he  may  thus  secure.  The  first  point,  therefore,  is  to 
adopt  no  theory  and  no  conclusion  which  will  offer  to  an 
attacliment,  or  to  execution,  any  thing  more  or  any  thing  else 
than  the  debtor  has. 

What,  then,  is  the  right  or  interest  or  property  of  a  partner 
to  or  in  the  effects  of  the  partnership  ?  Certainly,  not  a  separate 
and  exclusive  right  to  any  part  or  portion  of  it ;  or  any  right  of 
any  kind  to  any  one  part  rather  than  to  any  other  part ;  or  any 
other  right  or  interest  than  that  which  all  the  other  partners 

have,  (o)  It  follows,  therefore,  that  he  can  have  no 
*  351   right  or  *  interest  which  is  such  in  kind  or  in  degree  as 

prevents  all  or  any  of  his  copartners  from  having  pre- 
cisely the  same ;  and  the  right  which  he  has  is  the  same  as 
theirs  in  reference  to  the  whole  and  every  part  of  the  property. 
We  cannot,  therefore,  define  this  right  of  any  one  partner  better 
than  we  have  already  done,  by  calling  it  an  ownership  of  all  the 
property  of  the  firm,  subject  to  the  ownership  of  the  copartners, 
who  hold  it  all  subject  to  his  ownership.  This  is  at  least  the 
foundation  of  his  property  and  interest ;  and  from  this  he  de- 
rives certain  rights   as  incident  to   it.     Thus,  if  no   special 


(n)  See  an^e,  p.  *34o,  note  (c),  and  Knox,  2  Conn.  518.  And  see  ante, 
cases  cited.  And  see  Smith  v.  Emer-  p.  *343,  note  (c),  the  cases  wliich  ad- 
son,  43  Penn.  456.  mit  the  partner's  interest  alone  to  be 

(o)  Lovejoy   v.   Bowers,  11   N.   H.  taken.      See   Cookingham  v.   Lasher, 

404  ;   Black  v.  Bush,  7  B.  Mon.  210 ;  38  Barb.  656. 
Daniel  v.  Daniel,  9  id.  195 ;   Church  v. 


CH.  X.]  REMEDIES   OF   THIRD   PERSONS,  ETC.  381 

agreement  forbids,  each  partner  may  disencumber  his  interest 
from  the  rights  of  the  others,  by  giving  up  his  right  to  all  the 
other  shares  or  interests.  That  is,  each  one  may  have  his  own 
share  in  severalty.  But,  to  do  this,  the  first  step  is  to  ascertain 
what  this  share  is.  For  it  must  be  remembered,  not  only  that 
the  ownership  of  each  partner  is  subject  to  the  ownership  of  all 
the  others,  but  that  all  the  partners  together  hold  the  property 
subject  to  the  right  and  obligation  of  the  partnership  as  a  body 
per  se,  to  apply  all  its  funds  to  the  payment  of  all  its  debts,  (p) 
Or,  if  this  way  of  presenting  this  right  be  objected  to,  then  we 
say  that  all  the  partners  own  all  the  property,  subject  to  the 
right  of  all  the  creditors  to  have  their  debts  paid  and  satisfied 
out  of  this  property.  (^) 

The  partner  who  desires  to  separate  his  share  of  the  common 
property,  and  own  it  free  from  any  liability  to  others  or 
any  *  interest  in  others,  must  settle  the  concerns  of  the  *  352 
partnership  in  the  first  place,  so  as  to  be  sure  that  the 
debts  are  paid  or  provided  for;  and  then  he  may  call  for  a 
division  of  the  joint  property,  and  take  his  share  to  himself. 
He  may  do  many  other  things  by  the  consent  of  others :  he 
may  in  that  way  sell  out  his  interests  to  a  stranger,  or  to  a 
third  person,  who  is  to  come  into  the  partnership ;  or  he  may 
sell  to  his  copartners.     But  no  such  arrangement  liberates  his 

(/»)  Washburn  v.  Bank  of  Bellows  an  equity  of  theirs,  and  not  primarily, 

Falls,  19  Vt.  292  ;    [Warren  v.  Willis,  if  at  all,  of  the  partnership  creditors, 

38  Tex.  225.]  Hunt  v.  Waterman,  2  R.  I.  298  ;  Miller 

{q)  This  ownership  by  partners,  sub-  r.  Estill,  5  Ohio  St.  508;  and  maybe 
ject  to  the  claims  of  creditors  of  the  barred,  or  the  property  removed  from 
firm,  is  made  by  Richardson,  J.,  the  its  operation  by  any  bond  fide  assign- 
foundation  of  an  able  dissenting  opin-  ment,  Ex  parte  Ruffin,  6  Ves.  119; 
ion  against  the  right  of  a  sheriff  to  Ex  parte  Williams,  11  id.  3;  Miller  v. 
take  specific  articles  of  the  partnership  Estill,  5  Ohio  St.  508 ;  Smith  v.  Ed- 
stock  for  the  debt  of  one.  Wiles  v.  wards,  7  Humph.  106 ;  Holderness  v. 
Maddox,  26  Mo.  77,  84.  So  by  Parker,  Shackels,  8  B.  &  C.  612;  Lingen  v. 
C.  J.,  in  Morrison  v.  Blodgett,  8  N.  H.  Simpson,  1  Sim.  &  S.  600 ;  Campbell 
238.  In  4  Strobh.  Eq.  25,  it  is  held,  v.  Mullett,  2  Swanst.  575;  Ex  parte 
that  the  share  of  each  partner  in  the  Fell,  10  Ves.  347 ;  Griffith  v.  Buck, 
joint  effects  is  subject  to  his  partners'  13  Md.  102;  Rogers  i'.  Nichols,  20  Tex. 
liens  for  joint  demands,  and,  though  719  ;  Stout  v.  Fortune,  7  Iowa,  183  ; 
aliened,  was  subject  to  their  equities  Jones  v.  Lusk,  2  Mete.  (Ky.)  356; 
for  a  settlement.  The  rigiit  or  lien  of  Holmes  v.  Hawes,  8  Ired.  Eq.  21 ;  Wil- 
the  partners  on  the  joint  property  for  son  i'.  Soper,  13  B.  Mon.  414;  Reese 
their  own  shares,  and  for  the  payment  v.  Bradford,  13  Ala.  840 ;  Ex  parte 
of  the  partnership  debts,  is,  however,  Peake,  IMadd.  358.    See  ante,  p.  *o45. 


382  THE   LAW   OF    PARTNERSHIP.  [CH.  X. 

share  from  the  debts  of  the  firm  ;  and  nothing  will  but  their 
payment,  or  the  agreement  of  the  creditors,  for  consideration, 
to  discharge  him.  What  the  law  permits  him  to  do,  or  cause 
to  be  done,  without  the  consent  of  others,  is  to  settle  the  con- 
cern, pay  the  debts,  and  then  divide  the  surplus.  This  is, 
practically  speaking,  the  whole  of  his  right.  And  this,  and 
only  this,  is  therefore  the  right  which  his  private  creditor  can 
acquire  by  attachment  or  execution.  That  is,  his  creditor  may 
put  himself  exactly  in  the  place  of  his  debtor,  both  as  to  the 
power  of  the  latter  and  as  to  its  limitations,  (r) 

The  creditor  may,  therefore,  attach  tlie  interest  of  the  debtor 
partner  in  the  partnership  property.  This  is  universally 
admitted,  (s)  But  can  he  attach  the  very  goods  of  the  part- 
nership ?  or,  to  state  the  question  more  accurately.  Can  the 
officer  having  the  writ  attach  any  definite  portion  of  the  goods 
of  the  partnership,  and  take  them  into  his  possession;  or  can 
he,  holding  an  execution,  take  a  portion  of  the  goods,  and  sell 
them  to  satisfy  it  ?  There  is  much  diversity  of  opinion  on 
this  subject ;  but  we  are  unable  to  regard  it  as  at  all  doubtful 
on  principle ;  that  is,  the  conclusion  to  which  the  principles 

applicable  to  the  case  lead  seems  to  us  inevitable.  If 
*  353    there  be  any  doubt,  it  must  arise  from  *  the  inability 

of  the  law  of  partnership  to  clear  itself  of  the  last 
remaining  influence  of  the  old  notion,  tliat  partnership  was  but 
one  form  of  tenancy  in  common.  (^)     The  partner  himself  is 

(r)  Tappan   v.    Blaisdell,   5   N.    H.  to  attach  the  partnership  effects  against 

193.     See  Inbusch  v.  Farwell,  1  Black  all  creditors  whose  demand  is  not  upon 

(U.  S.),  S.  C.  566.  the    company."      See    also    Allen    v. 

(s)  Chapman  r.  Koops,  3  Bos.  &  P.  Wells,   22    Pick.    450;    Washburn    v. 

289;   Moody  v.  Payne,   2  Johns.  Ch.  Bank   of  Bellows  Falls,  19  Vt.  278; 

548;   per  Parker,  C.  J.,  in  Morrison  v.  Bardwell  v.  Perry,  19  id.  292;  Dow  v. 

Blodgett,  8  N.  H.  252,  253  ;  Jarvis  v.  Sayward,  12  N.  H.  276,  277;   Page  v. 

Hyer,  4  Dev.  367 ;   Johnson  v.  Evans,  Carpenter,  10  id.  77  ;   Hill  v.  Wiggin, 

7  Man.  &  G.  240;  Mayhew  v.  Herrick,  11  Post.  292;   Newman  v.  Bean,  1  id. 

7  C.  B.  229 ;  Holmes  i:  Mentze,  4  Adol.  93  ;  .James  v.  Stratton,  32  III.  202. 
&  E.  127.     So  the  share  may  be  taken  (t)  And  that  this  is  so,  see  the  later 

on  mesne  process  in  those  States  which  cases  of  Johnson  v.  Evans,  7  Man.  &  G. 

confer  this  right.    Pierce  v.  Jackson,  240;   Mayhew  v.  Herrick,  7  C.  B.  229, 

6    Mass.    242 ;    Burgess    v.   Atkins,   6  in  which  the  court  found  the  right  of 

Blackf.  337 ;   Douglas  v.  Winslow,  20  the  sheriff  to  take  possession  of  spe- 

Me.   89,   92,  93.      Thus,  in   Pierce  v.  cific  articles,  on  the  old  law  as  it  stood 

Jackson,   Parsons,   C.    J.,   says:     "A  in   Heydon   v.   Heydon,   1   Salk.   392, 

creditor  of  one  of  the  firm  has  a  right  Jackey  v.   Butler,  2  Ld.  Raym.  871, 


CH.  X.]  REMEDIES   OF   THIRD   PERSONS,  ETC.  383 

wholly  without  the  right  (unless  by  agreement)  of  appropriat- 
ing to  himself  in  severalty  any  thing  whatever  which  belongs 
to  the  common  stock.  All  the  partners  together  cannot  do  it, 
if  it  be  needed  for  the  payment  of  the  debts,  (w)  This  is 
universally  conceded.  If  a  private  creditor  of  a  partner 
attaches  his  interest  in  any  form,  his  attachment  is  certainly 
avoided  by  the  insufficiency  of  the  joint  assets  to  pay  the  joint 
debts,  (v)  How,  then,  can  it  be  held^  either  that  the  partner, 
before  settlement  of  the  debts  and  a  division  of  the  property, 
may,  by  his  own  act,  make  some  portion  of  it  his  own  ;  or  that 
the  partner  himself  has  no  such  right,  but  that  his  private 
creditor  may  say  the  partner  has  such  right,  and  possess  him- 
self of  it  by  attachment  or  levy  or  execution  ?  The  courts 
which  have,  in  recent  times,  permitted  a  sheriff  to  attach  the 
property  of  a  firm  in  a  suit  against  a  partner,  and  sell  the 
same  on  execution,  hold  also  that  he  must  not  pay  this  over  to 
the  plaintiff,  but  must  hold  the  proceeds  subject  to  an  account 
with  the  firm,  to  be  paid  to  them  for  their  creditors  if  needed 
for  debts,  or  for  the  other  partners  if  it  belongs  to  them  on  the 
settlement.     Or  else  that  the  purchaser  takes  the  property  as 

Bachurst  v.  Clinkard,  1  Shower,  169  ;  tion  lies  in  the  nature  of  the  interest, 

namely,  permitting  the  interest  of  one  which  is  not  a  specific  thing,  having 

partner  to  be  taken  as  an  undivided  a  distinct  and  independent  existence; 

moiety.     See  Garvin  v.  Paul,  47  N.  H.  but  is   a  mere  result  flowing  from  a 

158.  comparison  of  accounts,  and  may  fall 

(u)  As  to  the  restriction  upon  the  on  either  side  as  the  balance  happens 

partners  to  assign  in  case  of  insolvency,  to  be.    A  specific  debt  or  demand  may 

actual  but  not  avowed  or  acted  upon  be  unliquidated,  but  nevertheless  has 

by  process  of  court,  see  Allen  u.  Centre  its    own    independent    existence,   and 

Vale    Co.,    21    Conn.    130.      And    see  may  be  ascertained  by  computation  or 

Jones  V.  Lusk,  2  Mete.  (Ky.)  356;  Den-  valuation.     Not  so  with  the  interest  of 

nis   V.   Green,  20  Ga.   380;    Burtus  v.  a  partner  in  an  unsettled  partnership 

Tisdall,  4  Barb.  571 ;   Lucas  v.  Laws,  account.      It    results    wholly    from   a 

27  Penn.  St.  211.  comparison  of  the  debts  and  credits 

(v)  And   this  is  true  even  though  of  the  partnership  in  the  first  instance, 

the   partnership   creditors    have    com-  and  then  a  comparison  of  the  accounts 

menced  no  action  for  the  recovery  of  between  the  partners  themselves.     If 

their  debts.    Pierce  v.  Jackson,  G  Mass.  the  partnership  is  insolvent,  there  is  no 

242;   Fisk  y.  Herrick,  6  id.  271  ;    Rice  balance  for  division;   if  solvent,  then 

V.    Austin,    17    id.   206 ;    Commercial  the  account  between  the  partners  may 

Bank  v.  Wilkins,  9  Greenl.  28;    Lyn-  show  that  the  partner  whose  interest 

don  V.  Gorham,  1  Gallison,  308.     [Tlie  it  is  attempted  to  attach  has  no  claim 

true  reason  why  the  resulting  interest  to  any  part  of  the  balance.    Agnew,  J., 

of  a  partner  in  the  partnership  effects  Alter  v.  Brooke,  9  I'iiila.  258;    Knerr 

cannot  be  attached  or  taken  on  execu-  v.  Hoffman,  16  P.  P.  Smith,  126.] 


384  THE   LAW   OP    PARTNERSHIP.  [CH.  X. 

tenant  in  common  with  the  other  partners,  and  subject  to  an 
account  between  the  partners,  which,  if  it  eventuate  against 
him,  will  make  his  purchase  give  him  nothing,  {iv}  This  is 
an  acknowledgment  that  the  partner  holds  his  interest 
*  354  in  the  joint  property  *  on  terms  and  conditions  which 
make  it  unreasonable  to  subject  that  property  itself  to 
attachment  as  his  property. 

We  should  say,  therefore,  that  there  is  no  general  rule  of 
the  law  of  partnership  which  rests  on  stronger  reason  than 
that  a  private  creditor  cannot  do  this.  But  this  rule  is  perhaps 
subject  to  some  qualification.  How,  for  example,  is  the  cred- 
itor affected  by  private  agreements  or  arrangements  between 
the  partners  ?  (a;)  These  may  be  of  two  kinds  :  they  may  be 
favorable  to  the  creditor,  or  unfavorable.  Thus,  if  the  articles 
of  copartnership  permitted  any  one  partner  to  withdraw  one- 
third  of  the  stock  at  his  pleasure,  or  some  specific  articles  of 
the  joint  property,  it  would  be  for  the  advantage  of  the  cred- 
itor to  acquire  this  right.  If  by  the  articles  no  partner  could 
ask  for  a  settlement,  or  withdraw  any  stock,  for  five  years,  it 
would  be  a  hindrance  to  the  creditor  to  be  delayed  so  long. 

In  considering  the  question  how  a  private  creditor  of  the 
partner  would  be  affected  by  such  a  bargain,  if  it  were  unfavor- 
able, if, —  for  example,  the  articles  of  partnership  provided  that 
an  account  should  be  taken  annually,  and  all  the  profits  added 
to  the  stock  for  five  years,  and  that  the  partnership  should  not 
be  dissolved,  or  any  of  its  stock  withdrawn,  for  five  years 
more,  and  eight  of  these  ten  years  remained, —  it  might  be 
supposed  that  the  well-known  principle,  in  constant  applica- 
tion, that  no  bargains  between  the  partners  affect  injuriously 
any  third  person  dealing  with  tlie  partnership  in  ignorance  of 
these  bargains,  would  apply  to  this  case.     The  reason  of  this 

{w)  Phillips  V.  Cook,  24  Wend.  398,  v.   McBride,   U.   S.  Dist.  Ct.   Cal.  16 

404  ;   Johnson  v.  Evans,  7   Man.  &  G.  N.   B.    II.   22.      See    also    Menagh   v. 

240;  Mayhew  y.  Herrick,  7  C.  B.  222;  Whitwell,   62    N.    Y.    146;    Bank    v. 

Lncas    v.   Laws,    27    Penn.    St.    211;  Carrolton  R.  K,  11  Wall.  (U.  S.)  624 ; 

[White  V.  Jones,  38  111.  159.     If  the  Garvin  v.  Paul,  47  N.  H.  158 ;   Barrett 

interest  of  both  members  of  a  partner-  v.  McKenzie,  1  N.  W.  Reptr.  123,  S.  C. 

ship  consisting  of  two  be  sold  on  sep-  Minn.] 

arate  executions  against  each  to  the  (x)  Elliott  v.  Stevens,  38  N.  H.  311, 

same  purchaser,  he  gets  nothing  till  313. 
the  partnership  debts  are  paid.    Osborn 


CH.  X.]  REMEDIES    OF   THIRD   PARTIES,  ETC.  385 

principle  is,  that  all  jDersons  have  a  right  to  believe  that  all 
partnerships  stand  on  the  common  ground  of  the  law,  unless 
they  are  informed  that  it  is  otherwise.  If  this  rule  were  held 
to  apply  to  an  attaching  creditor,  we  should  say  that  a  private 
creditor  of  a  partner,  who  knew  of  such  an  agreement  when 
he  gave  him  credit,  should  be  bound  by  it  as  much  as  he  would 
be  by  any  other  lien  or  encumbrance  on  the  partner's  property. 
But  that,  if  he  had  no  such  knowledge  or  means  of  knowledge, 
he  would  be  unaffected  by  the  agreement.  There  are  cases 
which  would,  indii-ectly  at  least,  favor  this  conclusion.  (^) 
But  as  all  partners  have  a  right  to  make  any  honest  disposition 
of  their  affairs,  or  any  arrangements  between  themselves, 
which  do  not  injuriously  affect  those  who  deal  with  the 
*  firm,  we  should  prefer  to  say  that  an  attaching  cred-  *  355 
itor  of  one  of  the  partners  would  be  bound  by  such  a 
bargain,  if  made  in  entire  good  faitli,  and  with  no  reference  to 
any  insolvency  either  of  the  partner  or  of  the  firm.  Prac- 
tically, however,  it  would  make  little  or  no  difference.  Where 
the  interest  of  the  debtor  was  sold  on  execution,  we  apprehend 
that  this  would  work  a  dissolution  of  the  partnership.  The 
remaining  partners  would  not  be  bound  to  admit  the  purchaser 
as  their  partner  during  these  years  ;  and,  on  the  other  hand 
(the  delectus  personarum  being  mutual  and  equal),  the  pur- 
chaser would  not  be  bound  to  become  and  remain  a  partner 
with  the  others,  against  his  wishes.  The  parties  could,  of 
course,  make  what  arrangement  they  chose.  But,  if  they  could 
not  agree,  the  legal  effect  of  the  sale  and  purchase  would  be  a 
dissolution  ;  and  the  legal  effect  of  this  would  be  an  annulling 
of  those  agreements,  and  a  right  on  the  part  of  the  purchaser 
to  call  at  once  for  an  account  and  settlement,  and  to  take  his 
share  in  severalty. 

On  the  other  supposition,  that,  if  the  partner  had  made 
an  agreement  adding  to  or  enlarging  his  rights,  the  principle 
that  the  ci-editor  takes  just  what  the  debtor  has,  and  is  put 
precisely  in  his  place,  would  give  to  him  all  the  benefit  of  tliis 
agreement.  And  the  fact  that  he  did  not  know  it,  would  not 
prevent  his  profiting  by  it,  any  more  than  it  would  prevent  him 

(ij)  See  Penn  v.  Stow,  10  Ala.  209. 
26 


386  THE   LAW   OP   PARTNERSHIP.  [CH.  X. 

from  profiting  by  property,  theretofore  unknown  to  him,  of  the 
partnership  or  of  the  partner. 

No  theory  can  be  adopted,  in  relation  to  the  partner's  right 
and  its  liability  to  attachment,  wiiich  will  not  give  rise  to  diffi- 
cult questions,  that  cannot  be  definitely  answered  without  the 
aid  of  adjudication.  Thus,  while  we  assert  that  the  partner's 
separate  interest  is  not,  as  a  general  rule,  open  to  attachment 
or  execution,  the  question  arises,  whether  circumstances  may 
not.  authorize  such  attachment.  We  will  suppose  an  English 
firm,  of  which  all  the  partners  are  resident  English  subjects. 
One  of  them  visits  this  country,  and  in  his  individual  capacity 
here  contracts  a  large  debt ;  and  while  he  is  here  a  large 
amount  of  the  property  of  the  firm  arrives  here.  We  suppose, 
further,  that  the  firm  is  perfectly  solvent,  but  that  this  partner 
refuses  here  to  pay  this  debt,  and  has  no  effects  in  this  country 
which  could  satisfy  this  debt.    The  question  would  then  arise, 

whether  his  creditor  might  not  attach  his  interest  in  this 
*  356    property,  and  sell  it  on  *  execution,  if,  after  due  notice  and 

opportunity,  the  firm  did  not  lease  this  property  by  substi- 
tuting for  it  an  equivalent  or  security  for  this  partner's  interest 
in  it.  The  principle,  that  no  creditor  of  a  partjier  could  take  by 
attachment  more  than  the  partner  himself  has,  would  distinctly 
deny  that  such  attachment  or  levy  could  be  made  in  the  case 
above  supposed.  One  reason,  however,  occurs  to  us  for  per- 
mitting such  attachment,  which  may  be  found  in  an  analogy 
between  such  a  case  and  that  of  a  foreign  bankruptcy.  Our 
courts  have  decidedly  refused  to  hold  our  citizens  so  far  bound 
by  a  transfer  of  property  by  foreign  bankruptcy  as  to  lose  their 
right  of  attaching  the  property  of  the  bankrupt  in  this  country, 
and,  instead  of  this,  trust  only  to  receiving  a  dividend  with  the 
creditors  abroad.  (2)  The  cases  certainly  are  not  the  same  ; 
but  the  creditor  of  the  separate  partner  in  this  country  cannot 
here  attach  his  individual  interest  in  the  partnership  property, 
to  any  purpose,  without  attaching  the  property  itself;  for  the 
goods  may  be  sold  or  sent  abroad,  and  then  the  officer  has  not 
within  his  reach  the  means  of  satisfying  the  judgment  which 
he  has  if  he  attaches  the  interest  of  the  partner  in  a  home 
firm. 

(z)  See  3  Parsons  on  Cont.  (5th  ed.)  449-455. 


CH.  X.]  REMEDIES    OF    THIRD    PARTIES,    ETC.  387 

It  may  be  that  the  courts  would  adhere  to  the  principle,  that 
the  property  belongs  to  the  partnership,  and  not  to  the  several 
partners,  so  far  that  it  is  not  open  to  attachment  or  levy  even 
by  the  creditor  of  a  partner,  when  he  and  the  property  are  far 
from  their  home,  and  in  the  home  of  the  creditor.  But  if  we 
suppose  that  the  reason,  above  suggested,  with  others  growing 
out  of  the  case,  might  make  this  exception,  it  would  apply 
probably  to  the  different  States  of  this  Union  ;  which,  for  most 
purposes  in  the  law-merchant,  are  foreign  to  each  other. 

The  question  might  then  arise,  how  the  firm  could  liberate 
their  property  from  such  attachment.  Of  course,  they  could 
charge  in  their  account  with  their  partner  whatever  they  lost 
by  a  compelled  payment  of  his  debt.  We  think  that  they  could 
not  tender,  instead  of  the  property,  the  whole  of  that  partner's 
interest  in  that  specific  property,  and  require  the  surrender 
thereof ;  for  we  apprehend  that  he  has  no  more  an  interest  in 
any  special  part  than  he  has  a  full  property  in  every  special  part. 
Then,  could  they  tender  the  whole  of  his  interest  in  all  the 
property  of  the  firm,  and  claim  the  protection  of  the 
courts  in  liberating  their  property  *  thereupon  ?  We  *  357 
think  not ;  because,  if  they  could  do  this  as  a  matter  of 
right,  they  might  do  it  although  the  property  was  nearly  all 
wanted  for  the  debts,  and  the  balance  to  each  partner  was 
trifling;  and  then  the  creditor  would  find  the  goods  withdrawn 
to  pay  debts  abroad,  and  his  security  lost ;  which  is  precisely 
what  our  courts  will  not  subject  him  to  in  the  case  of  foreign 
insolvency  ;  and  we  suppose  the  attachment  itself  would  be  per- 
mitted, if  at  all,  mainly  on  the  ground  of  an  analogy  to  the  case 
of  insolvency.  Indeed,  if  a  tender  of  the  partner's  interest, 
whatever  that  may  be,  would  liberate  the  property,  it  should  be 
free  from  attachment  or  levy  whenever  there  was  no  interest ; 
or,  in  other  words,  whenever  the  firm  was  insolvent,  or  could 
only  pay  its  joint  debts. 

We  have  presented  these  questions  for  consideration,  because 
we  know  that  they  have  actually  arisen,  although  they  did  not 
pass  under  adjudication  ;  but  the  reasons  on  the  one  side  and 
the  other  seem  to  us  so  nearly  balanced  that  we  must  wait  for 
authority  to  decide  them. 

The  general  conclusion  to  which  we  come,  —  and  on  this  wo 
rely  very  confidently,  —  is,  that  a  separate  creditor  of  a  part- 


888  THE   LAW    OF   PARTNERSHIP.  [CH.  X. 

iier,  in  pursuing  his  remedy  npon  property  of  the  firm,  can 
attach  or  levy  upon  the  partner's  interest  in  the  copartnership 
property,  and  upon  nothing  else,  (a)  But  even  where  this  is 
held,  there  is  much  diversity  and  uncertainty  as  to  the  proper 
manner  of  doing  it.  We  tliink,  however,  that  a  clear  appre- 
hension of  the  principle  itself  would  lead  to  a  sufficient  and 
unobjectionable  method  of  carrying  that  principle  into  effect. 

We  have  no  doubt  tliat  this  interest  of  the  partner  may  be 
attached  as  well  as  any  other  interest  or  property,  and  levied 
upon,  and  sold,  to  satisfy  a  judgment.  The  manner  in  which 
this  is  done  must  depend  somewhat  upon  the  local  statutory 
provisions.  In  general,  an  officer  ordered  to  attach  this  interest 
would  do  so  by  indorsing  such  attachment  on  his  writ ;  he 
should  then  certainly  give  immediate  notice  to  the  debtor,  and 
it  would  be  expedient  and  proper  to  give  such  notice  to  the 
other  partners.  This  interest  would  remain  under  attachment. 
We  think  that  the  firm  could  go  on,  dealing  as  before,  buying 
and  selling,  and  delivering  goods  ;  (h')  because  this  at- 
*  358  tachment  did  not  take  effect  *  upon  any  specific  interest 
in  any  specific  goods,  but  on  the  interest  of  the  partner 
in  the  partnership  concern ;  and  we  incline  to  the  opinion  that 
it  would  be  held  to  affect  the  defendant's  interest  in  new  mer- 
chandise added  to  the  stock,  in  the  course  of  dealing,  as  much 
as  in  the  old  ;  although  this  conclusion  could  not  be  reached  by 
the  court  without  applying  equitable  principles  to  the  case. 

We  suppose  that  the  transactions  of  the  firm,  after  being  noti- 
fied of  the  attachment,  are  in  good  faith ;  and,  if  so,  it  is  no 
objection  to  them  that  the  debtor  himself  is  active  in  these 
transactions,  or  in  part  of  them.  But,  whether  he  be  active  or 
not,  if  the  transactions  are  fraudulent  as  against  the  creditor, 

—  that  is,  intended  to  delay  or  defeat  the  recovery  of  his  debt, 

—  they  might  still  be  valid  as  against  him,  and  in  favor  of  a 

(n)  See  ante,  p.  *3o2,  note  (s) ;  p.  the  specific  goods  under  execution,  is  a 

* 343,  note  (c).  dissolution.     Id.;    Haberslion  v.  Blur- 

(h)  The  property  of  the  partner  in  ton,  1  De  G   &  S.  121  ;  Waters  v.  Tay- 

his  share  is  not  entirely  divested,  and  lor,  per  Lord  Eldon,  2  Ves.  &  B.  301. 

the   firm    consequently   dissolved,    till  The  same  mode  of  attachment  without 

sale  under  the  levy.    Morrison  v.  Blod-  seizure  was  held  to  be  the  only  proper 

gett,    8  N.  H.  238;   Aspinall   v.  Lon-  form  in  Pennsylvania.     Deal  i-.  Bogue, 

don  &  N.  W.  R.  Co.,  11  Hare,  325;  but  20  Penn.  St.  229. 
a  sale  of  any  part,  however  small,  of 


CH.  X.]  REMEDIES   OF   THIRD   PARTIES,   ETC.  389 

stranger  dealing  honestly  with  the  firm  in  their  way  of  busi- 
ness :  but  would  be  void  in  favor  of  the  creditor,  as  against  the 
fraudulent  partners,  and  as  against  any  third  party  co-operat- 
ing in  the  fraud,  or  dealing  with  the  partners  knowing  the 
intention  of  fraud,  and  by  thus  dealing  giving  it  efficacy ;  for 
this  would  be  co-operation,  although  tlie  third  party  had  no 
other  object  in  view  but  his  own  interest. 

So  affairs  might  go  on  until  judgment  was  obtained,  and  an 
execution  issued.  For,  if  not,  it  would  be  in  the  power  of  any 
person,  by  mere  suit  and  allegation  of  a  demand  against  a  part- 
ner, to  arrest  the  whole  business  of  a  partnership  more  effect- 
ually than  he  could  do  it  by  the  allegation  of  a  debt  against  the 
partnership  itself. 

When  execution  issued,  the  sheriff  would  sell  the  interest  of 
the  partner  in  the  partnership  in  the  same  manner  in  which  he 
would  sell  any  other  interest  or  right  which  he  levied  upon, — 
as  a  right  to  redeem,  or  the  like  ;  and  the  proceeds  would  be 
applied  to  satisfy  the  execution,  (c) 

*  The  purchaser  would  not  become  a  partner ;  but  he  *  359 
would  stand  in  the  place  of  the  partner  whose  interest  he 
bought,  and  acquire  all  of  his  rights  which  were  necessary  to 
make  this  interest  valuable  and  available.  That  is,  he  would 
have  the  right  to  call  for  an  account,  and  a  settlement  of  the 
partnership  concern,  and  to  take  his  share  of  any  surplus  in 
severalty.  And  a  court  of  equity  would  probably  render  him 
the  same  assistance  in  obtaining  or  enforcing  these  rights  that 
they  would  to  the  partner  whose  interest  he  has  bought.     This, 

(c)  This  is  admitted  as  tlie  conse-  Phillips  v.  Cook,  24  Wend.  397;  Wad- 

quence  of  such  levy  and  sale  in  the  dell   v.   Cook,  2    Hill,   47,    and    note; 

case  of   Wiles  v.  Maddox,  26  Mo.  77,  Walsh   v.  Adams,   3   Denio,    12.5,  &c. 

84.      The  doctrine  of  tlie  majority  of  Even  in  New  Hampshire,  the  unfortu- 

the  court  in  that  case  is  sustained  by  nate  effects  of  the  ordinary  method  of 

the  decisions  of  every  law  court  except  attachment  without  the  power  to  make 

those  of  New  Hampshire,  Morrison  v.  it  operative  except  in  equity,  because 

Blodgett,   8    N.    H.    238  ;    Gibson    v.  a  mere  contingent  right  is  sold  that  no 

Steven,  7  N.  H.  357  ;    Page  v.  Carpcn-  one  cares  to  buy,  have  been  so  severely 

ter,  10  N.  H.  77 ;    Hill  v.  Wiggin,  11  felt,  that,  in  Hill  v.  Wiggin,  the  result 

Post.  292,  &c. ;   and  of  Pennsylvania,  is  described  by  the  judge  as  affording 

Deal  1-.  Bogue,  20  Penn.  St.  229  ;  and  a  secure  means  for  fraudulent  debtors 

of   some  earlier  cases   in  New   York,  to  get  their  money  securely  out  of  the 

Crane   i\   French,   1    Wend.  313 ;   Ex  reach  of  the  law.     Hill  v.  Wiggin,  11 

parte    Smith,    16    Johns.    102 ;    which  Post.  2U2.  296. 
were    all    conclusively    overruled    in 


390  THE   LAW    OF   PARTiNERSHIP.  [CH.  X. 

however,  like  almost  every  lliing  else  in  equity,  would  be  ad- 
dressed to  the  discretion  of  the  court,  and  could  not  be  claimed 
as  a  matter  of  strict  and  technical  right.  For  if  the  case  were 
one  whicli  admitted  of  easy  and  accurate  estimate,  and  certainly 
sufficient  tender,  and  this  were  made,  the  court  would  not 
require  a  settlement  wliich  would  be  injurious  to  the  partner- 
ship, and  was  asked  for  by  this  purchaser  only  for  oppressive 
or  dishonest  purposes. 

An  additional  step  to  that  of  attaching  the  separate  partner's 
interest  has  been  suggested  on  high  authority,  {d)  It  is 
*  360  to  sue  the  *  indebted  partner  by  process  of  foreign  attach, 
ment  or  garnishee  process  or  trustee  process,  as  it  is 
variously  called,  and  make  the  other  partners  trustees.  They 
would  tlien  be  required  to  answer  under  oath  ;  and  the  interests, 
rights,  and  property  of  the  principal  defendant  in  their  hands 
might  thus  be  more  effectually  held.  It  might  be  that  our 
courts  would  find  some  difficulty  in  the  complete  application  of 
such  a  system  to  practice,  unless  they  were  aided  by  legislative 
provisions  ;  (e)  and  perhaps  no  other  questions  of  commercial 
law  call  so  loudly,  at  this  time,  for  such  provisions. 

We  have  already  remarked,  that  the  attachment  by  a  sepa- 
rate creditor  of  a  partner,  of  his  debtor's  interest  in  the  part- 
nership, or  of  the  goods  themselves,  is  vacated  by  the  insolvency 
of  the  partnership,  which  leaves  in  the  partner  no  interest,  and 

((/)  In  Morrison  v.  Blodgett,  8  N.  H.  whole  partnership  have  been  held  as 
238,  Parker,  C.  J.,  suggested,  as  a  means  trustees  in  a  suit  of  f(jreign  attach- 
of  rendering  available  an  attachment  ment,  upon  the  private  debt  of  one 
of  the  partnership  effects  for  the  pri-  partner.  The  course  thus  suggested 
vate  debt  of  a  partner,  the  expediency  and  approved  is  entitled  to  the  highest 
and  necessity  of  summoning  the  other  consideration,  and  may  prove  to  be 
partners  as  trustees.  See  also  Tread-  practically  the  best  that  can  be  pur- 
well  V.  Brown,  43  N.  H.  290.  A  simi-  sued  in  the  present  condition  of  the 
lar  suggestion  had  previously  been  law.  But  it  is  obvious  that  the  law  of 
made  by  Parsons,  C.  J.,  in  Fisk  i\  Her-  partnersliip,  taken  in  connection  with 
rick,  6  Mass.  271,  where  a  debtor  of  the  law  of  trustee  process  or  foreign 
the  partnership  had  been  ineffectually  attachment,  offers  some  difficulties  ; 
summoned  as  trustee  in  a  suit  against  and  we  do  not  know  that  this  course 
one  partner  of  the  creditor  firm  ;  and  has  been  generally  adopted, 
in  Lyndon  v.  Gorham,  1  Gallison,  261,  (e)  See  Field  v.  Crawford  and  Trs., 
Mr.  Justice  Story  recognized  that  6  Gray,  116  ;  Lane  v.  Felt,  7  id.  401 ; 
course  as  likely  to  obviate  some  of  the  Treadwell  v.  Brown,  41  N.  H.  12; 
difficulties  in  the  case  then  before  the  Bulfinch  i-.  Winchenbach,  3  Allen, 
court.  But  we  know  of  no  case  in  IGl. 
which  a  portion  of  the  members  or  the 


CH.  X.]  REMEDIES   OF   THIRD   PARTIES,  ETC.  391 

requires  all  the  property  to  pay  the  debts.  (/)  But  it  is  also 
vacated  by  the  fact  of  insolvency,  prior  to  any  proceedings 
founded  thereon,  whether  there  be  a  general  process  of  insol- 
vency or  suits  by  individual  creditors.  But  a  distinction  seems 
to  be  taken  in  this  respect  between  the  case  of  a  dormant 
(that  is,  secret)  partner  and  a  known  partner.  Thus,  if  a 
man  in  business  have  a  dormant  partner,  and  a  creditor  of 
the  first  sue  him  and  attach  his  goods,  this  attachment  shall 
not  be  postponed  to  a  later  attachment  by  another  creditor, 
who  discovers  this  unknown  partner,  and  makes  him  defend- 
ant. (^)  For,  if  both  creditors  stand  on  equal  ground  as  to 
their  claims,  the  fact  that  one  happens  to  discover,  and  sues,  a 
partner  not  publicly  known,  should  give  him  no  advantage  over 
one  who  sues  in  fact  the  partnership,  and  uses  all  the  names 
that  the  firm  enables  hira  to  know.  It  is  not  so,  however,  in 
its  reason,  and,  we  think,  not  on  authority,  where  the  creditors 
stand  on  different  grounds.  Thus,  if  the  first  creditor  dealt 
with  the  known  partner  only,  and  did  not  deal  with  him  in  fact 
on  partnership  account,  but  did  attach  partnership  property, 
then  this  attachment  must  yield  to  one  on  which  part- 
nership property  is  taken  in  a  suit  *  properly  brought  *  361 
against  all  the  partners.  And  we  apprehend  the  result 
should  be  the  same  although  the  known  partner  was  the  only 
defendant  in  both  writs.  That  is,  if  a  man  transacted  business 
on  his  sole  account,  and  also  had  a  secret  and  silent  partner, 
and  with  him  transacted  another  business,  which  was  distinctly 
a  partnership  business,  and  became  insolvent,  and  creditors  in 
his  own  business  attached  his  property,  and  creditors  in  the 
partnership  business  also  attached  the  property,  either  before  or 
after  the  others,  we  suppose  that  a  court  of  equity,  if  it  could 
discriminate  the  debts  and  discriminate  the  property,  would 
give  relief,  and  appropriate  the  partnership  property  to  the 
partnership  debts,  and  the  private  property  to  the  private  debts. 
And  we  should  suppose  that  courts  of  law  would  now,  generally 
at  least,  follow  the  same  rule  to  the  same  result. 

(/)  Lyndon  v.  Gorliam,  1  GallUon,  (//)  French  v.  Chase,  6  Greenl.  160; 

307;   Commercial  Bank  v.  Wilkins,  9  Lord  v.  Baldwin,  6  Pick.  348.    See  also 

Greenl.  28.     And  see  Fisk  v.  Ik-rrick,  Cammack   v.   .Johnson,   1    Green,   Ch. 

6  Mass.  271;   Upham   v.  Naylor,  0  id.  164;  Allen  r.  Dunn,  15  Me.  202. 
490;  Church  v.  Knox,  2  Conn.  514. 


892  THE   LAW    OF   PARTNERSHIP.  [CH.  XI. 


CHAPTER    XL 

OF   THE   REAL   ESTATE   OF   A    PARTNERSHIP. 
SECTION    I. 

GENEltAL    CONSIDERATIONS. 

Formerly,  the  title  of  tliis  chapter  could  have  found  no  place 
in  a  treatise  on  the  law  of  partnership.  The  distinction  which 
existed  at  common  law  between  real  estate  and  personal  estate 
has  been  bridged  over  only  of  late.  It  used  to  be  deemed  that 
the  purposes  of  partnership,  and  the  means  which  it  used,  ex- 
cluded all  reference  to  land,  and  that  the  law  of  partnership 
could  not  with  propriety  speak  of  land,  (a)  But  in  England 
this  doctrine  has  long  been  greatly  modified  ;  and  now,  by  the 
assistance  of  equity,  a  tolerably  convenient  and  consistent  sys- 
tem is  in  force  there.  Mr.  Justice  Story,  in  his  treatise  on 
Partnership,  remarks  (§  93)  :  "  The  doctrine  (as  to  real  es- 
tate), under  these  circumstances,  must  be  considered  as  open 
to  many  distressing  doubts."  We  apprehend,  however,  that  a 
careful  consideration  of  American  cases  will  show  that,  in  this 
country,  most  of  these  doubts  have  been  dispelled.  Indeed,  few 
questions  remain,  in  relation  to  this  subject,  as  to  which  au- 
thority, illustrated  by  the  reasons  and  principles  which  are 
unquestionably  applicable,  do  not  give  us  a  sufficiently  distinct 
and  definite  answer. 

There  are  two  reasons  why  we  might  have  expected  an  im- 
provement in  the  American  law  on  this  subject  over  that  of 

(a)  In  Pitts  V.  Waiigh,  4  Mass.  considered  in  England  tliat  the  rule, 
424,  where  it  was  sought  to  charge  a  jus  accrescendi  inter  mercalores  locum  non 
person  as  partner  in  an  action  for  the  habei,  applied  only  to  personal  prop- 
price  of  land  sold  to  the  ostensible  erty  ;  and  it  was  also  thought  neces- 
partner  alone,  the  court  said,  "  The  sary  to  provide  against  survivorship 
law-merchant  does  not  extend  to  spec-  in  the  partnership  articles.  Jeffreys  u. 
ulations  in  land  ;"  and  it  was  formerly  Snell,  1  Vern.  217. 


CH.  XT.]  OF   THE   REAL   ESTATE   OF   PARTNERSHIP. 


393 


England.  One  is,  our  less  rigid  conservatism ;  or,  in 
other  words,  the  weaker  *  influence  of  precedent  and  *  363 
prescription,  and  the  greater  facility  of  change.  This 
reason,  however,  applies  to  the  whole  body  of  our  law.  The 
other  applies  peculiarly  to  this  topic.  It  is,  that  land  is,  with 
us,  vastly  more  a  matter  of  merchandise  than  in  England.  It 
is  every  day's  practice  for  individuals  and  partnerships  to  en- 
gage in  business,  of  which  the  principal,  and  sometimes  the 
only,  element  is  trade  or  speculation  in  land.  (^)  There  is 
nothing  to  make  this  illegal,  or,  within  proper  bounds,  impolitic 
or  undesirable.  At  all  events,  the  law  recognizes  it,  and  must 
take  charge  of  it,  as  of  all  other  social  or  business  movements. 
Questions  to  which  such  business  as  this  gives  rise  not  only 
come  before  our  courts  with  great  frequency,  and  demand  for 
their  settlement  well-considered  and  well-established  principles, 
but  they  come  in  such  a  form  as  to  compel  important  modifica- 
tions of  the  technical  law  of  real  estate,  (c) 

It  must  be  obvious  that  these  questions  connect  themselves 
with  many  others.  But  the  remaining  influence  of  the  peculiar 
law  of  real  estate  —  an  influence  which  must  remain  until  our 
whole  system  of  law  is  changed  by  legislative  authority  —  im- 
parts to  all  the  details  of  this  subject  a  character  peculiar  to  them 
and  common  to  them  all ;  (rZ)  and  it  is  thought  best  to  gather 
under  one  head  all  that  the  law  and  practice  of  our  American 
courts  have  to  say  about  the  real  estate  of  a  partnership. 


(6)  This,  after  some  doubts,  see 
Pitts  V.  Waugh,  4  Mass.  424,  Blake  i-'. 
Nutter,  19  Me.  16 ;  Coles  v.  Coles,  15 
Johns.  169,  in  cases  occurring  before 
courts  of  law,  was  early  recognized  in 
this  countrJ^  See  Dudley  i'.  Little- 
field,  21  Me".  418;  Fall  River  Whaling 
Co.  V.  Borden,  10  Cush.  469;  Black  v. 
Black,  15  Ga.  445 ;  Gray  v.  Palmer, 
9  Cal.  616;  Smith  v.  Jones,  12  Me. 
337 ;  Ludlow  v.  Cooper,  4  Ohio  St.  1  ; 
Coster  V.  Clarke,  3  Edw.  Ch.  238; 
Patterson  v.  Grace,  10  Ala.  444 ;  Row- 
laud  V.  Boozer,  id.  690 ;  In  re  Warren, 


Daveis,  320.  And  in  England,  Dale 
v.  Hamilton,  5  Hare,  369  ;  Darby  v. 
Darby,  3  Drewry,  495. 

(c)  Dudley  v.  Littlefield,  21  Me. 
418;  Coster  v.  Clarke,  3  Edw.  Ch. 
238 ;  Darby  v.  Darby,  3  Drewry, 
495;  Dilworth  v.  Mayfield,  36  Miss. 
40;  Brady  v.  Calhoun,  1  Penn.  140; 
Woodbridger.  Wilkins,  3  How.  (Miss.) 
360;  Markham  v.  Merrett,  7  How. 
(Miss.)  437. 

{(l)  See  post,  section  3d  of  this 
chapter. 


394 


THE   LAW    OF   PARTNERSHIP. 


[CH. 


XI. 


SECTION    II. 

WHEN    AND    BY    WHAT    MEANS    REAL    ESTATE    BECOMES    PARTNERSHIP 

PROPERTY. 

The  general  rule  is  undoubtedly  this :  Real  estate 
*  864  purchased  *  for  partnership  purposes,  and  appropriated 
to  those  purposes,  paid  for  by  partnership  funds,  and 
necessary  for  partnership  purposes,  always  becomes  part- 
nership property,  (e)  Nor  does  it  seem  to  be  material  in 
what  manner,  or  by  what  agency,  the  land  is  bought,  or  in 
what  name  it  stands.  (/)  It  may  be  conveyed  to  all  the 
partners  as  tenants  in  common,  and  tliis  perhaps  is  the  usual 
and  the  best  way  ;  (</)  or  to  one  or  more  of  the  partners,  in 
trust  for  the  whole  partnership,  and  this  is  not  uncommon  ;  (/i) 
or  to  a  stranger,  under  a  similar  trust,  and  this  is  sometimes 


(e)  Dyer  v.  Clark,  5  Mete.  562; 
Howard  v.  Priest,  id.  582 ;  Burnside  v. 
Merrick,  4  Mete.  587 ;  Delmonico  v. 
Guillaume,  2  Sandf.  Ch.  336  ;  Buchan 
V.  Sumner,  2  Barb.  Ch.  165,  197; 
Duhring  v.  Duliring,  20  Mo.  174; 
Matlock  V.  Matlock,  5  Ind.  403  ;  Pat- 
terson V.  Blake,  12  id.  436;  Davis  v. 
Christian,  15  Gratt.  11  ;  Pierce  v. 
Trigg,  10  Leigh,  246  ;  Jones  v.  Neale, 
2  Patton  &  H.  339  ;  Lacy  v.  Waring, 
25  Ala.  625 ;  Andrews  ;;.  Brown,  21  id. 
437  ;  Owens  v.  Collins,  23  id.  837  ;  Pugh 
V.  Currie,  5  id.  446;  Tillinghast  v. 
Champlin,  4  R.  I.  173;  Buckley  v. 
Buckley,  11  Barb.  43;  Blake  v.  Nutew, 
19  Me.  16 ;  Holland  v.  Fuller,  13  Ind. 
195,  199 ;  Overholt's  Appeal,  12  Penn. 
St.  222;  Deloney  v.  Hutcheson,  2 
Eand.  183;  Hunt  v.  Benson,  2  Humph. 
459;  Forde  v.  Herron,  4  Munf.  316; 
Goodburn  v.  Stevens,  5  Gill,  1 ;  Sig- 
ourney  v.  Munn,  7  Conn.  11 ;  Jarvis  v. 
Brooks,  7  Fost.  37  ;  Cox  i'.  McBurney, 
2  Sandf.  561  ;   Brooke  i'.  Washington, 

8  Gratt.  248 ;  Peck  v.  Fisher,  7  Cush. 
386  ;  Fall  River  Whaling  Co.  v.  Bor- 
den, 10  Cush.  458;   Savage  r.  Carter, 

9  Dana,  408,  410,  '411  ;  [Fairchild  v. 
Fairchild,  64  N.  Y.  471.]  These  cases 
maintain  the  general  proposition  in 
America.     [And  this  partnership  title 


may  be  proved  by  parol,  notwithstand- 
ing  the  paper  title.     Sherwood  v.  St. 
Paul,  &c.,  21  Minn.  127  ;  York  v.  Clem- 
ens, 41  lowsi,  9o;  ante,  p.  *  7.]     So  in 
England.  Pliillips  v.  Phillips,  1  Mylne 
&K.  649;  Houghton  v.  Houghton,  11 
Sim.   491 ;    Townshend  v.   Devaynes, 
Montagu  on  Part.  App.  96.     And  see 
Roper  on  Husb.  &  W.  (Jac.  ed.)  346,  n. 
Broom  v.  Broom,  3  Mylne  &  K.  443 
Morris  v.  Barrett,  3  Younge  &  J.  384 
See   also  Kendall   v.   Rider,  35  Barb 
100;  Dupuy  v.  Leavenworth,  17  Cal 
262  ;  Buffum  v.  Buffiim,  40  Me.  108 . 
Moran  v.  Palmer,  13  Mich.  367  ;  North 
Penn.    Coal    Co.'s   Appeal,    45   Penn 
181  ;    Willis  v.  Freeman,   35   Vt.   44  . 
Fowler  i\  Bailey,  14  Wis.  125. 

(/)  Gilchrist,  C  J.,  in  Jarvis  v. 
Brooks,  7  Fost.  37,  67  ;  Dyer  v.  Clark, 
5  Mete.  562 ;  Howard  v.  Priest,  id. 
582 ;  Pugh  v.  Currie,  5  Ala.  446. 

ig)  Dyer  v.  Clark,  5  Mete.  562; 
Howard  v.  Priest,  id.  582.  See  Col- 
lumb  V.  Read,  24  N.  Y.  505 ;  and  as  in 
many  States  joint  tenancy  is  abolished 
by  statute,  deeds  to  the  partners,  by 
their  individual  names,  create  at  law, 
in  such  States,  an  estate  in  common. 

(h)  Coster  V.  Clarke,  3  Edw.  Ch. 
428 ;  McGuire  v.  Ramsey,  4Eng.  (Ark.) 
418. 


CH.  XI.]  OF    THE    REAL   ESTATE    OP   PARTNERSHIP. 


395 


altliough  not  often  done,  (z)  Nor  is  it  necessary  that  the  trust 
should  be  expressed  ;  for,  however  proper  and  expedient  this 
is,  yet,  if  the  trust  be  wholly  omitted  and  have  no  existence 
on  record,  the  law  will  sometimes,  (y)  and  equity 
always,  supply  this  *  want,  and  treat  the  ownership  as  *  365 
a  distinct  trust,  if  only  the  trust  exist  and  is  capable  of 
proof,  and  the  land  be  in  fact  and  substance  partnership  prop- 
erty. We  consider  it  an  established  rule  in  equity,  that  any 
party  holding  the  legal  title  to  land,  however  it  may  have  come 
to  him,  will  be  held  as  trustee  for  the  partnership,  if  it  be  cer- 
tain that  the  land  was  in  fact  a  part  of  their  joint  property  as 
partners.  (Jc)  But  although  it  be  held  in  the  joint  name  of  two 
or  more  persons,  if  there  be  no  proof  that  it  was  purchased 
with  partnership  funds  for  partnership  purposes,  it  will  be  con- 
sidered as  held  by  them  as  joint-tenants,  or  tenants  in  common  ; 
and  if  they  are  copartners  in  the  ownership  of  the  land,  the 
partnership  as  to  that  will  be  terminated  by  a  sale  of  the  land, 
excepting  so  far  as  the  proceeds  are  needed  for  the  debts  of  the 
partnership.  (Jclc) 

We  consider  that  the  three  elements  we  have  above  stated 
must  unite,  in  order  to  make  the  real  estate  neeessarily  partner- 
ship property.  (/)     For  if  it  be  not  purchased  for  partnership 


(/)  Per  Gilclirist,  C.  J.,  in  Jarvis  v. 
Brooks,  7  Fost.  37,  67 ;  Moreaii  v.  Saf- 
farans,  3  Siieed,  GOO;  per  Story,  J.,  in 
Hoxie  V.  Carr,  1  Sumner,  173,  182. 

(/)  The  interference  of  a  common- 
law  court  in  behalf  of  the  cestui  que 
trust  Vienefieially  interested  in  the  part- 
nership real  estate,  is  ordinarily  only 
indirect  and  to  a  limited  extent ;  as  in 
the  case  of  a  levy  on  execution  of  a 
private  creditor.  This  it  does  in  pur- 
suance of  a  rule  sometimes  asserted  in 
equity,  that  upon  such  levy  only  the 
separate  interest  of  the  debtor  can  be 
sold  ;  and  it  gives  effect  to  tliis  rule  by 
rendering  the  sheriff  liable  in  trover  or 
trespass  if  he  sell  more  than  this  ;  or 
by  suspending  judgment  to  await  the 
result  of  a  pending  suit  in  equity,  as  in 
Peck  V.  Fisher,  7  Cush.  386 ;  or  in 
some  such  indirect  mode.  For  a  stay 
of  sale,  resort  must  be  had  to  chancery 
to  obtain  an  injunction.     And  in  most 


other  cases,  protection  for  this  trust 
must  be  sought  in  equity. 

(k)  Such  a  trust  is  necessarily  im- 
plied in  favor  of  the  partnership  where 
the  property  has  been  made  partner- 
ship property  under  the  limitations 
above  ;  that  is,  bought  with  partner- 
ship funds  for  partnership  purposes, 
and  employed  for  such  purposes.  See 
Dyer  v.  Clark,  5  Mete.  562  ;  Pugh  v. 
Currie,  5  Ala.  446  ;  Morris  v.  Barrett, 
.S  Younge  &  J.  384;  Owens  v.  Collins, 
23  Ala.  837.  The  doctrine  rests  on 
tlie  broad  foundation  of  a  resulting 
trust. 

{kk)  Thompson  r.  Bowman,  6  Wal- 
lace, 316. 

{/)  Wlicther  real  property  shall  be- 
come i)artners]iip  stock  or  not  is  a 
question  of  intention.  Per  Story,  J., 
in  Hoxie  v.  Carr,  1  Sumner,  18:5 ;  also, 
see  Fall  River  Wiialing  Co.  v.  Horden, 
10  Cush.  462.    But  this  intention  may, 


396 


THE   LAW   OF   PARTNERSHIP. 


[CH.  XI. 


purposes,  and  even  if  it  be  paid  for  by  partnership  funds,  and 
is  in  fact  appropriated  to  tiie  purposes  of  the  partnership,  it  is 
very  possible  that  one  partner  is  the  owner  of  it,  and  is  to  be 
charged  witli  its  vakie  on  the  books,  and  credited  with  fair 
compensation  for  its  use.  Such  a  fact  may  be  proved ;  but  it 
will  not  be  presumed.  (7?i)  So,  if  not  paid  for  by  partnership 
funds,  then  it  is  probably  his  property  who  does  pay  for  it, 
whatever  use  he  permits  to  be  made  of  it.  (h)  And  if  not  ap- 
propriated to  the  purposes  of  the  partnership,  however  purchased 
and  paid  for,  it  is  possible  that  the  firm,  perhaps  changing  their 
intention,  from  the  unfitness  of  the  estate  for  their  use  or  for 
any  other  reason,  had  agreed  that  it  should  be  his  alone  who 
uses  it,  and  that  he  should  pay  the  firm  for  it  in  some  way.  (o) 


so  far  as  all  claimants,  except  bond  Jicle 
purcliasers  without  notice,  are  con- 
cerned, be  htkl  sufficiently  established, 
if  the  purchase  is  made  with  partner- 
ship funds,  even  without  intended  or 
actual  use  for  partnership  purposes, 
unless  an  express  agreement  appears 
vesting  the  beneficial  as  well  as  the 
legal  interest  in  the  grantee  or  grantees 
in  the  deed.  Smith  v.  Smith,  5  Ves. 
189;  Hunt  r.  Benson,  2  Humph.  459. 

{in)  Smith  v.  Smith,  5  Ves.  189; 
Hunt  V.  Benson,  2  Humph.  459. 

(n)  Marvin  v.  Trumbull,  Wright, 
386;  Owens  v.  Collins,  23  Ala.  837; 
Wheatley  v.  Calhoun,  12  Leigh,  264. 

(o)  See  Fall  River  Wiialing  Co. 
V.  Borden,  10  Cush.  458.  For  cases 
where  land  was  bouglit  for  special 
purposes,  see,  where  the  estate  was 
bought  for  the  purpose  of  supplying 
earth  under  a  contract,  Moreau  v. 
Saffarans,  3  Sneed,  595 ;  to  build  a 
furnace  on,  Ridgway's  Appeal,  15 
Penn.  St.  177 ;  for  glass  works,  Mc- 
Dermot  v.  Laurence,  7  S.  &  R.  438 ; 
to  build  a  hotel  on,  Brovvnlee  v.  Allen, 
21  Mo.  123 ;  for  stores  for  merchants. 
Dyer  v.  Clark,  5  Mete.  562 ;  for  other 
purposes,  Mattock  v.  Mattock,  5  Ind. 
403;  Roberts  v.  McCarty,  9  id.  16; 
Evans  v.  Gibson,  29  Mo.  223 ;  Green  v. 
Green,  1  Ohio,  244;  Buckley  v.  Buck- 
ley, 11  Barb.  43;  public-houses  and 
lands  bought  by  brewers,  Phillips  v. 


Phillips,  1  Mylne  &  K.  649  ;  Morris  v. 
Barrett,  3  Younge  &  J.  884.  [If  nec- 
essary, and  so  far  as  is  necessary,  real 
estate  purcliased  with  partnersliip 
funds  for  partnership  business  will  be 
treated  as  personalty.  Hiscock  v. 
Pliilips,  49  N.  Y.  97;  Pearce  v.  Co- 
vert, 39  Wis.  252  ;  Scruggs  v.  Blair, 
44  Miss.  406;  Heartt  v.  Rankin,  41 
Iowa,  35  ;  Shearer  v.  Shearer,  98  Mass. 
107;  Drewry  r.  Montgomery,  28  Ark. 
250  ;  Little  v.  Snedecor,  52  Ala.  167 ; 
Bank  of  Louisville  v.  Hale,  8  Bush. 
(Ky.),  672;  Manck  ;;.  Manck.  54  111. 
281 ;  King  v.  Weeks,  70  N.  C.  372 ;  Lime 
Rock  Bank  v.  Phetteplace,  8  R.  1.  56; 
Nat.  Bank  i-.  Sprague,  20  N.  J.  Eq.  13. 
Real  estate  will  be  treated  as  partner- 
ship property,  thougli  situated  in  a 
State  where  by  statute  provision  it  is 
not.  Tillotson  v.  Tillotson,  34  Conn. 
335.  A  mill  belonging  to  one  partner, 
and  credited  to  him  in  the  partnership 
accounts  at  a  certain  value,  becomes 
partnersliip  property  ;  and  any  rise  in  its 
value  becomes  partnership  assets.  Ash- 
ton  V.  Robinson,  L.  R.  20  Eq.  25.  See 
also  Waterer  v.  Waterer,  L.  R.  15  Eq. 
402  ;  Hogle  v.  Lowe,  5  Reptr.  118.  If 
the  real  estate  be  not  purchased  for  the 
partnership  business,  tliougli  purchased 
with  the  partnership  funds,  it  will  be 
held  by  the  respective  partners  as  ten- 
ants in  common.  Russell  r.  Miller,  26 
Mich.  1 ;  Price  v.  Hicks,  12  Fla.  365. 


CH.  XI.]  OF   THE   EEAL   ESTATE   OF   PARTNERSHIP. 


397 


Indeed,  it  might  be  said,  that  even  if  real  estate  be 

*  purchased  for,  used  for,  and  paid  for  by  the  firm,  it    *  366 

may  still  be  shown  not  to  be  partnership  property.  This 

is  not  impossible  ;  but  the  strongest  proof  would  be  required  of 

a  thing  in  its  nature  so  improbable. 

This  is  one  of  those  questions  which  must  be  determined  al- 
together from  the  intention  of  the  parties.  It  is  impossible  for 
a  partnership,  as  such,  to  hold  the  legal  title  of  real  estate. , 
Only  a  person  can  do  this  ;  and  a  corporation,  only  because  it 
is  a  person  in  law  ;  but  this  a  partnership  is  not.  On  the  other 
liand,  a  partnership  may  own,  in  equity,  real  estate,  without 
the  least  reference  to  the  legal  title,  it  being  of  no  importance 
who  holds  it  or  how  he  came  by  it,  excepting  so  far  as  these 
facts  express  or  reveal  the  intention  of  the  partnership.  (;?) 
If  by  that  intention  the  property  is  treated  by  them  and  con- 
sidered by  them  as  partnership  property,  whether  the  intention 
be  expressly  declared  and  agreed  by  the  partners,  or  only  iii- 
feri-ed  from  circumstances  which  do  not  admit  of  any  other 
equally  reasonable  and  satisfactory  explanation,  then  it  will  be 
treated  as  partnership  property. 

SECTION   III. 

HOW    COURTS    OF    LAAV   TREAT    THE    REAL    ESTATE    OF    A    PARTNERSHIP. 

In  some  of  our  States,  courts  of  law  sit  also  as  courts  of 
equity ;  in  some  they  are  authorized  to  some  extent  to  apply 


Nor  is  real  estate  not  purchased  witli 
partnersliip  funds,  though  used  for  part- 
nership purposes,  partnersliip  jjroperty, 
unless  there  is  evidence  beyond  the 
use,  under  an  agreement,  that  there  is 
an  intention  to  make  it  partnership 
property.  Alexander  v.  Kinibro,  4'J 
JMiss.  52'J ;  Frank  v.  Branch,  Itj  C'onn. 
261,  1  Am.  L.  C.  (5th  ed.)  605.  Wlien 
two  tenants  in  common  own  land,  and 
carry  on  a  partnership  business  which 
is  ancdlary  to  the  land, — quarry in>>- 
stone,  for  instance,  —  the  land  still  re- 
mains realty.  Steward  v.  Blakeway, 
L.  R.  4  Ch.  Ap.  60a.] 


(/))  In  Markham  v.  Merritt,  7  How. 
(Miss.)  487,  it  was  said  o/vVe/- by  Sharkey, 
C.  J.,  that  taking  a  deed  as  tenants  in 
common  might  be  lidd  a  partition  of 
the  joint  fund  ;  but  see,  per  Story,  J., 
in  Hoxie  v.  Carr,  1  Sumner,  1^8,  that 
that  circumstance  was  as  evidence  of 
intention,  jier  se,  very  slight,  and  never 
decisive.  See  Wilson  v.  Hunter,  14 
Wis.  68:3;  where  one  of  the  partners 
who  had  not  the  legal  title  nn^rtgaged 
land,  and  it  was  held  good  against 
subsequent  mortgagees,  with  notice. 
And  see  Howell  v.  Howell,  15  Wis.  66. 


398  THE   LAW    OF   PARTNERSHIP.  [CH.  XI. 

the  rules  of  equity,  wliile  sitting  as  courts  of  law ;  and 
*  367    in  some  tliey  have,  *  from  a  kind  of  necessity,  taken  to 

themselves  this  power,  and  applied  equity  principles  to 
such  questions  as  those  we  have  to  consider.  At  the  same 
time,  the  distinction  is  obvious  and  certain  between  the  prin- 
ciples of  law  and  their  operation,  and  the  principles  of  equity 
and  their  operation.  And  this  distinction  in  some  form  or 
other  is  usually  preserved,  even  by  courts  that  administer  both 
principles.     We  shall  speak  of  them  as  entirely  distinct. 

In  England,  the  legal  title  to  real  estate  in  respect  to  transfer 
and  conveyance  is  entirely  distinct  from  that  of  personal  es- 
tate. In  respect  to  inheritance,  it  is  also  different,  both  in  form 
and  in  substance  ;  in  respect  to  devises,  it  is  different,  but  less 
so,  practically,  than  in  reference  to  tlie  other  two.  In  this 
country,  the  law  of  real  estate  is  even  more  distinct  from  that 
of  personal  than  in  England,  in  respect  to  conveyance,  owing 
to  our  excellent  and  universal  system  of  record :  but,  in  regard 
to  inheritance,  the  difference  is  formal  only ;  the  same  persons, 
in  nearly  all  instances,  taking  realty  who  would  take  personalty, 
though  by  a  different  title  and  process,  (^q') 

We  should  infer,  therefore,  tliat  here  as  well  as  there  the  law 
would  pay  the  utmost  regard  to  title  by  deed  and  record.  And 
this  is  always  so.  Thus,  no  partner  or  partners  can  convey 
any  interest  or  title  in  or  to  real  estate,  not  held  of  record  in 
their  names,  although  it  is  partnership  property  beyond  all 
question,  (r)  And  in  all  actions  at  law,  no  person  can  appear 
and  rest  upon  his  title,  as  plaintiff  or  defendant,  if  the  title  by 
deed  on  which  he  rests  is  in  some  one  else,  (s)     And  this  is 

(7)  In  Davis  v.  Christian,  15  Gratt.  ham  i'.  Merritt,  7  How.  (Miss.)  437.  See 

11,  a  bill  was  filed  for  a  share  accrued  Bradbury  v.  Barnes,  19  Cal.  120,  as  to 

to  tlie  complainant  as  husband  of  the  the  right  of  one  partner  to   buy   an- 

daughter  of  a  partner   deceased,  and  other's  interest  in  the  real  estate  of  the 

one   question    was,  whether  she  took  partnership. 

such  share  as  real  or  personal  prop-  (/)  Jackson  v.  Stanford,  19  Ga.  14, 
erty ;  and  so  whether  the  complainant  where  one  partner,  holding  under  a 
acquired  the  property  absolutely  as  conveyance  to  the  partners  by  their 
personal,  or  only  a  life-interest  therein,  individual  names,  attempted  to  convey 
as  tenant  by  curtesy  :  and  it  was  held,  the  whole  property,  and  the  convey- 
that  tlie  conversion  of  real  property  ance  was  held  valid,  only  as  to  his 
into  personal  was  equitable  only  ;  but  moiet}'.  See  Whitman  v.  Boston  & 
the  precise  question  was  not  definitely  Maine  R.  R.,  3  Allen,  133. 
decided.    Per  Sharkey,  C.  J.,  in  Mark-          (s)  Story,  J.,  in  Iloxie  v.  Carr,  1 


CH.  XI.]  OF    THE    REAL    ESTATE    OF    PARTNERSHIP.  399 

true  of  title  by  inheritance  also.  "We  apprehend  that 
some  of  our  courts  might  find  a  way  to  dispose  of  this  *  title  *  368 
at  law,  as  it  would  be  done  in  equity  ;  but  it  would  be 
difficult  to  do  this,  and,  wherever  equity  powers  could  be  exer- 
cised, it  would  be  unnecessary.  We  should  say,  therefore,  that 
at  law  the  real  estate  of  a  partnership  would  pass  to  the  legal 
heir  by  inheritance  ;  that  is,  to  the  legal  heir  or  heirs  of  him 
or  them  in  whom  was  the  legal  title :  (^)  and  that  it  would 
also  pass  by  devise  of  the  legal  holder,  although  here  courts  of 
law  might  perhaps  take  a  wider  liberty  than  in  the  case  of  in- 
heritance. 

In  like  manner  the  peremptory  provisions  of  the  Statute  of 
Frauds  would  apply  ;  and  even  equity  would  feel  itself  obliged 
to  pay  some  regard  to  them.  Hence,  if  a  partnership  were 
formed  even  to  trade  in  lands,  and  for  nothing  else,  the  lands 
when  bought  must  not  only  have  an  owner  by  legal  title,  and 
pass  solely  from  him  and  solely  by  a  legal  title,  but  all  contracts 
and  agreements  betw^een  the  partners  themselves,  as  well  as 
between  them  and  strangers,  for  the  sale  of  "  lands,  tenements, 
and  hereditaments,  or  any  interest  in  or  concerning  them," 
should  be  written  and  signed.  Qii)  But  on  this  there  are  con- 
flicting views,  which  we  shall  consider  in  the  next  section. 

Hence,  too,  at  law,  the  general  rule,  as  to  the  rights  and  lia- 
bilities of  dormant  partners,  is  said  not  to  apply  to  partnerships 
for  the  purchase  and  sale  of  land.  Thus,  if  two  are  partners  for 
such  a  purpose,  one  of  whom  is  silent  and  unknown,  and  the 
other,  in  whose  name  the  lands  are  taken  and  transferred,  alone 
becomes  indebted  for  the  price,  it  is  said  that  the  secret  partner 
cannot  be  sued  for  the  price,  on  proof  of  his  partnership,  and 
that  the  purchase  w^as  made  and  the  debt  incurred  for  the  part- 
nership, (f) 

Sumner,   173,    177,    178;    Benfield   v.  Gray  f.  Palmer,  9  Cal.  616  ;  Patterson 

Solomons,  9  Ves.   76;    Harris  v.  Pol-  i-.  Grace,  10  Ala.  444 ;  Black  r.  Black, 

lard,  3  P.  Wras.  348.  15  Ga.  445.     And  see  Darby  v.  Darby, 

{t)  Pugh    V.    Currie,    6   Ala.   446  ;  3  Drewry,  495.     Tlie  case  of  Smith  v. 

Lang  V.   Waring,  25  id.  625 ;  Dyer  v.  Burnham,  3  Surnn.  435,  seems,  from 

Clark,  5 Mete.  562;  Burnside  U.Merrick,  the  remarks  of  Story,  J.,  to  support 

4  Mete.  537  ;  Dilworth  v.  Mayfield,  36  the  same  doctrine  ;  thoiifrh  tlie  decision 

Miss.  40;    Andrews  v.  Brown,  21  Ala.  was  against  tiie  complainant,  no  satis- 

437;  Davis  v.  Christian,  15  Gratt.  11.  factory  proof  of   a  partnership,  even 

(u)   Per  Tucker,  J.,  in  Wlieatley  v.  by   parol,  being  made  out.     See  ante, 

Calhoun,  12  Leigh,  264  ;  Sergeant,  J.,  p.  *  7. 

in  Hale  v.  Henrie,  2  Watts,  145,  147;  ('•)  Pitts  v.  Waugh,  4  Mass.  424; 


400  THE    LAW   OF   PARTNERSHIP.  [CH.  XL 

But  we  have  some  doubt  whether  tliese  decisions  do  not  rest 
upon  a  recognition  of  a  difference  between  land  and  personalty 
which  would  not  now  be  made.  The  reasons  which  compel 
courts  of  law  to  regard  the  legal  title  to  land  by  deed  do  not 

apply,  or  certainly  not  with  the  same  force,  to  courts  of 
*  369    equity.    Nor  do  we  *  know  any  among  the  reasons  which 

are  held  sufficient  in  such  a  case  to  bind  a  secret  partner 
when  discovered,  in  an  ordinary  case  of  partnership,  which  do 
not  apply  quite  as  well  to  a  case  where  land  was  a  part  of  the 
partnership  property.  (?t') 

From  the  regard  which  is  necessarily  paid  to  the  legal  title, 
it  follows,  as  we  have  said,  that  no  partner  can  convey  any  real 
estate,  or  any  interest  in  it,  but  he  in  whose  name  it  stands. 
Even  equity  cannot  dispense  with  this  rule.  By  the  American 
law  and  practice  all  title  to  land  must  be  traced  along  an 
unbroken  chain  of  record.  At  every  step,  it  must  be  legal 
title ;  passing,  by  legal  conveyance,  from  him  who  has  it  to 
one  capable  of  taking  it. 

'  SECTION    IV. 

HOW   THE    KEAL   ESTATE    OF    A    PARTNERSHIP   IS    TREATED    IX    EQUITY. 

1.  Hoiv  far  it  is  Regarded  as  Personal  Estate. 

On  this  point,  the  conflict  of  authorities  renders  it  difficult  to 
lay  down  a  positive  and  certain  rule.  We  think,  however,  that 
there  is  a  difference  between  the  practice  of  the  English  equity 
courts  and  our  own  ;  and  this  difference  can  be  defined  and 
explained,  and  the  decided  tendency,  if  not  the  established 
rule,  of  the  courts  of  each  country,  be  ascertained. 

The  older  authorities  in  England  are  opposed  to  any  recog- 

cited  and  followed  in  Gray  v.  Palmer,  now  universiilly  admitted  at  common 

9  Cal.  016.  law  —  it  must  be  considered  overruled 

(ic)  Though    the   case    of    Pitts   v.  by  the  current  of  later  authority ;  and 

Waugh  is   usually   considered   sound,  the    rule,   that   a   dormant    or    secret 

as   being   merely    at    law,  —  see    Fall  partner  of  a  land  company  cannot  be 

Iliver  Whaling  Co.  v.  Borden,  10  Cush.  charged,  would  seem  now  to  rest  upon 

485,  —  yet,  so  far  as  it  was  rested  by  feeble   reasons.     In   Thorn  v.   Thorn, 

the   court   on   the    ground   of  an   im-  11    Iowa,    146,   it   was   held   that   the 

possibility  to  have  a  partnership  deal-  Statute   of  Frauds   did   not   apply   to 

ing  in  land,  —  such  partnerships  being  land  held  in  partnership. 


CH.  XI.]  OF   THE   REAL   ESTATE   OF   PARTNERSHIP.  401 

nition  of  real  property  as  a  part  of  the  partnership  stock,  and 
the  later  have  yielded  to  the  pressing  necessity  for  this  ac- 
knowledgment, slowly  and  imperfectly.  It  was  not  until  quite 
recently  that  it  has  been  full  and  complete  ;  and  now  it  is 
carried  further  in  England  than  it  is  here.  We  suppose  the 
rule  of  those  courts  to  be  well  expressed  thus :  "  All 
property,  whatever  be  its  nature,  *  purchased  with  part-  *  370 
nership  capital  for  the  purposes  of  partnership  trade,  is 
and  continues  to  be  partnership  capital,  and  has,  to  every 
intent,  the  quality  of  personal  estate."  {x)  These  last  two 
clauses  are,  it  will  be  noticed,  quite  distinct.  It  is  one  thing 
to  say  that  such  real  estate  shall  be  considered,  in  every 
respect,  partnership  property,  and  another  thing  to  add  that  it 
has  to  every  intent  the  quality  of  personal  estate.  It  is  the 
first  thing  only,  we  suppose,  which  the  American  courts  say ; 
and  the  English  courts  say  that,  and  then  add  the  latter. 

There  are  two  reasons  for  this  English  rule.  One  is,  that 
the  reluctance  to  admit  real  estate  as  by  any  possibility  part 
of  the  partnership  capital  arose  from  the  feeling  that  only 
personal  property  could  be  thus  held  ;  and  therefore,  when  it 
became  obvious  that  real  estate  must  be  acknowledged  as  part 
of  the  partnership  property,  it  seemed  as  if  this  was  in  fact 
calling  it  personal  property.  The  other  reason  is  more  sub- 
stantial, and  probably  more  operative.  The  law  of  inheritance 
is  such,  in  England,  that  where  a  partner  intended  that  his 
real  estate  should  be  partnership  stock,  and  so  treated  in  all 
respects,  injustice  would  be  done  by  treating  it  so  until  the 
partnership   account    was  settled    and    terminated,  and   tiien 

{x)  Mr.  Bisset,  in  his  treatise  on  which  these  conclusions  were  drawn, 
the  Law  of  Partnership,  after  a  review  would  seem  to  be  overruled  by  Essex 
of  all  the  cases  up  to  his  time  (1847),  v.  Essex,  20  Beav.  442,  and  Darby  v. 
concludes,  among  other  things,  tliat  Darby,  3  Drewry,  495.  See  Bell  v. 
"  real  estate,  purchased  with  partner-  Phyn,  7  Ves.  453,  and  Ripley  v.  Water- 
ship  property,  but  not  for  partnership  worth,  id.  425.  In  the  latter  case,  the 
purposes,  is  not  converted  into  person-  whole  law  on  this  point  was  elabo- 
alty  ;  and  that,  though  partners  pur-  rately  considered,  and  the  Vice-Chan- 
chase  with  partnership  funds  the  equity  cellor  /wid,  after  reviewing  all  the 
of  redemption  of  mortgages  devised  to  authorities,  that  all  real  estate  which 
them,  the  equity  of  redemption  follows  was  added  to  the  partnership  stock,  in 
tlie  mortgage,  and  does  not  become  whatever  way  acquired,  becomes  con- 
partnership  property."  But  the  cases  verted  absolutely  into  personal  prop- 
of  Kandall  v.  Randall,  7  Sim.  271,  and  erty.  See  Bonner  v.  Campbell,  48 
Cookson  V.  Cookson,  8  Sim.  520,  from  Penn.  St.  280. 

26 


402  THE   LAW    OP    PARTNERSHIP.  [CH.  XI. 

restoring  to  it  its  character  of  real  estate.  For  then  the  heir 
would  take  it,  and  all  the  next  of  kin  would  lose  it :  one  child 
would  take  all,  and  the  rest  none.  If  the  father  had  sold  the 
land,  and  put  the  money  into  trade,  all  would  have  shared  it. 
And  if  he  had  put  his  land  into  trade,  and  it  must  be  consid- 
ered that  he  in  this  way  made  it  personal  estate  so  far  as  his 
partners  and  the  creditors  of  the  firm  were  concerned,  it  would 
seem  reasonable  that  he  should  be  considered  as  having  in- 
tended to  impart  to  tlie  real  estate  the  character  of  per- 
*  371  sonalty  in  all  respects,  and  just  to  carry  this  *  intention 
into  effect.  (7/)  Hence,  it  seems  to  be  the  English  rule, 
and  is  so  stated  in  American  cases  which  refer  to  it,  that  the 
real  estate  of  a  partnership  does  not  go  to  the  heir  of  a  deceased 
partner  or  partners  beneficially  interested  in  it,  but  to  his 
personal  representatives.  (2)  The  following  distinction  might 
possibly  be  taken  :  Supposing  three  partners,  one  of  whom  has 
the  legal  title  to  real  estate  which  is  partnership  property,  and 
he  dies.  His  heir  would  be  held  as  trustee  for  two-thirds  of  it 
(one-third  to  each  partner),  but  the  other  third  he  would  hold 
as  his  own.  Whereas,  in  the  same  case,  if  one  of  the  other 
partners  who  was  thus  beneficially,  but  not  Ijy  legal  title,  in- 
terested in  one-third,  had  died,  the  partner  holding  the  title, 
or  his  heir,  would  be  held  as  trustee,  not  for  the  heir  of  that 
deceased  partner,  who  had  only  an  equitable  title,  but  for  his 
personal  representatives.  We  apprehend,  however,  that  such 
a  distinction  would  be  regarded  as  theoretical  only,  if  admitted 
at  all ;  and  that  the  English  rule,  for  the  reasons  we  have 
stated,  would  give  to  such  real  estate  the  character  and  quali- 
ties of  personal  property,  as  to  all  persons  and  under  all  cir- 
cumstances. 

iy)  See  per  Sharkey,  C.  J.,  in  Mark-  wliich  gave  rise  to  the  doubt.    See  an^e, 

ham  V.  Merritt,  7  How.  (Miss.)  437.  p.  *  370,  note   (.r)  ;  [Callumb  v.  Read, 

(z)  This  is  the  conclusion  of  Wal-  24  N.  Y.  505.]  So  see  the  same  con- 
worth,  Ch.,  in  Buchan  v.  Sumner,  elusion  in  Diihring  c.  Duhring,  20  Mo. 
2  Barb.  Ch.  199,  200 ;  of  Story,  J.,  in  174.  Compare,  with  these  English 
Hoxie  V.  Carr,  1  Sumn.  173,  184 ;  and  cases,  the  recent  case  of  Steward  v. 
Shaw,  C.  J.,  in  Dyer  v.  Clark,  5  Mete.  Blakeway,  Law  Rep.  6  Eq.  Cas.  479. 
562,  578;  and  though  this  was  ques-  [The  land  still  remaining  after  the 
tioned  in  Buckley  v.  Buckley,  11  Barb,  settlement  of  the  partnership  aflairs 
73-76,  yet  that  was  before  the  more  becomes  realty.  Foster's  Appeal,  74 
recent  cases  of  Essex  i-.  Essex,  and  Penn.  St.  341.] 
Darby  v.  Darby,  overruling  the  cases 


CH.  XI.]  OP   THE   REAL   ESTATE   OF   PARTNERSHIP.  403 

111  this  country,  tlie  rule  is  otlierwise.  Neither  of  the  rea- 
sons above  stated  apply  to  us.  There  is  not,  and  we  know  no 
reason  why  there  should  be,  any  reluctance  to  recognize  as 
partnership  property  any  real  estate  which  the  owners  wish 
should  be  so  considered.  And  when  it  has  fulfilled  all  its 
functions  as  personal  property,  in  respect  of  the  partnership, 
the  partners,  and  the  creditors,  and  is  no  longer  wanted  for 
these,  it  may  now  become,  in  their  hands  who  have  the  legal 
title,  real  estate,  and  subject  to  all  incidents  as  such  ;  because 
the  same  persons  with  us  take  the  personalty  and  inherit  the 
realty,  and  it  will  l)e  much  simpler  and  easier  for  them  to  take 
at  once  as  realty  that  which  is  realty.  The  following,  then,  is 
the  American  rule:  Real  estate,  purchased  and  held  as  part- 
nership property,  is  so  treated  in  equity,  and  subjected  to  all 
the  incidents  of  partnership  property.  If  there  be  death, 
*  the  surviving  partner,  whether  he  hold  the  whole  title,  *  372 
or  hold  it  in  part,  or  hold  none  of  it,  if  he  be  a  creditor 
of  the  partnership,  has  the  same  rights  against  the  real  estate, 
and  only  the  same,  which  any  other  creditor  has.  (a)  But 
this  real  estate  goes  to  pay  the  debts  of  the  partnership,  and 
only  after  they  are  paid  does  it,  or  what  is  left  of  it,  become 
the  property  of  the  partners,  or  their  representatives,  free  from 
all  claims ;  and  then  it  is  divided  between  them  just  as  so 
much  money  capital  would  be.  But  it  then  becomes  at  once 
real  estate ;  or,  rather,  all  the  incidents  and  qualities  of  real 
estate  revive.  This  rule  goes  upon  the  ground  of  a  trust  im- 
posed upon  all  who  hold  the  legal  title,  in  l)elialf  of  all  partner- 
ship objects ;  and,  that  trust  once  discharged,  the  residue 
resumes  its  former  character.  (Z;) 

(a)  Delaney  ?;.  Hutclieson,  2  Rand.  (i)  Dyer   v.    Clark,   5    Mete.   562; 

183;    Gray   v.    Palmer,   9    Cal.    616;  Burnsiile    v.    Merrick,   4   Mete.    5B7 ; 

Eoberts  v.   McCarty,  9  Ind.   16.     Ab-  Howard  v.  Priest,  5  id.  582 ;   Peck  v. 

bott's  Appeal,  50  Penn.  St.  234.     [In  Fislier,  7  Cusli.  386;  Rice  v.  Barnard, 

Pennsylvania,  if  the  partners  take  a  20  Vt.  479 ;    Goodburn  ^^  Stevens,  5 

deed  of  real  estate  as  tenants  in  com-  Gill,    1  ;    Gal))raitli    v.    Gedge,    16  B. 

nion,  this  fixes  the   character   of  the  Mon.   631;    liuckiey    v.    Buckley,    11 

property  as  to  creditors ;  and,  in  dis-  Barb.  43  ;  Holland  v.   Fuller,   13  Ind. 

tribution,     i)rivate     and     partnership  195,   199  ;   Mattock  v.   Mattock,   5  id. 

creditors   are   paid    pari    7ws.su.      Ap-  403;   Buclian  v.   Sumner,  2  Barb.  Cli. 

peal  of  Second   Nat.    Bank,  83   Penn.  165;   Boyers  v.  Elliott,  7  Humph.  204; 

St.   203.      See  also   Ebbert's  Appeal,  Tillinghast  r.  ('h!in)piin,  4  li.  I.  173; 

70  Penn.  St.  79.]  Lancaster   Bank   v.   Myley,    12   Penn. 


404 


THE   LAW   OF   PARTNERSHIP. 


[CH.  XI. 


2.    Of  Dower  in  such  Real  Estate. 

The  English  rule  would  seem  to  cut  this  off.  (e) 
*  373  But  in  this  *  country  it  is  quite  well  settled  that  while 
dower  yields  to  the  claims  of  partnership  creditors, 
whether  they  are  of  the  firm  or  strangers,  and  therefore  can- 
not be  granted  until  all  the  partnership  debts  are  paid  or  se- 
cured, yet,  when  this  is  accomplished,  as  the  land  is  treated  in 
the  same  way  as  if  it  had  never  entered  into  partnership  prop- 
erty, dower  revives,  (d)     But  the  widow   should  be  made  a 


St.  544  ;  Sumner  v.  Hampson,  8 
Ohio,  358 ;  Greene  v.  Greene,  1  Ohio, 
244  ;  Coster  v.  Clarke,  3  Edw.  Ch.  428 ; 
Lang  V.  Waring,  25  Ala.  625 ;  Jones  v. 
Neale,  2  Patton  &  H.  339 ;  HanflF  v. 
Howard,  3  Jones  Eq.  440 ;  Collins 
V.  Warren,  29  Mo.  236 ;  Wesson  v. 
Washburn  Iron  Co.,  13  Allen,  95; 
Shearer  v.  Shearer  (2  Browne),  98 
Mass.  107  ;  [Kleine  v.  Shanks,  U.  S. 
C.  Ct.  Miss.  1876,  3  Cen.  L.  J.  799  ; 
Foster  v.  Barnes,  81  Penn.  St.  377  ; 
Pierce  v.  Covert,  39  Wis.  252.]  But, 
in  Pierce  v.  Trigg,  10  Leigh,  406,  it 
was  held,  by  Tucker,  J.,  that  the  pur- 
chase of  real  property  with  partner- 
ship funds  and  for  partnership  purposes, 
converted  it  absolutely  into  personalty. 
The  court  say  :  "  It  ought  to  replace 
the  fund  withdrawn  from  the  personal 
estate.  By  placing  it  as  stock  in  the 
partnership,  the  deceased  evinced  a 
design  to  treat  it  as  personalty,  and 
it  ought  to  go  accordingly.  The 
representatives  of  the  deceased  can 
claim  it  only  as  stock  ;  and  as  stock 
in  trade  it  is,  ex  vi  termini,  personal. 
And,  accordingly,  the  widow's  dower 
was  denied  to  her  thereout,  although 
the  partnership  was  solvent."  The 
court  were  not  unanimous  in  this 
opinion.  No  other  American  decision 
has,  it  is  believed,  maintained  this 
doctrine  ;  and  the  later  cases  in  Vir- 
ginia, Davis  V.  Christian,  15  Graft.  11, 
and  Jones  v.  Neale,  2  Patton  &  H.  339, 
treat  the  point  as  doubtful,  a  decision 
thereon  being  unnecessary.  See  ante, 
p.  *  367,  note  (q).    On  the  other  hand, 


dicta  occur  going  to  sustain  an  abso- 
lute conversion  in  the  case  of  a  pur- 
chase of  land,  under  a  stipulation  for 
resale,  made  either  at  the  time,  or 
agreed  upon  in  the  partnership  articles. 
Ludlow  V.  Cooper,  4  Ohio  St.  1  ; 
Buck  V.  Winn,  11  B.  Mon.  320;  Divine 
V.  Mitchum,  4  id.  488;  Galbraith  v. 
Gedge,  16  id.  631,  635;  Thayer  v. 
Lane,  Walk.  Ch.  200 ;  but  in  none  of 
these  cases  is  the  point  decided.  See 
Dewey  v.  Dewey,  35  Vt.  655.  As  to 
what  joinder  of  interest  is  necessary 
to  make  a  partnership  in  lands,  see 
White  V.  Fitzgerald,  19  Wis.  480. 

(c)  Houghton  V.  Houghton,  11  Sim. 
491 ;  Morris  v.  Kearsley,  2  Younge  & 
C.  139. 

(d)  Dyer  v.  Clark,  5  Mete.  562; 
Howard  v.  Priest,  5  Mete.  582  ;  Coster 
V.  Clarke,  3  Edw.  Ch'.  238 ;  Galbraith 
V.  Gedge,  16  B.  Mon.  631 ;  Goodburn  v. 
Stevens,  5  Gill,  1 ;  Smith  v.  Jackson, 
2  Edw.  Ch.  28.  Thus,  if  the  firm 
become  insolvent,  the  widow  loses 
dower.  Greene  v.  Greene,  1  Ohio, 
244 ;  Duhring  v.  Duhring,  20  Mo.  174. 
[There  is  no  dower  in  the  real  estate 
of  a  partnership,  till  the  adjustment 
of  partnership  accounts ;  and  any  sale, 
whether  by  mortgage,  or  on  execu- 
tion, or  by  decree  of  court,  will  bar 
dower.  Simpson  v.  Leach,  Sup.  Ct. 
III.,  June,  1878,  G  Cent.  L.J.  135  ;  Uhler 
V.  Semple,  20  N.  J.  Eq.  288 ;  Willett  v. 
Brown,  Sup.  Ct.  Mo.  3  L.  &  Eq.  Reptr. 
728.]  On  the  otiier  hand,  if  the  prop- 
erty passes  out  of  the  partnership  to  a 
stranger,   as  he  is  not   privy   to  the 


CH.  XI.]  OF  THE   REAL   ESTATE   OF   PARTNERSHIP.  405 

party  to  any  bill  for  an  account  or  for  a  sale  of  the  real  prop- 
erty to  pay  debts,  (e)  Otherwise,  the  purchaser  might  be  liable 
to  the  widow's  claim  for  dower.  (/) 

3.    Of  the  Inheritance  of  such  Real  Estate. 

The  heir  always  takes  the  real  estate  in  order  to  support  the 
legal  title,  and  is  then  held  as  trustee  for  all  those  purposes  to 
which  the  land  must  be  devoted  in  order  to  make  it  effectually 
partnership  property  ;  (^)  having,  however,  the  right  to  require 
that  the  real  property  shall  not  be  sold  to  pay  debts  until  all 
the  personal  property  is  exhausted.  (Ji)  When  these 
are  all  fulfilled,  he  then  holds  *  it  discharged  from  claim,  *  374 
precisely  as  if  it  had  never  been  otherwise,  (i')  If  land 
be  conveyed  to  partners,  in  fact  as  partnership  property,  but  in 
form  to  them  as  tenants  in  common,  and  one  dies,  his  heir 
becomes  tenant  in  common  with  the  other  partners,  (y) 
Here,  as  before,  he  holds  as  trustee  for  the  partnership  until 
this  trust  is  discharged,  and  then  for  himself.  And  it  is  said 
in  England,  that,  in  such  a  case,  if  the  heir  has  a  beneficial  as 
well  as  legal  interest,  dower  would  be  allowed.  (Jc)  Here  it 
certainly  would  be  as  soon  as  the  estate  were  cleared  from  all 
liability  for  the  debts  of  the  partnership. 

trust,  but  holds  the  estate  discharged  into  personalty,  and  the  widow  could 

thereof,   the  widow   can   claim    dower  take    no    dower.      But    this    decision 

of  the   vendee,   as   the  holder  of  the  seems  questioned  in  Davis  v.  Christian, 

legal  estate  ;  nor  can  he  avail  himself  15  Gratt.  11. 

of  the  fact  that  the  land  was  partner-  (e)  Pugli  v.  Currie,  5  Ala.  446. 

ship  property,  as  the  trust  is  wholly  (/)  Thus,  in  Collins  v.  Warren,  29 

gone.     Markham   v.  Merritt,  7   How.  Mo.  2.36,  as  this  was  not  done,  the  sur- 

(Miss.)  437.     In  Tennessee,  it  is  held,  vivor  was  not  allowed  to  recover  from 

that,  in  consequence  of  the  act  ahol-  the  widow,  in  an  action  of  ejectment, 

ishing  joint  tenancy,  Stat.  1784,  ch.  22,  more  than  an  undivided  moiety  of  the 

land  of  the  partnership,  bought   with  real  estate. 

its  funds    and   used   for  its  purposes,  (*/)  See    ante,    p.    *363,    note    (c)  ; 

unless  within  the  exception  in  favor  of  p.  *368,  note  (t). 

"useful  trade,"   &c.,  will  have   every  (h)  Lang   v.  Waring,  25  Ala.  G25. 

attribute  of  real  property,  and  descend  So  the  heirs  must  be  parties  when  a 

to  the  heir,  and  not  go  to  tlie  personal  sale   is    sought   for  payment   of   firm 

representatives.     McAllister   v.  Mont-  debts.      Piigh  v.   Currie,  5  Ala.  446  ; 

gomery,   3    Ilayw.    <J4 ;    Yeatman    v.  Lang  v.  Waring,  25  id.  025;   Andrews 

Woods,  0  Yerg.  20;    Piper  v.  Smith,  v.  Brown,  21  id.  437. 

1  Head,  93.     In  Virginia,  on  the  other  (i)  Dyer  v.  Clark,  5  Mete.  562.    See 

hand,  it  was  hid,  in  Pierce  f.  Trigg,  also  preceding  note,  and  cases  cited. 

10  Leigh,  400,  that  real  estate  which  ( /  )  See  preceding  notes. 

became  stock  was   entirely   converted  (k)  See  unt<',  notes  (A),  (/). 


406  THE   LAW   OF   PARTNERSHIP.  [CH.  XI. 

If  lands  are  conveyed  to  partners  in  fact  as  partnership 
property,  but  in  form  as  joint  tenants,  equity  will  not  permit 
any  survivorship,  but  will  treat  it  as  if  the  grantees  had  held  it 
as  tenants  in  common.  (Z) 

There  seems  to  be  some  disposition  in  England  to  make 
some  distinction  between  lands  bought  by  partnership  funds 
for  partnership  purposes,  and  those  which  are  devised  to  part- 
ners for  the  same  purpose,  (w)  We  doubt,  however,  whether 
it  would  be  carried  out  and  fully  applied  in  England.  If  a 
father,  for  example,  having  two  sons  who  were  partners,  de- 
vised to  them  lands  either  as  tenants  in  common  or  as  joint 
tenants,  but  certainly  as  partners  and  for  partnership  purposes, 
we  think  equity  would  use  the  legal  title  for  partnership  pur- 
poses in  the  same  manner  as  if  it  had  been  bought  by  the  part- 
ners and  paid  for  by  money  bequeathed  to  them.    We  are  quite 

confident  such  would  be  the  rule  in  this  country.  (>i) 
*  375  *  It  has  been  held  in  England,  where  mortgages  were 
devised  to  partners,  and  they  bought  the  equities  of 
redemption,  thus  completing  title  in  themselves,  the  land  was 
not  partnership  property,  nor  to  be  treated  as  personal  prop- 
erty. The  case  was  perhaps  well  decided  on  its  facts,  (o) 
But  we  believe  no  rule  exists  in  England,  and  certainly  none 
in  this  country,  that  real  estate  so  acquired  should  not  be  con- 
sidered partnership  property,  if  it  was  intended  so  to  be,  and 
was  so  treated,  by  the  parties  interested. 

(/)  This   equitable    interference    is  Sumner    v.   Hampsnn,    8    Ohio,    328; 

more  usual  in  England  than   in   this  Duliring    v.    Duhring,    20    Mo.    174 ; 

country,  Broom  v.  Broom,  3  Mylne  &  Evans  v.  Gibson,  29  id.  236;    Carlisle 

K.  443 ;  Morris  v.  Kearsley,  2  Younge  v.  Mulhern,  19  id.  5(3. 
&  C.  139;  Hougliton  v.  Houghton,  11  (m)  Phillips  v.  Phillips,  as  stated  in 

Sim.   491 ;    Fereday   v.   Wightwick,   1  Bisset  on  Part.  50. 

Russ.  &  INI.  45  ;  as  the  statutes  of  most  (n)  Dyer    v.    Clark,    5    Mete.   562; 

of   the    United    States   have    changed  Burnside  v.  Merrick,  4  id.  537 ;  Howard 

joint   tenancies  into  what  are  practi-  v.  Priest,  5  id.  582. 
cally  tenancies  in  common,  by  abolish-  (o)  Phillips   v.   Phillips,   Bisset   on 

ing   the   right   of    survivorship.      See  Part.   50.      This   case   has    not    been 

1  Washburn  on  Real  Propert}',  408,  questioned  in  any  decision  that  we  are 
where  the  several  State  statutes  are  aware  of,  and  is  recognized  by  Mr. 
referred  to  at  length.  The  American  Lindley,  Law  of  Part.  pp.  553,  554, 
courts  generally  have  declared  the  same  though,  it  seems,  witii  some  hesita- 
equitable  rule.    Delaney  v.  Hutcheson,  tion  ;    and  it  is  certainly  against   the 

2  Rand.  183  ;  Thayer  v.  Lane,  Walk,  broad  rules  given  by  him  as  the  result 
Ch.  200  ;   Dyer  v.  Clark,  5  Mete.  562  ;  of  the  English  authorities. 


CH.  XI.]  OP   THE   REAL   ESTATE    OF   PARTNERSHIP.  407 


4.    Of  the  Ricjht  of  Creditors  of  the  firm  to  its  Heal  Estate. 

This  right  whenever  it  arises,  as  will  be  inferred  from  what 
has  been  said,  is  the  same  as  it  is  to  the  personal  estate  of  the 
partnership.  But  it  must  be  worked  out  by  the  power  of 
equity  to  hold  the  legal  owner  as  trustee  for  those  who  are 
beneficially  interested.  A  question  of  some  importance,  at  least 
in  this  country,  arises,  as  to  when  the  creditors'  right  to  real 
estate  may  be  enforced.  It  is  this :  Have  the  creditors  of  a 
firm,  in  equity,  under  all  circumstances  tlie  same  right  to  the 
real  estate  that  they  have  to  the  personal  estate  of  the  firm  ; 
or  have  they  only  a  right  to  resort  to  the  real  estate  if  the 
personal  estate  prove  to  be  insufficient  to  pay  the  debts  ?  The 
difference  might  be  a  very  important  one  in  this  country,  so 
far  at  least  as  dower  is  concerned.  It  might,  indeed,  be  for 
the  interest  of  the  heir  to  have  the  land  of  a  partnership 
appropriated  in  the  first  place  to  pay  the  debts.  If  the  firm 
were  insolvent,  it  would  make  no  difference.  (|j)  If  not,  the 
heirs  would  lose  the  land,  but  would  save  from  the  surplus  of 
personal  just  as  much  as  they  would  lose  in  the  laiid,  and 
would  take  it  free  from  the  encumbrance  of  dower.  But,  in 
such  a  case,  a  court  of  equity  applied  a  similar  rule  to  that 
which  obtains  in  the  settlement  of  an  estate  of  a  de- 
ceased person,  {cf)  The  personal  *  estate  is  applied  to  *  376 
the  payment  of  debts  in  the  first  place ;  if  that  be  ex- 
hausted and  insufficient,  then  so  much  of  the  real  estate  is  so 
applied  as  may  be  necessary.  And  so  it  is  in  case  of  partner- 
ship ;  and  therefore  the  whole  real  estate  of  a  partnership,  if 
none  of  it  were  wanted  for    payment  of  debts  or  partners' 

(p)  But  see,  in  Lang  v.  Waring,  25  where  the  aid  of  equity  is  claimed  to 

Ala.  625,  that  the  heirs  are  not  cut  off  reach  a  fund,  hy  one  who  has  recourse 

from  all  defence,  even  by  insolvency  to  two  funds  in  the  same  ri>>lit;  that  is, 

of  the  firm.     [Where  a  partner  mort-  the  creditor  will  be  comiiellcd  to  resort 

gages  partnership  real  estate  to  secure  to  that  fund  which  he  alone  has  re- 

his  individual  debts,  the  i)artnership  course  to,  and   exhaust   it,  before  he 

creditors  must  first  be  paid  before  the  can  subject  the  otlier  to  his  demand, 

private  creditors  can  take  the  property,  Adams'  Eq.  271,  274,  and  cases  cited  ; 

or    any    part    of    it,    by    foreclosure.  Bardwell  v.  Perry,  19   Vt.  2U2 ;    and, 

Conant  r.  Frary,  49  Ind.  5:10.]  generally,   cases   cited   ante,   p.   *353, 

(q)  The  doctrine  of  marshalling  as-  note  («). 
sets   will  always  be  applied  in  cases 


408  THE   LAW   OF   PARTNERSHIP.  [CH.  XI. 

shares,  would  be  as  unaffected  in  equity  as  at  law  ;  and,  if  part 
of  it  were  so  wanted,  that  part  only  would  be  treated  as  per- 
sonal property,  leaving  the  residue  untouched,  (r) 

5.    Of  the  Right  and  Power  of  the  Partners  as  to  the  Meal 
Estate  of  the  Partnership. 

This  seems  to  be,  in  equity,  entire  and  complete,  so  far  as 
the  payment  of  debt  goes ;  and,  after  that  payment,  so  far 
as  the  adjustment  of  the  mutual  claims  or  balances  of  the  part- 
ners is  concerned,  (s)  But  there  is  a  limitation  as  to  the  power 
of  a  partner  over  this  real  estate,  which  would,  we  think,  be 
applied  in  this  country  as  it  is  in  England.  It  is  simply  this  : 
No  partner,  and  no  proportion  of  the  partners,  can  sell  or  trans- 
fer the  real  estate  of  the  firm — outright  for  money,  or  by  way 
of  mortgage  to  secure  a  debt,  or  to  assignees  in  trust  for  debts  — 

without  the  consent  and  authority  of  the  other  partners. 
*  377    On  the  first  point,  —  that  he  *  who  happens  to  have  the 

legal  title  cannot  sell  the  real  estate  without  the  consent 
and  authority  of  the  rest,  so  as  to  give  title  to  a  grantee  having 
notice, — we  are  quite  sure  that  must  be  the  law.  And  if  he 
make  a  mortgage  to  secure  a  debt,  or  an  assignment  in  trust  for 
creditors,  by  which  the  legal  title  would  pass,  it  seems  that 
equity  will  not  sustain  the  transaction,  even  supposing  it  free 


(r)  In  case  of  dissolution  by   the  v.  Mulhern,  19  id.  56 ;   Ricliardson  v. 

death  of  a  partner  holding  title  to  the  Wyatt,     2    Desaus.    471;     Dillon    v. 

firm's  real  estate,  neither  the  survivor  Brown,  11   Gray,   179.      In  the  cases 

nor  the  partnership  creditors  can  claim  where    an    apparent    right    has    been 

the  aid  of  a  court  of  equity  to  compel  given  to  the  survivor  to  call  upon  the 

the  widow  and  heirs  to  release  their  heir  peremptorily   to   convey,   it   will 

rights,  until   the   personal   assets   are  always,   we  think,  be  found  that  the 

exhausted.      Lang  r.  Waring,  25  Ala.  land  was  needed  to  pay  the  debts  of 

625,  correcting  Andrews  v.  Brown,  21  the  firm.     Pugh  v.  Currie,  5  Ala.  446  ; 

id.  437.     As  to  the  right  of  partnership  Sumner  v.  Hampson,  8  Ohio,  328.    And 

creditors,   when    the    real    assets    are  the  case  of  Andrews  i".  Brown,  21  Ala. 

requisite  to  a  full  satisfaction  of  their  437,   which   seemed  to  disregard   this 

debts,  to  call  upon  the  heirs  and  widow  rule,  was  overruled  on  this  point  by 

to    convey    and   release    their    rights,  Lang  i-.  Waring,  25  id.  625. 
through   the   medium    of  assent   to   a  (s)  Dilworth  v.  Maj'field,  36  Mo.  40  ; 

sale  by  the  survivor,  see   Sumner  v.  Andrews  i\  Brown,  21  Ala.  437;   Lang 

Hampson,  8  Ohio,  328  ;   Lang  v.  War-  v.  Waring,  25  id.  625 ;  Pugh  v.  Currie, 

ing,  supra:  Pugh  v.  Currie,  5  Ala.  446;  5  id.  446  ;  Davis  v.  Christian,  15  Gratt. 

Davis  V.  Christian,  15  Gratt.  11  ;  Duh-  11 ;  Shearer  v.  Paine,  12  Allen,  289. 
ring  V.  Duhring,  20  Mo.  174  ;   Carhsle 


CH.  XI.]  OF   THE   EEAL   ESTATE   OF   PARTNERSHIP.  409 

from  the  taint  of  fraud.  (0  It  would  seem,  therefore,  that  the 
power  of  a  partner  over  the  real  estate  of  the  firm  is  less  than 
that  over  the  personal  estate.  He  may  contract  debts  and  make 
contracts  which  will  indirectly  reach  the  realty,  because  this 
must  finally  be  subject  to  the  debts  of  the  firm.  But  he  cannot 
directly  convey  or  appropriate  it,  excepting  so  far  as  he  has 
the  legal  title  in  himself;  and  then  a  purchaser  with  knowl- 
edge, or  the  means  of  knowledge,  takes  the  land  subject  to  all 
the  equities  of  the  partners,  (i^)  And,  by  the  same  principle,  it 
is  held^  in  England,  that  the  contracts  of  a  partner  about  the 
land  of  the  firm  —  as  for  its  sale,  for  example  —  have  no  force, 
unless  they  are  made  with  the  consent  and  by  the  authority  of 
the  firm.  If  this  were  shown,  however,  although  not  in  such  a 
■way  as  to  give  any  interest  or  right  or  remedy  at  law,  equity 
would  undoubtedly  enforce  the  contract,  if  it  were  itself  legal. 

A  different  question  arises  when  a  partner  does  not  under- 
take to  dispose  of  the  property  or  interest  of  the  firm  in  the  real 
estate,  but  sells  his  own  interest  in  it  to  a  stranger.  This  it 
has  been  held  he  may  do,  and  that  the  sale  is  valid  as  against 
his  copartners,  although  it  would  not  be  valid  as  against  the 
creditors  of  the  firm.  (i«/) 

A  sale  of  partnership  real  estate  by  order  of  court,  to  pay  the 
debts  of  a  deceased  partner,  conveys  only  his  interest  as  partner, 
although  the  whole  legal  title  was  in  the  deceased,  {uuu) 

SECTION    V. 

OF    CONVEYANCES    TO    STRANGERS   OF    THE    REAL   ESTATE    OF    THE 
PARTNERSHIP. 

We  have  repeatedly  remarked  that  the  law  respects  and 
upholds  the  legal  title  to  land  by  deed  and  record.  Xor  will 
equity  disregard  or  supersede  this  in  relation  to  innocent  pur- 
chasers. Thus,  if  land  which  certainly  belongs  to  a  partner- 
ship is  held  in  the  name  of  one  partner,  and  he  conveys  it  for 

(I)  Ilanff  i;.   Howard,  3  Jones  Eq.  (uu)  Treadwell  r.  Williams,  9  Bosw. 

440  ;  Baldwin  v.  Johnson,  Saxt.  Ch.  441.  649. 

(n)  Forde  v.  Hcrron,  4  Munf.  81(j ;  (unu)  M'Cormick's  Appeal,  57 Tenn. 

per  Walworth,  Chancellor,  in  Huciian  St.  54. 
V.  Sumner,  2  Barb.  Ch.  175,  I'JS. 


410  THE   LAW   OP   PARTNERSHIP.  [CH.  XI. 

value  to  a  person  who  1ms  no  knowledge,  or  reasonable  means 
of  knowledge,  that  it  belongs  to  the  firm,  such  person,  we  have 

seen,  will  iiold  it  as  against  the  firm.  Of  this  there  can 
*  378    be  no  doubt,  and  as  little  that  *  if  the  grantee  knew,  or 

had  sufficient  means  of  knowing,  that  it  belonged  to  the 
firm,  his  title  will  be  annulled,  or  he  will  be  charged  as  trustee 
for  the  firm,  (v)  It  is  a  much  more  difficult  question,  whether 
such  innocent  purchaser  holds  the  property  as  against  creditors. 
In  the  absence  of  decisive  authority,  we  should  say,  on  gen- 
eral principles,  tliat  he  would.  If  a  partner  sells  a  part  of  the 
merchandise  of  his  firm,  fraudulently  against  the  firm  or  its 
creditors,  but  apparently  in  due  course  of  business,  so  as  to 
excite  no  suspicion,  and  give  no  notice  to  the  purchaser,  we 
should  say  that  the  purchaser  would  hold  it  both  as  against  the 
firm  and  their  creditors.  On  similar  grounds,  we  should  say  that 
a  regular  transfer  of  land,  for  value,  to  an  innocent  stranger 
would  give  him  title  against  the  firm  and  the  creditors  of  the 
.firm,  although  the  firm  were  insolvent,  and  the  sale  fraudulent 
on  the  part  of  the  partner  selling. 

(r)  M'Dermot  v.  Laurence,  7  S.  &  decision  was  sustained  by  the  court  in 
R.  438  ;  Forde  y.  Herron,  4  Munf.  310;  bank.  In  tlie  later  cases  of  Kramer 
Walworth,  Ciianceilor,  Buchan  i'.  Sum-  i'.  Arthurs,  7  Penn.  St.  165,  and  Kidg- 
ner,  2  Barb.  Ch.  198 ;  Tillinghast  v.  way's  Appeal,  15  id.  177,  the  same 
Champlin,  4  II.  I.  173,  209  ;  per  Shaw,  doctrine  was  recognized.  But  see 
C.  J.,  in  Dyer  v.  Clark,  5  Mete.  562,  Moderwell  v.  MuUison,  21  id.  257, 
580.  In  some  cases  in  Pennsylvania,  Coder  v.  Huling,  27  id.  84,  where  tliis 
a  different  doctrine  prevails.  In  the  doctrine  seems  somewhat  qualified, 
earliest  case,  M'Dermot  v.  Laurence,  Where,  as  is  generally  the  case,  the 
Tilghman,  C.  J.,  carefully  guarded  purcliaser  is  a  creditor  of  one  part- 
against  the  case  where  the  purchaser  ner,  it  seems  held,  that  he  will  be  post- 
had  reasonable  means  of  knowledge  ;  poned  to  the  demands  of  the  partner- 
but  in  Hale  v.  Henrie,  2  Watts,  145,  ship,  —  both  creditors'  and  partners' 
the  court,  Gibson,  C.  J.,  absolutely  claims  —  notwitlistanding  the  recorded 
excluded  evidence  showing  a  clear  title.  Edgar  v.  Donnally,  2  Munf.  .387  ; 
knowledge  of  the  partnership  equities,  Jarvis  v.  Brooks,  7  Fost.  36;  Hanft'  v. 
holding  tiuit  tlie  purcliaser  need  only  Howard,  3  Jones  Eq.  440 ;  Tillingliast 
rely  on  the  registered  title  ;    and  his  v.  Champlin,  4  R.  I.  173. 


CH.  XII.]  OP  DISSOLUTION.  411 


CHAPTER   XII. 

OF  DISSOLUTION. 
SECTION    I. 

OF    THE    EXTENT    AND    DUUATION   OF    A    PARTNERSHIP. 

When  a  partnership  is  formed,  the  partners  may  determine 
at  their  pleasure  what  its  extent  shall  be  in  respect  to  busi- 
ness, and  what  in  respect  to  time.  We  shall  presently  consider 
how  far  and  in  what  way  their  agreement  as  to  the  duration  of 
the  partnership  binds  them.  As  to  the  scope  or  character 
of  their  business,  supposing  they  do  or  propose  to  do  notliing 
in  itself  unlawful,  we  know  no  limitation  to  their  power. 
They  may  determine  this  when  they  enter  into  partnership, 
and  provide  for  it  in  their  articles,  or  at  any  subsequent  time. 
And  they  may  change  their  business  at  their  own  pleasure, 
by  enlargement,  contraction,  or  alteration. 

It  must  be  obvious,  however,  that  any  agreement  of  this 
kind,  once  made,  is  binding  upon  all  the  parties  to  it,  and 
comes  under  the  general  rule  of  contracts,  that  they  cannot 
be  varied  or  rescinded  but  with  the  consent  of  those  who  make 
them.  And  another  general  rule  applies ;  which  is,  that  the 
terms  of  the  bargain,  if  reduced  to  writing,  are  not  to  be 
varied  by  other  evidence  ;  and,  if  not  reduced  to  writing,  may 
be  inferred  from  circumstances.  This  is  sometimes  important. 
A  partner  who  violates  an  agreement  of  this  kind  —  that  is,  who 
makes  a  material  change  in  the  extent  or  character  of  the 
business,  without  the  consent  of  the  other  partners  —  commits  a 
wrong  against  them,  as  wc  have  already  seen,  for  which  he  is 
responsible  to  them  in  damages,  and  may  also  be  restrained  or 
otherwise  dealt  with  in  equity.  Whether  such  wrong  has  been 
done  may  be  easily  ascertained,  if  there  be  articles  which  dchnc 


412  THE  LAW   OF   PARTNEESHIP.  [CH,  XII. 

the  business  of  the  partnership.  If  there  are  none, 
*  380  *  it  is  more  difficult.  And,  perliaps,  it  may  be  said  that 
courts  of  law  or  of  equity  would  in  such  case  require 
circumstantial  evidence  of  a  certain  and  positive  character, 
both  as  to  the  proper  scope  and  character  of  the  business,  and 
that  the  cliange  complained  of  is  in  violation  of  the  agreement 
implied,  in  the  absence  of  writing,  from  a  long  and  distinct 
course  of  business. 

A  partnership,  having  once  begun,  will  be  presumed  to  con- 
tinue until  there  is  some  evidence  of  its  termination,  (a)  And, 
even  after  a  dissolution,  the  partnership,  or  at  least  a  kind  of 
community  of  interest,  of  power,  and  of  liability,  continues,  as 
we  shall  see,  for  some  purposes,  and  for  so  long  a  time  as  is 
necessary  to  carry  those  purposes  into  effect.  In  general,  how- 
ever, we  may  say  that  a  partnership  ends  by  its  dissolution. 
And  we  will  now  proceed  to  consider  the  subject  of  dissolu- 
tion of  partnership  ;  and,  particularly,  how  many  ways  there  are 
in  which  a  partnership  may  be  dissolved,  and  what  are  the 
effects  of  each  kind  of  dissolution. 

Dissolution  of  partnership  takes  place  in  seven  different 
ways :  1.  By  the  provision  of  the  articles.  2.  By  the  will 
of  all  the  partners.  3.  By  act  of  one  or  more  of  the  partners 
alone.  4.  By  a  change  in  the  partnership.  5.  By  the  death 
of  a  partner.  6.  By  decree  of  a  court  of  equity.  7.  By  bank- 
ruptcy. 

SECTION    II. 

OF    DISSOLUTIOX   BY   A    PROVISION   IN    THE    ARTICLES. 

Perhaps  there  is  no  one  thing  more  frequently  provided  for 
by  the  articles  than  the  duration  of  the  partnership.  Where  this 
is  done  in  a  simple  form,  as  by  the  mere  statement  that  "this 
partnership  shall  continue  for  the  period  of  five  years  from  this 
date,"  there  can  be  no  question  about  its  meaning,  and  none 

(a)  Howe  i'.  Thaj-er,  17  Pick.  91."  the  note  in  suit  was  signed,  was  not 

But  in    Rogers   v.  Keed,  18  Me.  257,  evidence  tliat  they  were   so   at   that 

the  court  held,  tliat  evidence  that  per-  time, 
sons  were  partners  ten  months  before 


CH.  XII.]  OP   DISSOLUTION.  413 

about  its  legal  obligation.  When  that  period  expires,  or  the  time 
for  dissolution  arrives,  the  partnership  dies,  of  course.   It 
may  be  *  continued  by  agreement,  and  often  is  ;  but  this    *  381 
is,  in  fact,  a  new  partnership.     And  the  old  articles  are 
of  use  only  as  evidence  to  assist  in  determining  its  terms  ;  and 
they  will  be  decisive  on  this  point,  if  by  the  agreement  the  terms 
of  the  new  one  are  to  be  the  same  with  those  of  the  old.    The 
question  often  occurs,  however,  What  can  a  partner  do,  who, 
wishes  to  terminate  such  a  partnership  before  the  agreed  period 
arrives  ?     And  we  have  already  seen  that  there  is  much  diffi- 
culty in  determining  how  far  the  parties  are  bound  by  such 
agreement  in  practice.    No  doubt  exists  that  equity  may  decree 
dissolution  for  cause,  whatever  be  the  agreement,  or  may  refuse 
such  a  decree,  and  even  enjoin  a  continuance  of  the  partner- 
ship.    And  we  shall   presently  see  that  certain  acts,  which 
would  seem  to  be  always  in  the  power  of  a  partner,  as  a  trans- 
fer of  his  interest,  or  his  insolvency,  or  retirement  in  any  way, 
generally  dissolve  the  partnership.  And  the  question  has  arisen, 
whether  equity  will  ever  compel  parties  to  remain  in  this  rela- 
tion, after  it  has  become  certain  that  there  is  no  longer  mutual 
confidence,  or  regard,  or  desire  for  continuing  the  connection. 
This  question  we  have  already  touched  upon  ;  (6)  and  it  is  per- 
haps impossible  to  give  even  a  general  rule  on  the  subject, 
unless  we  venture  to  state  this  to  be  one :  That  equity  will  not 
in  such  case,  decree  a  continuance  of  the  partnership  because 
the  agreed  period  has  not  expired,  unless,  in  the  first  place,  a 
decided  wrong  and  injury  would  be  inflicted  by  the  present  dis- 
solution ;  and,  secondly,  it  is  practicable  for  the  court  to  insist 
upon  such  a  continuance  as  will  in  fact  prevent  the  threatened 
mischief,  without  doing  other  harm,  (c) 

(6)  See  ante,  pp.  *236,  301.     And  Harrison   v.   Tennant,  21   Beav.  482; 

see  ;jos<,  p.  *  404,  note  (c).  Pearpoint  v.  Graliani,  4  Wash.  C.  C. 

(c)  Chavany  v.  Van  Somnior,  cited  2:>4  ;  Cape  Sable  Co.'s  Case,  3  Bland, 
1  Swanst.  512,  note,  and  3  Wooddes.  674;  Monroe  v.  Conner,  15  Me.  180; 
Lect.  416,  note;  Barring  v.  Dix,  1  Cox,  llowell  v.  Harvey,  5  Ark.  281 ;  Beaver 
213;  Smith  v.  Jeyes,  4  Boav.  503;  r.  Lewis,  14  Ark.  138;  Mann  r.  Con- 
Harrison  V.  Tennant,  21  id.  482  ;  In  re  nell,  1  Whart.  388  ;  Whitton  r.  Sniitii, 
Electric  Telegraph  Co.  of  Ireland,  22  1  Freem.  Ch.  (Miss.)  231 ;  Blake  v.  Dor- 
id.  471  ;  Waters  v.  Taylor,  2  Ves.  &  B.  gan,  1  Greene  (Iowa),  640  ;  Garretson 
229;  Skinner  v.  Dayton,  I'J  Johns,  y.  Weaver,  3  Edw.  Ch.  385 ;  Kennedy 
538;  Peacock  y.  Peacock,  16  Ves.  oO  ;  v.  Kennedy,  3  Dana,  23'J ;  Gowan  v. 
Crawshay   v.  Maule,   1   Swanst.  4'J5 ;  JeSries,  2  Ashm.  2y0.     As  to  season- 


414  THE   LAW   OP    PARTNERSHIP.  [CH.  XII. 

The  provision  in  the  articles  on  this  subject  may  not  be  so 
simple  as  above  suggested.  It  may  be  that  the  partner- 
*  382  ship  shall  *  continue  until  certain  circumstances  occur, 
or  until  one  partner  or  the  other  does  certain  things. 
In  such  a  case,  there  is  no  dissolution  by  the  articles  until  tiic 
circumstances  occur,  or  the  act  be  done.  Difficult  questions 
of  fact  may  arise  under  such  a  clause  ;  but,  so  far  as  a  question 
of  law  can  come  from  it,  it  must  be  governed  by  the  ordinary 
principles  of  contracts  on  a  condition,  (c?) 

The  articles  may  omit  all  reference  to  the  termination  of  the 
partnership;  and  sometimes  the  agreements  as  to  the  partner- 
ship are  only  oral,  (e)  and  sometimes  the  partners  expressly 
agree  simply  to  be  partners,  leaving  all  the  rest  to  their  mut- 
ual but  silent  understanding,  or  to  time  and  the  operation 
of  law.  (/) 

In  these  cases,  it  may  be  a  question  whether  the  facts  and 
circumstances  do  not  imply  or  raise  a  presumption  of  law  that 
there  was  some  agreement  for  a  definite  term.  This  question 
has  been  not  unfrequently  mooted,  and  sometimes  it  seems  to 
have  been  decided  on  doubtful  principles.  We  certainly  should 
not  deny  that  there  may  be  such  inferences  or  implications ;  but 
they  should  not  readily  be  admitted. 

If,  for  example,  a  partnership,  needing  land  or  a  store  for  its 
business,  hired  one,  paying  the  rent  from  partnership  funds, 
and  using  it  for  partnership  purposes,  so  as  to  leave  no  doubt 
that  it  is  partnership  property,  could  it  be  said  that  the  lease 
implies  an  agreement  that  the  partnership  shall  continue  until 
the  lease  expires  ?  We  think  not ;  and  the  best  authorities 
lead  to  this  conclusion.  (^)  Asa  matter  of  actual  probability, 
such  a  lease  is  very  slight  evidence  of  any  such  intention.  They 
may  have  taken  it  for  many  years,  because  they  could  not  get 
it  otherwise,  and  were  willing  to  take  the  risk  of  disposing  of 

able  time,  see  "Wheeler  v.  Van  Wart,  (/)  Ante,  p.  *  231. 

2  Jur.  252 ;   Reade  v.  Bentley,  3  Kay  (rj)  Crawshay  v.  Maule,  1  Swanst. 

&  J.  271,   4   id.  65;    Potter  v.   Gray,  495;    Featherstonhaugh    i\    fenwick, 

1  R.  I.   430.      As  to  the  grounds  on  17    Ves.  2'J8,  307;    Alcock  v.  Taylor, 

which  equity  will  decree  a  dissolution,  Tamiyn,  500;  Jefferys  v.  Smith,  1  Jac. 

see  Mealier  v.  Cox,  37  Ala.  201.  &  W.  301.     See   Marshall  r.  Marshall, 

(d)  See  2  Pars.  Contr.  (5th  ed.)  525-  cited  2  Bell  Comm.  641,  note  3,  and 
527.  033,  note  1. 

(e)  Ante,  p.  *  6,  et  seq.,  and  notes. 


CH.  XII.]  OF   DISSOLUTION.  415 

it  when  they  should  dissolve ;  or  they  may  have  taken  it  in 
order  to  he  sure,  at  all  events,  of  the  premises  as  long  as  they 
might  want  them.  Other  suppositions  might  be  made:  so 
many,  indeed,  that  we  think  the  lease  while  standing  alone 
would  not  amount,  even  if  wholly  unexplained,  to  prima 
facie  evidence,  either  in  fact  or  in  law,  of  *  any  under-  *  383 
standing  that  the  partnership  should  last  as  long  as  the 
lease  run. 

So,  too,  if  the  partnership  entered  into  long  and  continuing 
contracts  of  business,  or  engaged  in  some  transaction  which 
could  not  be  closed  for  a  considerable  period  without  great 
loss,  we  should  say,  that  nothing  of  this  kind  would  be  very 
strong  evidence  of  a  definite  understanding  or  agreement  for 
continuance.  (/«)  There  may  be  many  ways  of  transferring  or 
cancelling  such  contracts,  or  bringing  such  transactions  to  a 
close,  or  even  of  continuing  them  after  the  partnership  has 
closed.  We  should  admit  that  all  circumstances  of  this  kind 
might  be  admissible  and  useful  evidence  in  connection  with  the 
general  course  of  the  business,  the  usage  relating  to  it,  and  all 
those  facts  which,  looking  to  the  future,  imply  an  intention  in 
regard  to  it.  But,  so  far  as  a  general  principle  can  be  given 
fur  tliis  class  of  questions,  it  must,  we  think,  be  this :  That 
equity  would  not  decide  on  such  grounds  that  the  partners  had 
mutually  agreed  to  continue  as  partners  for  a  certain  period ; 
unless  no  other  theory  so  well  satisfied  and  explained  all  the 
facts  of  the  case,  and  a  permission  to  either  partner  to  dissolve 
at  pleasure  would  work  great  mischief.  Then,  perhaps,  equity 
might  prefer  to  decide  that  the  })arties  had  agreed  to  remain 
together,  and  therefore  should  not  part,  rather  than  to  say  that 
one  of  them  should  not  exercise  his  right  to  dissolve  the  firm, 
because  he  would  thereby  inflict  an  injury.  («)     But  if  one  of 

(/()  Featherstonhaugh  v.  Fenwick,  17  (/)  In  "Wlieeler  v.  Van  Wart,  2  Jur. 
Ves.  298,  307.  But  see  Potter  v.  Gray,  252,  tlie  deed  of  settlement  constituting 
1  R.  I.  -130.  The  mere  fact  tliat  a  firm  a  company  contained  no  clause  limit- 
has  incurred  debts,  and  charged  its  ing  the  duration  of  the  partnership; 
assets  for  their  payment,  is  no  evidence  but  it  provided  that  certain  persons 
of  an  agreement  that  the  firm  shall  should  be  appointed  directors  until 
continue  until  its  debts  are  paid.  See  July,  1838,  or  until  an  act  of  Parlia- 
King  r.  The  Accumulative  Assurance  ment  should  be  had.  The  Vice-Chan- 
Co.,  3  C.  B.  X.  8.  (yl  Eug.  Com.  L.  li.)  cellor  said:  "  It  is  my  opinion  that 
151.  they   could   not   dissolve    until    July, 


416  THE   LAW   OF   PARTNERSHIP.  [CH.  XII. 

several  partners  agrees  with  a  stranger  for  a  sub-partnership,  it 
is  not  to  be  implied,  merely  from  the  absence  of  any  agreement 
to  the  contrary,  that  the  duration  of  the  sub-partnership  is  to  be 

coextensive  with  the  original  jtartnership.  (y) 
*  384  *  Partnerships  are  sometimes  formed  for  a  single  ad- 
venture or  enterprise.  Then,  they  terminate  when  that 
enterprise  is  brought  to  a  close  ;  (/c)  for  the  articles  of  agree- 
ment which  limit  the  partnership  to  that  adventure  imply  that 
it  ceases  when  that  ceases ;  but,  for  the  purpose  of  winding 
up  those  affairs,  it  continues  until  all  past  transactions  are 
closed.  (^)  But  such  a  partnership  may  continue,  by  express 
agreement,  or  by  the  partners  going  on  to  act  as  partners  in 
other  transactions ;  and  this  would  not  be  considered  as  a  new 
and  distinct  partnership,  but  as  a  continuation  of  the  original 
one,  and  a  continuation  of  the  original  terms,  unless  new  par- 
ties came  in,  or  it  could  be  shown,  or  inferred  from  circum- 
stances, that  the  terms  were  varied. 

So,  too,  if  the  partnership  were  formed  for  dealing  with  a 
subject-matter  certain  to  expire  at  a  certain  time,  or  even  to 
expire  at  any  time,  it  must  be  understood  as  providing  that  the 
partnership  shall  then  expire.  As,  if  for  traffic  with  a  certain 
patent  or  copyright,  which  had  a  definite  number  of  years  to 
run.  We  apprehend,  that,  if  such  patent  or  copyright  were 
renewed  under  the  general  law,  the  partnership  would  still 
continue.  But,  if  it  were  renewed  only  by  special  statute  or 
grant,  a  continuance  of  the  partnership  would  require  a  new 
agreement.  (>«) 

SECTIOX   III. 

OF   DISSOLUTIOX   BY   THE    WILL   OF   ALL    THE    PARTXER9. 

It  is  obvious  and  certain  that  the  contract  of  partnership 
is  rescindable  by  all  who  are  parties  to  it,  at  their  own  pleas- 

1838  ;   and,  if  so,  then,  as  in  an  ordi-  (  /)  Frost  v.  Moulton,  21  Beav.  596. 

nary  partnership,  they  could  not  do  it  (i)  Pothier,    Contrat   de    Soc.   No. 

without   notice."      Tliis    point   is   not  140-14.3. 

mentioned  in  the  report  of  the  case  in         (/)  Petrilsin  r.  Collier,  1  Barr,  247. 
9  Sim.   193.      See  Keade  r.  Bentley,  (m)  See   Wheeler  v.  Van  Wart,  9 

3  Kay  &  J.  271,  4  id.  65;   Potter  v.  Sim.  193,  2  Jur.  252 ;  Reade  f.  Bentley, 

Gray,  1  R.  I.  430.  4  Kay  &  J.  656,  3  id.  271. 


CH.  XII.]  OP   DISSOLUTION.  417 

ure.  (7i)  But  a  majority  of  the  partners  may  not  exclude  one 
of  the  partners  from  the  firm  without  sufficient  cause.  It  has 
been  held  not  a  sufficient  cause,  that  he  paid  into  the  capital 
a  part  only  of  what  he  agreed  to  contribute,  if  that  part  had 
been  accepted,  and  used  in  the  business  of  the  firm,  (nii) 

A  technical  distinction,  still  mentioned  in  our  text-books, 
that,  if  the  contract  of  copartnership  is  under  seal,  it  cannot  be 
revoked  and  cancelled  excepting  under  seal,  has  never  had  any 
force  in  equity  ;  and  we  do  not  suppose  that  it  would  now  have 
any  practical  effect  in  law.  (o) 

*  Not  only  would  any  express  renunciation  have  this  *  385 
effect,  but  a  general  consent  of  the  termination  of  the 
partnership  would  be  inferred  from  conduct  or  circumstances 
not  otherwise  explicable  ;  as,  by  a  tacit  renunciation  and  stop- 
ping of  business,  settlement  of  the  debts  and  accounts,  con- 
verting of  the  property  into  money,  or  division  of  it  among  the 
partners,  sale  of  the  good-will,  or  the  like.  ( j!?) 

It  has  been  questioned  whether  the  incorporation  of  the  part- 
ners, for  a  similar  business,  would  amount  to  a  dissolution  by 
consent.  This  has  not  unfrequently  occurred  in  this  country, 
where  successful  manufacturers  or  mechanics  have  found  their 
business  so  enlarged  that  it  was  more  convenient  to  transact  it 
under  the  forms  of  a  corporation.  We  should  say  that  this  fact 
alone  would  not  necessarily  be  the  dissolution  of  the  partner- 
ship. But  it  never  would  stand  alone.  The  corporation  would 
always  have  some  defined  relation  to  the  former  partnership. 

(n)  See  Master  v.  Kirton,   3   Ves.  Same   ease   not    reported   so  fully,   4 

274.  Camp.  373.     In  Hutchinson  v.  Whit- 

(nn)  Hartman  v.   Woehr,   3    Green  field,  Hayes,  78,  it  was  provided  that 

(N.  J.),  383.  the   partnership   should    be    dissolved 

(o)  Tills  point  was  raised  in  Waith-  only  by  deed.  Held,  that  an  award 
man  v.  Miles,  1  Stark.  181.  The  part-  under  a  submission,  both  under  seal, 
nership  deed  was  under  seal.  To  dissolving  the  partnership,  was  valid. 
prove  a  dissolution,  a  written  notice  Tlie  action  of  covenant  lies  for  a  wrong- 
was  put  in,  signed  by  all  the  parties,  ful  dissolution.  Addams  i'.  Tutton, 
•which  stated  that  thy  hud  dissolved  the  39  Penn.  447. 

partnership.      Lord  Ellenborough   said  (p)  For  cases  bearing  on  such  ques- 

it  might  be  very  deserving  of  atten-  tions,  see  Heath  v.  Sansom,  4  15.  &  Ad. 

tion,  whether  a  partnership  created  by  175;    Jefferys  i'.   Smith,  3  liuss.  158; 

deed  could  be  dissolved  by  any  thing  Johnson  v.  Evans,   7  Man.  &  G.  240 ; 

short  of  a  deed;  but  here,  as  against  Ilaberslion  u.  Ulurton,  1  De  Ge.x  &  S. 

the  party  who  signed  the  notice,  the  121 ;    Aspinall   v.   The    London   &   N. 

partnersliip    must   be    taken   to   have  W.   K.  Co.,    11   Hare,   325;   Perens  v. 

been  dissolved  by  competent   means.  Johnson,  3  Smale  &  G.  411). 

27 


418  THE   LAW    OF   PARTNERSHIP.  [CH.  XII. 

Either  it  would  be  a  substitute,  taking  all  its  business  and  all 
its  proj»erty,  leaving  it  nothing  to  hold,  nothing  to  do,  and  noth- 
ing to  1)C  ;  in  which  case  it  would  be  clear  that  the  partnership 
had  died  out ;  or  else  some  portion  of  the  business  and  the 
stock  would  be  left  for  the  firm,  and  some  use  made  of  it ;  and 
then  it  would  remain  for  these  purposes,  (^q) 

SECTION    IV. 

OF    THE    GENEKAL    EFFECTS   OF    A    DISSOLUTION. 

1.    Of  its  Effect  on  the  lyiterests  or  Riglds  of  Partneis. 

*  386  *  Some  general  results  follow  a  dissolution  of  partner- 
ship, or  some  general  principles  apply  to  dissolution, 
which  are  especially  pertinent  to  dissolution  by  articles  or  by 
consent,  and  we  will  present  them  in  a  general  form  now  ;  re- 
serving the  modifications  in  them  caused  by  particular  methods 
of  dissolution,  until  we  specially  consider  those  methods. 

In  the  first  place,  a  mere  dissolution  has  no  effect  whatever 
on  the  property  of  the  partners,  or  their  interest  in  the  joint 
stock  or  joint  rights,  or  their  power  over  old  or  existing  debts 
due  to  them  or  due  from  them;  excepting  always  that  they 
have  all  entirely  lost  the  power  of  acting  for  each  other,  or 
binding  each  other,  any  further  than  all  joint  debtors  or  joint 
creditors  may  do.  Thus,  if  we  suppose  a  dissolution  by  articles 
or  consent,  and  no  special  agreement  as  to  the  powers  or  acts 
of  the  several  partners,  each  one  has  a  perfect  right  to  require, 
and  through  equity  compel,  a  final  settlement  and  adjustment 
of  all  questions  and  all  property ;  (r)  and  each  one  has  the 
same  power  as  to  this,  and  all  the  details  connected  with  it,  as 
any  other.  So,  too,  each  partner  has  as  much  right  to  any  par- 
ticular thing  or  things  as  any  other ;  and  all  the  others  have  as 
much  right  as  he  has.  (5)  '>^ 

((/)   See  Goddard  v.  Pratt,  16  Pick,  liabilities  of  the  old  firm,  and  the  cred- 

412;  Tlie  Cape  Sable  Company's  Case,  iters  assent  thereto,  they  cannot  on  the 

3  Bland,  674.     There  is  no  doubt  that  failure  of  the  corporation  hold  the  for- 

after  the  incorporation  the  members  of  mer  members  of  the  firm.     Whitwell 

the  tirm  are  liable  for  all  debts  pre-  v.  Warner,  20  Vt.  425. 
viously  incurred.     Haslett  v.  Wother-  (/•)  ^/(<e,  p.  *  299,  et  seq. 

spoon,  2  Rich.  Eq.   395.      But   if  the  (s)  Mumford   v.   McKay,  8  Wend. 

new  corporation  assumes  all  debts  and  440.     See   Downs  v.  Jackson,  38   111. 


CH. 


XII.] 


OF   DISSOLUTION. 


419 


Where,  upon  a  dissolution,  it  was  agreed  that  the  assets  of 
the  firm  should  be  placed  in  the  hands  of  one  partner,  and  he 
agreed  that  he  would  therefrom  pay  the  debts  of  the  partner- 
ship, it  was  held  that  he  had  only  agreed  to  apply  the  assets 
to  the  debts,  but  did  not  absolutely. assume  the  payment  of 
them,  (ss) 

As  all  are  liable  for  the  debts,  so  any  one  may  make  a  pay- 
ment of  any  or  all  the  debts,  and  charge  such  payment  to  the 
partnership,  without  any  express  authority  for  this,  (t) 
Even  if  he  *  uses  property  to  pay  the  debt  in  a  way  that  *  387 
is  fraudulent  or  injurious  to  his  former  partners,  and 
must,  therefore,  respond  to  them  in  account  or  as  damages  for 
the  act ;  the  creditor  thus  paid,  provided  he  do  not  participate 
in  the  wrong,  will  hold  his  payment,  even  if  he  were  aware  of 
the  dissolution,  (w) 

As  to  the  debts  due  to  the  partnership,  any  one  partner  may 
claim  and  receive  them  for  the  partnership ;  and  his  receipt 
would  be  binding  on  the  partnership,  in  favor  of  an  innocent 
debtor,  (y)  We  sliould  apply  the  same  principle  to  any 
method  of  payment.  Thus,  if  the  partner  compromised  the 
debt,  allowing  an  enormous  discount  for  immediate  payment, 
with  a  design  to  abscond  with  the  money,  or  otherwise  defraud 
the  other  partners,  we  should  say,  as  matter  of  law,  that  an 


464,  on  tlie  relative  mutual  liability  of 
each  partner  for  the  partnership  debts. 
And  see  Kobbins  v.  Fuller,  24  N.  Y. 
570 ;  Ward  v.  Tyler,  52  Penn.  St.  393. 
See,  on  the  relations  and  liabilities  of 
partners  after  dissolution,  Chapman  v. 
Thomas,  4  Keyes  (N.  Y.),  210. 

{ss)  Topliff  V.  Jackson,  12  Gray, 
565. 

(t)  Lyon  V.  Haines,  5  Man.  &  G. 
541 ;  Smith  v.  Winter,  4  M.  &  W.  401 ; 
Butchart  v.  Dresser,  10  Hare,  453, 
4  De  Gex,  M.  &  G.  542.  In  this  last 
case,  it  was  said  :  "  Each  partner  has, 
after  and  notwithstanding  the  disso- 
lution, full  authority  to  receive  and 
pay  money  on  account  of  the  partner- 
ship, ami  has  the  same  authority  to 
deal  witli  the  property  of  the  partner- 
ship for  partnership  purposes  as  he 
had  during  the  contiimance  of  the 
partnership.     Tliis  must  necessarily  be 


so.  If  it  were  not,  at  the  instant  of  the 
dissolution  it  would  be  necessary  to 
apply  to  this  court  for  a  receiver  in 
every  case,  althougli  the  partners  did 
not  differ  on  any  one  item  in  tlie  ac- 
count." And  see  Darling  ik  March, 
22  Me.  184;  llootes  v.  Welford,  4 
Munf.  215;  Woodford  v.  Downer,  13 
Vt.  522;  Union  Bank  v.  Hall,  1 
Harper,  245;  Wood  v.  Braddick,  1 
Taunt.  104. 

(h)  See  Butchart  v.  Dresser,  4 
Kuss.  430;  Lewis  v.  lieilly,  1  Q.  B. 
34'J. 

(v)  See  cases  cited,  aittp,  note  {t). 
And  see  Elliott  v.  Brown,  3  Swanst. 
489,  n. ;  Hawkins  v.  Hawkins,  4  Jur. 
N.  s.  1044  ;  Beniiam  v.  Gray,  5  C.  B. 
138;  Waithman  v.  Miles,  4  Camp.  373; 
Colnaghi  v.  Bluck,  8  Car.  &  I'.  4(J4,  as 
to  other  rights  of  partners  after  dis- 
solution. 


420  THE   LAW    OF   PARTNERSHIP.  [CH.  XII. 

entirely  innocent  debtor  would  still  be  protected,  although  he 
knew  of  the  dissolution.  (?<;)  But  we  should  also  say,  that,  as 
matter  of  fact,  any  such  circumstances  would  strongly  aid  the 
proof  of  dislionesty,  or  even  raise  a  presumption  of  it.  For  it 
would  certainly  be  a  gejieral  probability,  that  a  debtor  of  a 
partnership  which  he  knew  to  be  dissolved,  if  he  found  one  of 
the  partners  so  anxious  to  settle  the  account  or  anticipate  pay- 
ment as  to  consent  to  great  sacrifices,  would  infer  that  mis- 
chief might  be  intended,  and  at  least  be  sufficiently  warned  to 
put  him  upon  inquiry  as  to  the  honesty  and  validity  of  the 
proposed  transaction.  But,  we  repeat,  we  should  consider  this 
a  question  only  of  fact ;  for  the  rule  of  law  must  be,  that  a 
dissolution  without  especial  agreement  leaves  all  the  partners 
on  equal  ground,  and  gives  to  each  an  equal  power  of  set- 
tlement, (a;) 

Therefore  it  is  that  such  a  dissolution  is  rare.     Far  more 

frequently,  provision  is  made,  either  in  the  original 
*  388    articles  or  in  an  *  agreement  at  the  time  of  dissolution, 

as  to  the  manner  of  settlement ;  that  is,  who  shall  col- 
lect and  pay  the  debts,  adjust  and  settle  the  accounts,  and  (to 
use  the  common  phrase)  wind  up  the  concern.  And  such  an 
agreement  certainly  affects  all  the  partners  and  all  third  par- 
ties who  have  notice  or  knowledge  of  it. 

2.    Of  Winding  up  the  Concern. 

The  general  rule  we  take  to  be  this :  The  concerns  of  the 
partnership  must  be  wound  up  in  some  way  and  by  some  per- 
sons. The  partners  may  provide  for  this  at  their  own  pleasure. 
If  they  do  not  provide  for  it,  the  law  provides  for  it  in  the  only- 
possible  way  ;  and  that  is  by  continuing  the  partnership,  with 
its  incidents  of  interest,  power,  and  obligation,  for  the  purpose 
of  thus  winding  up,  and  therefore  as  far  as  is  necessary  for  thus 

(u)  Union  Bank  v.  Hall,  1  Harper,  operate  to  discharge  the  debtor  mak- 

245.     In  New  York,  it  is  enacted  by  ing  the  same.     But  such  compromise 

statute   passed   April    18th,    1838,   ch.  shall  not  operate  to  prevent  the  other 

257,  that  after  tiie  dissolution  of  a  firm  copartners  from  calling  on  the  partner 

one  or  more  of  the  partners  may  make  making  the  same  for  his  ratable  por- 

a  compromise  with  any  creditor  of  the  tion  of  such  debt, 
firm,    which    compromise    shall    only  {x)  See  cases  in  previous  notes. 


CH.  XII.]  OF   DISSOLUTION.  421 


/, 


winding  np,  and  no  further,  (i/)  And  this  power  of  a  former 
partner  has  been  held  to  pass  to  his  administrator  at  his 
death.  («/?/) 

It  follows  that  every  partner  has  full  authority  to  do  any 
thing  the  want  of  which  would  prevent  this  winding  up,  or 
leave  it  incomplete ;  and  that  he  can  do  nothing  which  is  not 
indispensable  for  this  purpose.  We  say  indispensable,  in  ex- 
clusion of  what  is  merely  convenient,  or  even  desirable  and 
expedient,  unless  it  can  be  considered  necessary  for  the  proper 
settlement  of  the  affairs  of  the  firm.  And  even  a  settlement 
by  a  partner  after  dissolution,  in  fraud  of  the  firm,  would  be 
valid  in  favor  of  a  third  party  who  was  wholly  innocent.  i;iiyy) 
^  And  if  the  partners  agree,  as  they  generally  do,  that  one  or 
more  of  them  shall  wind  up  the  business,  while  the  others  have 
nothing  to  do  with  it,  we  hold  that  this  arrangement  confines 
the  power  to  those  thus  designated  ;  but  does  not  enlarge  this 
power  in  them,  although  it  takes  it  away  from  the  others.  It 
seems,  however,  to  be  well  settled,  that  an  authority  given  to 
one  partner  "  to  close  all  business  transactions  of  the  late 
firm  ;  "  {z)  "  to  settle  up  the  business  of  the  firm  ; "  (a)  "  to 
settle  all  demands  in  favor  of  or  against  the  firm  ;  "  (6) 
"  to  settle  business  of  the  firm,  and  for  *  that  purpose  to  *  389 
use  their  name ;  "  (e)  "  to  settle  business  of  the  firm 
and  sign  its  name  for  that  purpose  ;  "  (t?)  "  to  use  the  name 
of  the  firm  in  liquidation,  only  of  past  business,"  (e)  —  confers 
no  more  power  than  the  partner  would  have  by  the  general 
principles  of  the  law  of  partnership.  In  one  case,  however, 
the  court  were  of  the  opinion  that  the  authority  given  to  use  the 
partnership  name  conferred  a  greater  power  than  would  have 

(y)  Ex   parte  Williams,  11  Ves.  5;  {z)  Palmer  ?;.  Dodge,  4  Ohio  St.  21. 

Peacock  c.  Peacock,  16  id.  57;  Craw-  {n)  Parker  w.  Cousins,  2  Gratt.  372; 

shay   V.   Collins,    15   id.   227,   2   Russ.  Long  v.  Story,  10  Mo.  636;  Martin  v. 

342;  Wilson  v.  Greenwood,  1   Swanst.  Walton,  1  McCord,  16;  Parkers.  Mac- 

480;    Crawshay    v.   Maule,    id.    507;  onil.er,  18  Pick.  505;  Fellows  r.  Wy- 

Butchart   v.  Dresser,  4  DeGex,  M.  &  man,  33  N.  II.  351. 
G.    542;   Payne   v.  Ilornhy,  25  Beav.  (/»)  Lockwood   v.  Comstock,  4  Mc- 

280;  Chappell  v.  Allen,  38  Miss.  213;  Lean,  383. 

[Thursby  v.  Lidgorwood,  N.  Y.  Ct.  of  (c)  National  Bank  v.  Norton,  1  Hill, 

App.  3  L.  &  Kq.  l{eptr.  601.]  572. 

(ipi)  Mutual  Institution   v.  Euslen,  [d)   Hamilton    v.    Seaman,    1    Ind. 

37  Mo.  453.  185. 

(ijijij)   Thrall  v.  Seward,  37  Vt.  573.  (e)  Martin  v.  Kirk,  2  Humph.  529. 


422  THE    LAW    OF    PARTNERSHIP.  [CH.  XII. 

otherwise  existed,  and  licld  tliat  it  was  for  the  jury  to  find, 
from  the  course  of  trade,  and  the  usage  and  custom  of  mer- 
chants, as  well  as  from  the  notice  itself,  whether  this  power 
extended  to  the  renewal  of  a  note  which  had  been  discounted 
at  a  Ijank  previous  to  the  dissolution.  (/)  When  one  partner 
takes  all  the  assets,  for  the  purpose  of  settlement,  equity  may 
require  him  to  indemnify  the  other  partners  against  the  liabili- 
ties of  the  firm,  {ff)  If  a  partner,  under  such  an  authority, 
receives  a  note,  in  payment  of  a  debt  due  to  the  firm,  payable 
to  bearer,  it  seems  that  the  legal  title  to  such  note  will  vest  in 
such  partner  alone  ;  and,  therefore,  he  will  be  al)le  to  give  a 
good  title  to  it  by  delivery.  ((/)  The  questions  which  refer  to 
this  rule  have  arisen  principally  where  any  former  partner, 
and  especially  where  a  partner  authorized  by  the  rest  to  settle 
the  concern,  has  issued  new  paper,  or  indeed  entered  into  any 
new  contract.  This  may  be  not  only  honest,  but  in  the  high- 
est degree  advantageous,  to  all  concerned.  Thus,  a  creditor 
may  be  willing  to  renew  a  note  or  bill,  or  take  a  note  or  bill 
for  a  former  purchase  on  a  credit  which  has  expired ;  and, 
unless  he  can  have  this  note  or  bill  in  the  name  of  the  firm,  he 
insists  upon  all  his  money,  which  can  neither  be  refused  nor 
paid  without  disaster.  It  is  an  unquestioned  principle  of  law, 
that  after  a  dissolution  the  authority  of  a  former  partner  to 
bind  the  others  is  gone,  except  as  to  the  settlement  of  the 
estate  of  the  old  partnership  :  and  it  is  usually  stated  that  he 
has  no  power  to  make  any  new  contracts.  It  is  obvious,  how- 
ever, that  a  strict  construction  of  this  rule  might  pre- 
*  390  vent  the  partner  whose  *  duty  it  is  to  settle  up  the 
estate  from  accomplishing  this  object  in  the  most  judi- 
cious manner.     So  far  as  the  question  is  still  an  open  one,  we 

(/)  Myersr.  Huggins,  1  Strobh.473.  ferred   to  a  tliird   person   by  another 

(_//')  Cook  V.  Jenkins,  35  Ga.  113.  partner,  who  was  authorized  to  settle 

((j)  See     the    language    of    Shaw,  the  concerns  of  the  partnersliip.     On  a 

C.  J.,  in  Parker  v.  Macomber,  18  Pick,  settlement  of  partnership  affairs,  if  it 

505,    where   the   individual  note   of  a  is  agreed  that  one  of  the  partners  shall 

partner,  made  after  the  dissolution  of  collect   a   note  and   accounts,   for  the 

the   partnersliip,    was    transferred    by  benefit  of  both,  it   will   be   presumed 

the  holder  to  the  firm,  by  an  indorse-  that  the  money,   as   fast  as  received, 

ment  in  blank,  in  payment  of  a  debt,  shall  be  divided  between  the  parties, 

it  was  held,  that  such  note,  being  paya-  Metcalf  r.  Fouts,  27  111.  110. 
ble  to  bearer,  might  be  legally  trans- 


CH.  XII.]  OF   DISSOLUTION.  423 

should  consider  the  true  rule  to  be,  that  uo  contract  can  be 
made  by  one  partner,  after  dissolution,  by  which  the  others  will 
be  bound,  unless  such  contract  is  necessary  for  settling  up  the 
business  of  the  concern  in  the  most  judicious  manner. 

The  duty  of  settling  partners  is  similar  in  many  respects  to 
that  of  trustees  and  agents  ;  (A)  and  they  should,  in  settling  up 
the  affairs  of  the  old  firm,  have  all  the  rights  which  agents 
usually  have  by  the  usages  of  the  business  in  which  the  old 
firm  was  engaged.  In  the  language  of  the  Supreme  Court  of 
Maine,  "  The  dissolution  operates  as  a  revocation  of  all  author- 
ity for  making  new  contracts.  It  does  not  revoke  the  au- 
thority to  arrange,  liquidate,  settle,  and  pay  those  before 
created."  (z)  Thus,  in  a  case  where  a  bill  of  exchange  was 
drawn  in  blank  by  one  partner,  to  the  order  of  the  firm,  and 
indorsed  before  the  dissolution  of  the  firm,  it  was  held  that  it 
might  after  that  event  be  filled  up  and  negotiated.  (/)  And, 
after  dissolution,  one  partner  may  waive  demand  and  notice, 
this  being  considered  as  merely  a  modification  of  an  existing 
liability  ;  Qc)  he  may  also,  it  has  been  held^  lawfully  assign  to 
a  creditor  of  the-  firm  a  demand  due  to  the  partnership  ;  (/)  or 
acknowledge  in  the  partnership  name,  after  dissolution,  a  bal- 
ance due  from  the  partnership,  (jii)  If  a  note  is  signed  by  a 
firm  payable  to  the  order  of  one  of  its  members,  this  person 
may  indorse  the  note  after  the  dissolution  of  the  firm,  so  as  to 
bind  it.  (?j) 

In  Pennsylvania,  the  courts  have  fully  adopted  the  principle, 
that  as  to  past  transactions  the  partnership  continues  until 
they  are  settled.  Thus,  it  is  held  that  after  dissolution  a 
partner  may  borrow  money  to  pay  partnership  debts,  (o)  and 

(A)  "Washburn  v.  Gooflman,  17  Pick.  See   also  Gannett  v.  Cunningham,  34: 

519.     See  Wilson  v.  Stilwell.  U  Ohio,  Me.  56. 

464;   Parker  v.  Pliillips,  2  Cush.  175.  ( /)   Usher  v.  Dauncey,  4  Camp.  97; 

See  also  Caklwell  v.  Stileman,  1  Rawle,  Lewis   v.   Reilly,    1    Q.    B.    349.     See 

212;  Beak  v.  Beak.  3  Swanst.  627.  Myers  v.  Standart,  11  Ohio  St.  29. 

(i)  Darling  v.  March,  22  Me.  184.  (k)  Darling  c.  March,  22  Me.  184. 

But   the  power  to  give  a  note,  in  re-  (/)  Milliken  v.  Loring,  37  Me.  408. 

newal  of  one  given  before  dissolution,  {/«)  Ide  v.  Ingraham,  5  Gray,  106. 

is    denied    in   Lumberman's    Bank    v.  (n)  Temple    v.    Suaver,    11     Ciisli. 

Pratt,   51   Me.   563.     Tiie    same   rule  314. 

was  held  where  a  note  was  given  for  a  (o)  Estate  of  Davis  &  Dcsauque,  5 

debt    created   before    tiie    dissolution.  Whart.  530. 
Cunningham  v.    Bragg,    37    Ala.    436. 


424 


THE   LAW    OP   PARTNERSHIP. 


[CH.  XII. 


*  391  may  renew  the  *  notes  of  the  firm;  (^)  or  give  notes 
in  the  firm  name,  in  payment  of  firm  debts.  (</) 

There  are,  however,  other  authorities,  which  construe  the 
rule  that  a  partner  cannot  make  a  new  contract  after  dissolu- 
tion very  strictly,  and  hold  that  the  power  of  a  surviving  part- 
ner not  only  does  not  extend  to  the  giving  of  a  note,  (r)  or 
accepting  of  a  bill,  (s)  in  the  firm  name,  after  dissolution,  for 
a  pre-existing  debt  of  the  firm,  even  though  it  be  antedated  so 
as  to  bear  date  before  the  dissolution,  (i)  but  also  that  he 
cannot  renew  l)ills  or  notes  given  by  the  partnership  before 
dissolution,  so  as  to  bind  his  former  copartners,  (w)  or  indorse 
notes  given  to  the  firm  before  dissolution,  so  as  to  vest  the 
title  in  the  indorsee,  (v) 

Nor,  it  has  been  held,  can  he  indorse  notes  belonging  to  the 
firm  at  the  time  of  the  dissolution,  so  as  either  to  render  the 
other  partners  liable  on  his  indorsement,  or  to  pass  a  valid 
title  to  the  notes,  (i/;)  It  has  even  been  doubted  whether  a 
note  indorsed  before  dissolution,  but  negotiated  afterwards, 
will  bind  the  firm  ;  (a:)  but,  if  negotiated  in  good  faith  for  the 


(/))  Id. ;  Brown  v.  Clark,  14  Penn. 
St.  469. 

(q)  Robinson  v.  Taylor,  4  Barr, 
242. 

(r)  Loekwood  v.  Comstock,  3  Mc- 
Lean, 383  ;  Bank  of  Port  Gibson  v. 
Baugh,  9  Smedes  &  M.  290 ;  Hamilton 
V.  Seaman,  1  Ind.  185  ;  Perrin  v.  Keene, 
19  Me.  855;  Lusk  v.  Smith,  8  Barb. 
570.  In  Mitcliell  v.  Ostrom,  2  Hill, 
520,  the  note  in  suit  was  signed,  "  Late 
firm  M.,  J  ,  E.,  &  Co."  [The  settle- 
ment of  a  book  account,  by  a  note  on 
time,  given  in  the  name  of  the  firm, 
by  the  remaining  partner  authorized 
to  liquidate,  does  not  bind  the  retiring 
partners.  They  stand  to  the  remain- 
ing partner  in  the  relation  of  sureties  ; 
and  the  latter  cannot  bind  them  to  any 
new  contracts,  imposing  additional 
burdens.  Smith  v.  Slieldon,  Sup.  Ct. 
Mich.  3L.  &  E.  Pvep.  120.] 

(s)  Tombeckbee  Bank  v.  Dumell,  5 
Mason,  56. 

(t)  Wrightson  v.  Pullan,  1  Stark. 
375;  Lansing  v.  Gaine,  2  Johns.  300. 

[n]  Palmer  v.  Dodge,  4  Ohio  St.  21 ; 
National  Bank  v.  Norton,  1  Hill,  572 ; 
Parker  v.  Cousins,  2  Gratt.  372 ;  Martin 


V.  Kirk,  2  Humph.  529  ;  Long  v.  Story, 
10  Mo.  636;  Stone  v.  Chamberlin,  20 
Ga.  2-39.  In  Bank  of  South  Carolina 
V.  Humphreys,  1  McCord,  388,  the 
firm,  during  the  continuance  of  the 
partnership,  had  written  a  letter  to 
the  holder  of  a  note  against  them,  re- 
questing permission  to  renew  it,  until 
the  expiration  of  a  certain  time,  dur- 
ing which  time  a  renewal  was  given 
by  one  partner,  but  subsequent  to  the 
dissolution.  Held,  tliat  the  firm  was 
not  bound.  See  Van  Valkenburgh  v. 
Bradley,  2  Iowa,  108,  overruling  Kemp 
V.  Coffin,  3  Greene  (la.),  190.  And 
see  Bichardson  v.  Moles,  31  Mo.  430. 

(v)  Sanford  v.  Mickles,  4  Johns. 
224;  Fellows  v.  Wyman,  33  N.  H.  351. 
See  also  Geortner  i'.  Trustees,  &c.,  2 
Barb.  625;  White  v.  Tudor,  24  Tex. 
639;  [Cavitt  v.  James,  39  Tex.  189.] 
See  note  (n),  preceding  page. 

(w)  Abel  V.  Sutton,  4  Esp.  108; 
Sanford  v.  Mickles,  4  Johns.  224; 
Parker  v.  Macomber,  18  Pick.  505 ; 
Humphries  v.  Chastain,  5  Ga.  166. 
See  Fowle  v.  Harrington,  1  Cush.  146. 

(.r)  Per  Lord  Kenyon,  in  Abel  v. 
Sutton,  supra. 


CH.  XII.]  OF   DISSOLUTION.  425 

purposes  for  which  it  was  indorsed,  we  are  inclined  to  think  it 
would,  although  tlie  contrary  doctrine  has  been  held.  (?/) 

*  One  partner,  after  dissolution,  may,  of  course,  bind  *  392 
his  copartner  by  any  of  the  above  acts,  if  he  have  an 
express  authority  for  that  purpose.  And  such  authority  may 
be  given  by  parol,  although  the  terms  upon  which  the  partner- 
ship was  dissolved  should  be  in  writing.  Thus,  where  a  retired 
partner  stated  that  he  left  the  assets  and  securities  of  the  firm 
in  the  hands  of  the  continuing  partner,  for  the  purpose  of 
winding  up  the  concern,  and  that  he  had  no  objection  to  his 
using  the  partnership  name,  it  was  held  that  the  jury  were 
justified  in  finding  that  the  continuing  partner  had  authority 
to  indorse  promissory  notes  so  left  in  his  hands,  in  the  part- 
nership name.  (2)  So  an  authority  by  parol  to  continuing 
partners  to  sell  a  negotiable  note  made  to  the  firm  before  dis- 
solution, will  authorize  an  indorsement  of  such  note,  "  without 
recourse,"  in  the  name  of  the  firm.  («)  This  authority  may 
also  be  given  by  implication  ;  as  where  one  partner  receives  a 
note  as  his  portion  of  the  property  of  the  firm.  In  such  case, 
he  may  indorse  it  without  recourse  ;  (J)  but  without  authority, 
either  express  or  implied,  it  has  been  held  that  such  power 
does  not  exist,  (c)  So  it  has  been  said,  that  the  settling  part- 
ner's transfer  of  a  bond  would  be  good,  under  his  general 
authority,  (cl) 

And  it  is  certain,  as  has  been  already  said,  that,  for  all  ordi- 
nary transactions,  the  power  of  each  partner  must  be  equal  to 
that  of  any  other  partner,  unless  the  power  of  acting  in  behalf 
of  the  firm  is  confined  by  agreement  to  one ;  and  then  this 
power  of  this  one  must  be  complete  for  the  purpose  of  winding 
up,  unless  expressly  limited.     Therefore,  the  settling  partner 

(y)  In  Glasscock  r.  Smith,  25  Ala.  partners  before  the  dissolution,  it  was 

474.     The   question    was    raised,   but  AeW,  that  the  remaining  partners  had  au- 

not   decided,   in    Mechanics'    Bank   v.  thority  under  that  power  to  give  to  the 

Hildreth,  9  Cush.  .359.  defendant  a  note  for  tlie  payment  of 

(z)  Smith   V.   Winter,   4    M.  &  W.  tlie   sixpences,  under  the  Lords'  Act, 

4-54.     In  Burton  v.  Issitt,  5  B.  &  Aid.  on  behalf  of  themselves  and  the  re- 

267,  by  a  deed  of  dissolution  of  part-  tiring  partner, 
nership,  a  power  was  reserved  to  the  («)  Yale  v.  Eames,  1  Mete.  48G. 

remaining  partners  to  use  tlie  name  of  (/>)  Waite  v.  Foster,  33  Me.  424. 

the  retiring  partner  in  the  prosecution  (c)  Fellows   v.   Wyman,   33   N.    H. 

of  all   suits.     In    an   action    in    which  351. 
judgment  had  been  obtained  by  all  the  ((/)  Morse  v.  Bellows,  6  N.  II.  508. 


426  THE   LAW   OF   PARTNERSHIP.  [CH.  XII. 

may  pay  and  receive  payment,  (t^)  may  sell  goods  con- 
*  393    signed  to  the  firm  before  *  dissolution,  (/)    and   may 

compromise  debts  in  any  way  which  does  not  indicate 
fraud.  (^)  So,  too,  he  may  undoubtedly  exchange  goods,  but 
always  for  the  purpose  of  winding  up  the  old  concern.  He 
has  power  to  draw  a  bill  upon  a  debtor  of  the  firm,  and,  on  its 
being  accepted,  to  sue  him  in  the  firm  name  ;  (A)  to  release  a 
debt  due  to  the  firm  ;  (i)  to  pledge  shares  of  stock  which  the 
firm  had  contracted  to  buy,  but  had  not  paid  for,  to  raise  the 
money  to  pay  for  the  shares ;  (y)  to  collect,  compound,  and 
release  debts  of  the  firm.  {Jc}  But,  any  thing  done  l)y  him, 
however  innocent  and  proper  in  itself,  would  not  be  within  the 
scope  of  his  authority,  if  it  was  done  for  the  purpose  of  con- 
tinuing the  business  of  the  firm,  or  opening  it  anew,  instead  of 
winding  it  up.  (/) 

It  may  be  doubted,  too,  whether  he  can,  without  especial 
authorit}-,  buy  goods  so  as  to  bind  the  other  pa^'tners  for  the 
purchase.  It  is  not  uncommon,  in  practice,  for  a  settling  part- 
ner to  make  small  purchases,  in  order  to  complete  an  assortment 
of  goods  on  hand,  and  promote  the  sale  thereof.  If  he  does  this 
with  cash,  in  good  faith,  the  seller  certainly  holds  the  money, 
and  we  should  have  no  doubt  that  he  might  credit  himself  with 
such  payments  in  his  account.  But,  if  he  buys  on  credit,  we  do 
not  think  that  the  other  partners  would  be  held,  unless  they 
distinctly  authorize  the  purchase.  («i) 
'ifs,  All  the  partners,  and  each  partner,  have  the  right  of  requir- 
ing that  the  settlement  should  be  made  with  reasonable  prompti- 
tude, and  with  entire  respect  for  the  rights  and  interests  of 
each  one.  And,  of  course,  no  partner  can  have  any  rights  in- 
consistent with  these  rights  of  his  copartners.  («)     And  if  any 

(e)  Butchart  v.   Dresser,   10   Hare,  (/.)   Huntington  v.  Potter,  32  Barb. 

453,  4  De  Gex,  M.  &  G.  542.     See  also  300. 

Parker  v.  Pliillips,  2  Cush.  175,  178 ;  (/)   Wilson  v.  Greenwood,  1  Swanst. 

Washburn  v.  Goodman,  17  Pick.  519,  481  ;    Crawsbay    v.    Maule,    id.    507 ; 

636;   Fereira  v.  Sayres,  5  Watts  &.  S.  Ex  parte  Williams,  11  Ves.  3. 

210 ;  Beak  r.  Beak,  3  Swanst.  627.  (m)   See    Minnit    v.    Whinner}',    5 

(/)  Herberton     v.    Jepherson,     10  Bro.  P.  C.  489,  2  id.  (Dublin  ed.)  323, 

Barr,  124.  16  Vin.  Abr.  244 ;  Vice  v.  Fleming,  1 

(f/)  Bass  V.  Taylor,  34  Miss.  342.  Younge  &  J.  227;  Ex  parte  Harris,  1 

('/()  King  I'.  Smith,  4  Car.  &  P.  108.  INIadd.  583. 

(i)  Napier  v.  McLeod,  9  Wend.  120.  («)  See  Lees  v.  Laforest,  14  Beav. 

( j)  Butchart   v.   Dresser,  10  Hare,  250 ;   Clegg  v.  Fishwick,  1  Macn.  &  G. 

453,  4  De  Ge.x,  M.  &  G.  542.  294;  Perens  v.  Johnson,  3  Smale  &  G. 


CH.  XII.] 


OF   DISSOLUTION. 


427 


thing  is  done  which  should  not  be  done,  or  left  undone  which 
should  be  done,  a  court  of  equity  will  interfere.  There  is,  per- 
haps, no  class  of  questions  or  of  cases  in  which  equity 
so  readily  *  or  so  usefully  exerts  its  power  as  in  those  *  394 
which  arise  under  dissolution  of  partnership.  The 
guiding  principle  in  its  action  is,  to  preserve  equally  the  rights 
of  all  parties,  (o)  Hence,  no  partner  can  make  any  use  of  the 
property  for  his  own  particular  benefit ;  but  he  will  be  held, 
chargeable  for  all  the  profits  and  advantages  which  may  accrue 
from  such  use,  either  as  trustee,  or  in  some  other  adequate 
way.  (jo)  And,  as  a  general  rule,  each  partner  has  an  equal 
right  to  the  possession  of  the  partnership  property.  If  the 
firm  is  dissolved,  and  the  partners  cannot  agree  as  to  the  divi- 
sion of  it,  a  court  of  equity  will  appoint  a  receiver  to  collect 
and  apply  the  effects,  {q)  Nor  can  any  partner  claim  to  him- 
self any  especial  commission  or  payment  for  his  services  in 
settling,  unless  there  be  an  agreement  to  that  effect ;  the  rea- 
son which  forbids  this  after  dissolution  being  the  same  which 
forbids  such  claim  for  services  in  the  ordinary  partnership 
business ;  namely,  the  entire  equality  of  the  partners,  unless 
they  agree  upon  some  inequality,  (r)  So,  too,  all  compositions 
or  compromises  of  debts,  all  settlements,  and  all  the  trans- 
actions which  follow  dissolution,  must  be  for  the  common  and 
equal  benefit  of  all  the  partners,  (s) 


419  ;  Clements  v.  Hall,  2  De  Gex  &  J. 
173. 

(o)  Bennett's  Case,    18   Beav.   339, 

5  De  Gex,  M.  &  G.  284;  Benson  v. 
Heatliorn,   1  Younge  &  C.  326;  York 

6  North  Midland  R.  Co.  v.  Hudson, 
16  Beav.  485  ;  Maxwell  v.  The  Port 
Tennant  Co.,  24  id.  495 ;  Kichardson 
V.  Larpent,  2  Younge  &  C  507  ;  Harris 
V.  The  North  Devon  R.  Co.,  20  Beav. 
384. 

(/*)  Kelley  v.  Greenleaf,  3  Story 
C.  C.  93,  101 ;  Featherstonhangh  v. 
Fenwick,  17  Ves.  298  ;  Pothier,  Contr. 
de  Soc.  ch.  8,  §  4,  art.  1.50.  See  also 
Leach  v.  Leach,  18  Pick.  68;  Dough- 
erty V.  Van  Nostrand,  1  Hoff.  Ch.  68, 
70. 

(r/)  Terrell  v.  Gcxldard,  18  Ga.  664. 
See  Stevens  v.  Yeatnian,  19  Md.  480. 


(/•)  Caldwell  V.  Lieber,  7  Paige, 
483  ;  Thornton  v.  Proctor,  1  Anst.  94  ; 
Franklin  v.  Robinson,  1  Johns.  Ch. 
157,  165;  Bradford  v.  Kimberly,  3 
Johns.  Ch.  431 ;  Burden  v.  Burden,  1 
Ves.  &  R.  170 ;  Lee  v.  Lashbrooke,  8 
Dana,  219 ;  Paine  v.  Thatcher,  25 
Wend.  450 ;  Anderson  v.  Taylor,  3 
Ired.  420;  Reybold  v.  Dodd,  1  Ilarr. 
(Del.)  401;  Newland  v.  Tate,  3  Ired. 
Eq.  232  ;  Phillips  v.  Turner,  2  Dev.  & 
B.  Eq.  123 ;  Dougherty  v.  Van  Nos- 
trand, 1  Hoff.  Ch.  68;  Wasliburn  v. 
Goodman,  17  Pick.  519;  Ilite  v.  Hite, 
1  B.  Mon.  179.  But  see  Bradley  v. 
Ciiamberlin,  16  Vt.  013  ;  VViiby  v. 
Pliiiuiey,  15  Mass.  120.  But  sec  ante, 
p.  *  443. 

(.s)  See  Porter  v.  Wheeler,  37  Vt. 
281;   Beak   v.   Beak,   2  Swanst.   627; 


428  THE   LAW   OF    PARTNERSHIP.  [CH.  XII. 


3.    Of  the  Effect  of  a  Dissolution  upon  Third  Parties. 

No  dissolution  of  any  kind  affects  the  rights  of  tliird 
*  395  parties,  *  who  have  had  dealings  with  the  partnership, 
without  their  consent.  This  is  a  universal  rule,  without 
any  exception  whatever,  (f)  Undoubtedly,  the  partners  may 
agree  as  they  please  about  their  joint  property  and  all  the  parts  of 
it ;  and  so  they  may  about  their  joint  obligations.  And  all  such 
agreements  are  valid,  so  far  as  they  do  not  affect  the  rights  of 
strangers;  but,  where  they  do,  they  are  wholly  void.  Thus, 
three  partners  may  agree  to-day  to  dissolve,  and  to  divide  all 
the  property  in  a  certain  way,  specifying  that  one  shall  have 
this,  another  that,  and  the  third  that  thing.  Or  they  make 
such  an  agreement  about  some  one  or  more  things,  and  not 
about  all.  And  these  agreements  determine  the  property  in 
these  things  effectually  as  to  the  partners  themselves.  But 
they  are  all  responsible,  in  solido  for  the  debts  due  by  the  firm  ; 
and  all  the  joint  property  of  the  firm  is  just  as  liable  for  the 
joint  debts,  after  such  division  or  settlement  among  them- 
selves, as  it  was  before,  (ii) 

So,  too,  it  is  very  common  for  the  partners  to  agree  not  only 
that  one  of  them  may  settle  and  wind  up  the  partnership  con- 
cern, but  that  one  or  more  shall  wind  it  up,  and  for  that  pur- 
pose shall  have  in  full  property  all  the  goods  or  funds  and 
business,  or  a  certain  part  of  them,  and  shall  pay  all  the  debts  ; 
and  this  he  undertakes  to  do.  Such  an  agreement  is  so  far 
binding  on  the  partners,  that,  if  either  of  the  others  is  obliged 

Page  V.  McCrea,  1  Wend.  167;  Bracket  Cummins  )'.  Cummins,  8  Ired.  Eq.  723 ; 

V.  Winslovv,  17  Mass.  153  ;  Hammatt  y.  Wood    v.    Braddick,    1    Taunt.    104; 

Wyman,  9  id.  139 ;  Stevens  v.  Morse,  Hoby  v.  Roebuck,  7  Taunt.  157  ;  Gra- 

7  Greenl.  36.  ham  v.  Wicliels,  1  Cromp.  &  M.  188. 

(0   Story  on  Part.  §  334;  Ault  v.  In  Wood  v.  Braddick,  Heath,  J.,  says  : 

Goodrich,  4  Kuss.  430  ;  Gow  on  Part.  "  When  a  partnership  is  dissolved,  it 

ch.  5,  §  2,  p.  240,  3d  edit.  ;  Blundell  v.  is  not  dissolved  with  regard  to  things 

Winsor,  8  Sim.  613.     [Dissolution  does  past,  but  only    with  regard  to  things 

not  release  the  partnersliip  from  their  future.     With   regard   to   things  past, 

liability  on  a  continuing  but  still  unex-  the  partnership  continues,  and  always 

ecuted   contract.     Dickson   v.  Indiana  must  continue."    See  Smyth  v.  Harrie, 

Mfg.   Co.,    Sup.    Ct.    Ind.,  November,  31  111.  62.     And  see  a  somewhat  pecu- 

1877,  6  Cent.  L.  J.  97.]  liar   case   on    this   subject,    Mayer  v. 

(u)  Smith    V.    Jameson,    5    T.    R.  Clark,   40    Ala.    259;    and   Myers    v. 

601 ;  Dickenson  v.  Lockyer,  4  Ves.  36  ;  Smith,  15  Iowa,  181. 


CH.  XII.]  OF    DISSOLUTION.  429 

to  pay  a  debt  thus  assumed  by  a  partner,  the  partner  paying 
may  have  his  action  for  the  money  against  the  partner  who 
undertook  to  pay.  But,  so  far  as  the  creditors  are  concerned, 
all  the  partners  remain  just  as  responsible  to  all  the  creditors, 
after  such  an  agreement,  as  they  were  before,  (v)  Thus,  an 
agreement  between  the  partners,  that  one  of  them  shall  settle 
up  the  affairs  of  the  concern,  collect  and  pay  the  debts, 
and  the  like,  will  not  prevent  any  person  from  *  effect-  *  396, 
ually  paying  to  any  partner  a  debt  due  the  firm ;  Qiv) 
even  though  the  debtor  has  notice  of  the  arrangement,  (a;) 
And  a  payment,  after  dissolution,  to  an  insolvent  partner,  has 
been  held  to  be  good,  where  the  partner  was  insolvent  at  the 
time  the  firm  was  formed,  and  known  to  be  so  to  the  other 
partners,  (y)  But,  where  the  legal  or  equitable  interest  in  a 
partnership  has  been  transferred  to  an  assignee,  a  debtor  who 
should  pay  a  debt  to  either  of  the  partners,  after  notice  of  such 
assignment,  would  be  liable  to  the  assignee.  (2)  And  a  pay- 
ment to  the  executor  of  a  deceased  partner  is  not  good,  (a) 

Though  these  agreements  between  the  partners  do  not  affect 
the  creditors,  without  their  consent,  yet  it  is  certain  that,  if,  in 
any  case,  they  do  consent,  and  for  sufficient  consideration,  they 
become  parties  to  the  agreement,  and  are  bound  by  it.  (6)  The 
question  whether  they  have  assented,  and,  if  so,  whether  on 
good  consideration,  arises  sometimes  under  every  form  of  dis- 
solution ;  but  far  more  frequently  where  there  is  a  change 
among  the  members, —  one  or  more  going  out,  and  one  or  more 
new  ones  coming  in.  And  then  it  is  important  to  ascertain 
who  are  the  debtors  or  the  creditors,  under  an  obligation  which 
existed  at  the  time  the  contract  was  made  ;  that  is,  whether  a 
retiring  partner  is  freed  from  this  obligation,  or  whether  an 
incoming  partner  has  assumed  it.  We  shall  consider  the  prin- 
ciples applicable  to  these  cases  more  fully  when  we  treat  of  this 
particular  form  of  dissolution  ;  at  present,  remarking  only,  in 

(v)  See    Kodgers  v.  Maw,  4  Dowl.  (y)  Major  v.  Havvkes,  12  III.  298. 

&  Lowndes,  G6 ;  yniith  v.  Jameson,  5  (s)  Gordon  v.  Freeman,  11  111.  14. 

T.  R.  601.  See  also  rritchard  v.  Draper,  1  Kuss.  & 

(w)  King  V.  Smith,  4  Car.  &  P.  108  ;  M.  191. 
Duff  V.  East  India  Co.,  15  Ves.  198  ;  (a)  Wallace  v.  Fitzsimmons,  1  Dall. 

Coombs  V.  Hoswell,  1  L)ana,  47?>.  248. 

(x)  Porter  v.  Taylor,  6  Maule  &  S.  (&)  Duller,  J.,  in  Tatlock  v.  Harris, 

156.  3  T.  K.  180. 


430  THE   LAW   OP   PARTNERSHIP.  [CH.  XII. 

the  first  place,  tliat  the  consent  of  the  creditors  to  an  arrange- 
ment which  discharges  some  of  their  debtors,  may  be  expressed 
or  imphed  from  circumstances  distinctly  indicative  of  their 
knowledge  of  the  transfer  or  change  of  the  indel)tedness,  and 
of  their  concurrence  and  consent  ;  and,  in  the  next  place,  that 
this  concurrence  and  consent,  whether  expressed  or  implied, 
will  not  suffice  to  exonerate  the  partners  whom  it  is  intended 
to  discharge,  unless  there  be  a  valuable  consideration  for  it. 

Because,  as  every  creditor  has  the  liability  of  every 
*  397    partner,  *  he   only  lessens  his  security  by  taking  one 

for  the  whole  ;  and  his  agreement  to  do  this  can  bind 
him  no  more  than  any  other  agreement  to  discharge  a  debt, 
unless  he  gains  some  advantage  by  it,  —  which  may  be,  by 
added  security,  better  terms  of  payment,  more  favorable  busi- 
ness, or  any  other  benefit, —  or  unless  those  whom  he  dis- 
charges undergo,  at  his  instance  or  request,  a  loss  by  reason 
of  his  concurrence  and  consent,  by  paying  something  to  him 
who  undertakes  to  pay  the  debt,  or  in  some  other  way  benefit- 
ing him  at  their  own  cost,  (c) 

Another  most  important  subject  connected  with  dissolution 
is  notice.  For,  on  the  same  principles  which  hold  a  principal 
bound  by  the  acts  of  his  general  agent  whose  authority  he  had 
revoked,  unless  he  has  given  sufficient  notice  of  his  revocation, 
any  person  who  deals  with  one  professing  to  act  for  himself 
and  others  as  partners  in  a  certain  firm,  and  believes  that  he  so 
acts,  and  is  justified  in  that  belief,  either  by  what  those  others 
so  held  out  as  partners  have  done  or  have  failed  to  do,  has 
both  a  legal  and  a  moral  right  to  hold  them  as  partners.  ((Z) 

(c)  See,  on  tliese  questions,  Kirwan  ander,  7  Car.  &  P.  746  ;  Harris  v.  Far- 

V.  Kirwan,  2  Cr.  &  M.  617;  Thompson  well,  15  Beav.  31. 

V.  Percival,  5  B.  &  Ad.  925;  Lodge  v.  {d)  See  Vice  v.  Fleming,  1  Younge 
Dicas,  3  B.  &  Aid.  611;  David  v.  El-  &  J.  227;  Willis  v.  Dyson,  1  Stark. 
lice,  5  B.  &  C.  106,  1  Car.  &  P.  369;  164  ;  llooth  v.  Quin,  7  Price,  193;  Gal- 
Thomas  V.  Shillibeer,  1  M.  &  W.  124;  wey  v.  Mathew,  1  Camp.  402,  10  East, 
Evans  y.  Drummond,  4  Esp.  89;  Reed  264;  Pecker  v.  Hall,  14  Allen,  532. 
V.  White,  5  id.  122;  Heath  r.  Percival,  [A  new  contract,  after  dissolntion,  in 
1  P.  Wms.  682,  1  Str.  403 ;  Bedford  v.  the  name  of  the  firm,  will  bind  the 
Deakin,  2  B.  &  Aid.  110;  Feather-  firm  to  those  who,  having  previously 
stone  V.  Hunt,  1  B.  &  C.  113;  Spence-  cjealt  with  the  firm,  have  had  no  notice 
ley  V.  Greenwood,  1  Fos.  &  Fin.  297 ;  of  the  dissolution.  Dickinson  v.  Dick- 
Robinson  V.  Wilkinson,  3  Price,  538;  inson,  25  Gratt.  (Va.)  321.  See  also 
Gough  V.  Davies,  4  id.  200;  Blew  v.  Lovejoy  v.  Spolford,  93  U.  S.  430.J 
Wyatt,  5  Car.  &  P.  397 ;  Hart  v.  Alex- 


CH.  XII.]  OF    DISSOLUTION.  431 

This  is  true  of  every  dissolution,  excepting  that  by  the  death  of 
a  partner,  {e')  wliich  event  is  said  to  operate  an  universal  notice, 
or,  at  least,  to  render  a  notice  unnecessary.  But  a  creditor, 
having  knowledge  of  a  dissolution  of  a  copartnership  when  he 
gives  credit  to  it,  cannot  recover  from  members  who  have 
retired,  however  the  knowledge  was  communicated  to  him.  (ee) 
And  this  is  true  where  the  dissolution  is  by  the  death  of  a 
partner,  and  the  debt  is  contracted  with  one  having  knowledge 
of  the  death,  (gee)  The  chief  importance  of  this  requirement 
of  notice,  and  the  principal  questions  arising  under  it,  belong 
to  cases  of  dissolution  by  change,  in  which  the  retiring  partner 
must  give  notice  of  his  retirement,  or  continue  to  be  held  as 
partner ;  and  we  shall  consider  when  notice  and  what  notice  is 
necessary,  more  fully,  when  we  treat  of  that  form  of  dissolu- 
tion. (/) 

4.    Of  Actiojis  and  Remedies  after  a  Dissolution. 

*  As  the  fact  of  dissolution  has  no  effect  whatever  on  *  398 
the  rights  of  third  persons,  or  on  the  rights  of  the  firm 
against  third  persons,  so  it  is  a  general  rule,  that  actions  by 
and  against  the  firm  must  continue  to  be  what  they  would 
have  been  before  the  dissolution.  That  is,  all  the  names  of 
the  partners  must  be  used  in  an  action  brought  by  the  settling 
partner,  for  a  debt  due  to  the  firm  ;  and,  if  a  debt  owed  by  the 
firm  is  sued,  not  only  can  all  the  old  partners  be  sued,  ((/)  but 
it  is  not  enough  to  make  the  settling  partner  sole  defendant, 
even  if  he  have  undertaken  to  pay  all  the  debts  of  the  firm, 
unless  it  is  intended  to  discharge  all  the  other  partners. 

In  one  case,  (Ji)  where  two  persons,  forming  a  partnersliip, 

(e)  Devaynes    v.   Koble,    Houlton's  sibility,  Speer  v.  Bishop,  24  Ohio  St. 

Case,  1  Meriv.  616,  Johnes'  Case,  id.  598.] 

619,  Brice's  Case,  id.  620;  Webster  v.  (ee)  Davis  v.  Keyes,  38  N.  Y.  (Tif- 

AVebster,   3    Svvanst.   490;    Blades   v.  fany)  94. 

Free,  9  B.  &  C.  167  ;  Smout  v.  Ilbcry,  {eec)  Stanwood  v.  Owen,  14   Gray, 

10  M.  &  W.  1  ;    Campanari  v.  Wood-  195. 

burn,  15  C.  B.  400.     [One  wlio  sufYers  (/)  See    Clianiberlain   v.   Dow,   10 

his  name  to  be  used  in  a  firm  after  his  Micli.  319. 

retirement,   is  responsible  to  now  cus-  (y)  Dobbin  i'.  Foster,  1  Car.  &  K. 

tomers  as  well  as  old,  who  do  not  have  323. 

actual   knowledge  of  the    change.   Re  [h)  Atkinson  v.  Laing,  Dowl.  &  R. 

Krueger,  2  Lowell  Dec.  (U.  S.  Dist.  Ct.)  N.  P.  16. 
66  ;  and  is  estopped  to  deny  liis  respon- 


432  THE   LAW    OF   PARTNERSHIP.  [CH.  XII. 

had  carried  on  trade,  and,  after  this  partnership  was  dissolved, 
one  of  them  carried  on  his  own  business,  under  tlie  name  of 
the  partnership,  it  was  held  that  this  person  might  bring  an 
action  for  goods  sold  and  delivered  by  the  partnership.  The 
case  seems  to  leave  it  in  doubt  whether  the  goods  were  sold 
and  delivered  by  the  partnership,  or  only  during  the  partner- 
ship ;  but  the  remark  of  the  judge  Avho  tried  the  case,  that,  if 
the  defendant  had  any  counter  demand  against  the  partner- 
ship, it  would  have  been  necessary  to  bring  the  action  in  the 
name  of  the  partnership,  seems  to  indicate  that  the  action  was 
for  a  debt  due  to  the  partnership.  His  remark,  that  the  plain- 
tiff was  really  entitled  as  "  remaining  partner,"  is  not  very 
intelligible :  the  case  does  not  indicate  that  he  was  a  surviving 
partner,  and  seems  to  us  of  very  doubtful  authority.  We  shall 
see,  in  speaking  of  dissolution  from  bankruptcy,  that  the  sol- 
vent partner  may  sometimes  sue  alone,  without  joining  either 
the  bankrupt  partner  or  his  assignees. 

A  dissolution  may  put  an  end  to  a  right  or  interest  held  by 
a  partnership,  if  it  be  held  on  condition  that  the  partnership 
exists,  or  if  it  be  of  such  a  nature  that  the  law  considers  it  as 
existing  only  while  the  partnership  exists  ;  but  not  if  the  con- 
tinued existence  of  the  right  or  interest  is  independent  of  the 
existence  of  the  partnership.  Thus,  a  common  lease  to  a  firm, 
from  a  stranger,  is  a  property  which  survives  the  dissolution. 
All  the  partners  continue  to  be  bound  for  the  rent,  and  all  are 
entitled  to  the  beneficial  use  of,  or  interest  in,  the  lease. 
*  399  But  if  it  *  is  stipulated  that  it  be  held  during  the  part- 
nership only,  the  lease  is  terminated  by  the  dissolu- 
tion, (i)  So,  a  lease  held  by  the  partners,  as  partners,  from 
one  of  them,  is  terminated  by  the  dissolution ;  and  the  lessor 
may  at  once  re-enter,  without  notice.  (/) 

(i)  Waithman  v.  Miles,  1  Stark.  181. 
{;■)  Colnaghi  t;.  Bluck,  8  Car.  &  P.  464. 


CH.  XII.]  OP   DISSOLUTION.  433 

SECTION   V. 

OF    DISSOLUTION    BY   THE   ACT    OF    A    PART   OF    THE    FIRM   ONLY. 

1.    What  Acts  Dissolve  a  Partnership. 

Dissolution  of  partnership  may  occur  by  the  act  and  intent 
of  some  of  the  partners  only,  or  as  the  effect  of  some  act  or 
condition  of  theirs.  (^)  Without  now  speaking  of  these  acts 
or  conditions,  which  are  good  cause  for  a  decree  of  dissolution, 
we  may  speak  of  some  which,  of  themselves,  operate  a  disso- 
lution. One  of  these,  at  common  law,  is  outlawry  ;  and, 
although  we  know  nothing  of  this  here,  we  have  conviction  for 
felony.  In  England,  where  attainder  forfeits  the  property  of 
the  convict  to  the  king,  who  cannot  be  a  tenant  in  common 
with  a  subject,  it  not  only  dissolves  the  partnership,  but  trans- 
fers to  the  king  all  the  joint  property  of  the  partnership.  That 
effect  of  the  rule  exists  now  in  England  only  in  theory,  if  it 
ever  was  applied  to  a  case  of  partnership.  In  this  country,  we 
know  nothing  of  it.  But  still,  we  suppose  that  a  conviction 
for  felony  would  here  operate  a  dissolution,  of  itself,  and  with- 
out waiting  for  a  decree.  But  it  may  be  open  to  question 
whether  notice  is  necessary  in  this  case.  If  a  convicted  part- 
ner used  the  name  of  the  firm,  apparently  in  its  business, 
immediately  after  his  conviction,  we  should  say,  that  it  would 
bind  the  firm  to  a  party  who  had  no  knowledge  of  the  felony, 
and  no  especial  means  of  knowledge. 

So,  on  the  marriage  of  a  female  partner,  the  other  partner 
may  dissolve  the  partnership ;  for  all  the  rights,  interests,  and 
property  she  can  hold  as  partner,  pass  at  once  to  the 
husband,  by  the  common  law,  as  *  completely  by  mar-    *  400 
riage  as  they  would  by  any  transfer  ;  and  she  loses  all 
power  of  binding  herself  by  any  contract.  (Z) 

Whether  a  partner  has  or  has  not  a  right  to  terminate  the 
partnership  at  his  pleasure,  (7?*)  it  is  certain  that  an  assign- 

{k)  Peacock  v.  Peacock,  16  Ves.  50;  (m)  Equity  would  probably  restrain 

Featherstonliaugh  v.  Fenvvick,  17  Vos.  to   prevent  irreparable  niiscliief.     See 

298;    Crawshay  v.    Maule,  1    Swanst.  Cliavany  v.   Van   Soinnier,  -i  Woodd. 

508;  Miles  v.  Thomas,  9  Sim.  GOG.  Lect.  416,  n.,  1  Swanst.  512,  n. ;  Blis- 

(/)  Kerot  V.  Burnand,  4  lluss.  247  ;  set  v.  Daniel,  10  Hare,  493. 
and  see  Brown  v.  Jewett,  18  N.  II.  230. 

28 


434  THE   LAW   OF   PARTNERSHIP.  [CH.  XII. 

mciit  by  one  partner,  of  all  his  interest  in  the  joint  property, 
to  the  other  partner  or  partners,  operates  at  once  the  withdrawal 
of  the  assignor  and  a  dissolution  of  the  firm.  For,  here  the 
other  partners  assent  to  the  transfer,  by  their  acceptance  of  it ; 
and,  therefore,  no  question  could  be  raised  as  to  the  right  of 
the  assignor.  («)  And  an  assignment  to  a  third  person  has 
the  same  effect,  (o) 

So  an  assignment,  in  good  faith,  by  a  partner,  of  all  the 
joint  property  in  trust,  for  the  payment  of  the  debts  of  the 
firm,  which,  as  we  have  seen,  is,  by  the  weight  of  authority, 
valid,  would  undoubtedly  operate  a  dissolution.  (  p')  And  so 
would  a  sale  on  execution  and  levy  upon  the  interest  of  an 
insolvent  partner  in  the  joint  property.  (<?)  But  an  attach- 
ment alone,  in  mesne  process,  only  gives  a  lien  to  the  creditor ; 
and  does  not  transfer  to  him  the  property,  and,  therefore,  does 
not  dissolve  the  partnership,  (r)  These  cases  of  assignment 
to  pay  debts,  and  sale  on  execution,  however,  belong  rather  to 
the  subject  of  dissolution  by  bankruptcy.  Let  us  consider  here 
what  right  a  partner  has  to  terminate  the  partnership  at  his 
own  will,  and  by  his  direct  action. 

While  the  courts  have  found  much  difficulty  in  com- 

*  401    pelling  *  parties  to  remain  together,  when   a  part  of 

them  wish  for  a  separation,  it  has  never  been  said,  that 

a  contract  for  a  partnership,  for  a  time  certain,  is,  as  to  this 

limitation,  wholly  inoperative  in  law  or  in  equity.      On  the 


[n)  Heath  v.  Sanson,  4  B.  &  Ad.  175  ;  act  as  a  partner,  and  transacts  business 

Cochran  v.  Perry,  8  Watts  &  S.  262.  as  before,  there  is  no  dissolution.    Taf  t 

(o)  Jefferys  v.  Smith,  3  Kuss.  158;  v.  Biiffum,  14  Pick.  322. 

Marquand   v.   N.    Y.   Manuf.    Co.,    17  (;;)  See  Gordon  y.  Freeman,  11  111.  14. 

Johns  525 ;  Ilorton's  Appeal,  13  Penn.  (q)  Habersiion   v.   Blurton,  1  De  G. 

St.  67  ;  Conwell  v.  Sandidge,  5  Dana,  &  S.  121;  Aspinall  v.  London  &  N.  W. 

210;  Parkhursti'.  Kinsman,  1  Blatciif.  R.  Co.,  11   Hare,  325;    Skipp  v.  Har- 

C.  C.  488.     See  Merrick  v.  Brainard,  wood,  2  Swanst.  58G;  Renton  v.  Cliap- 

38  Barb.  574.     In  Buford  v.  Neely,  2  lain,  1  Stock.  Cii.  62;  Joiinsont-.  Evans, 

Dev.  Eq.  481,  tlie  general  doctrine  was  7  M.  &  G.  240.     A  purchase  by  other 

assented  to ;  but  as  tiie  assignment  in  partners  of  the  share  so  sold,  must  be 

that  case  was  as  security  for   a  debt,  made  under   circumstances  placing  it 

and  it  was  agreed  by  all  parties  that  beyond  suspicion  ;   otherwise,  tlie  sale 

the  assignor  should   continue  in  busi-  will   be   set  aside,  tlie  partners  being 

ness  as  the  agent  of  the  assignee,  it  was  treated   as   the  trustees   of   the   otlier 

held  tliat  tiie  partnersliip  was  not  dis-  partner.     Perens  v.  Jolinson,  3  Smale 

solved.     And,  if,  notwithstanding  such  &  G.  419. 

assignment,  the  assignor  continues  to  (r)  Arnold  v.  Brown,  24  Pick.  38. 


CH.  XII.]  OF   DISSOLUTION.  435 

other  hand,  it  is  universally  agreed,  that  where  there  is  no 
such  limitation,  — that  is,  where  the  contract  is  not  for  a  certain 
time,  —  it  is  always  in  the  power  of  any  one  partner  to  dissolve 
the  partnership,  at  his  own  pleasure,  and  for  no  other  cause 
than  that  pleasure,  (s)  Still,  we  should  say,  that  the  dissolu- 
tion must  be  in  good  faith,  and  not  unreasonable  in  point  of 
time  or  manner,  or  unnecessarily  injurious  to  the  other  part- 
ners, (ss)  In  order  to  effect  a  dissolution  in  such  a  case,  it  is 
necessary  for  the  partner  wishing  to  dissolve  to  give  notice  to 
the  other  partners,  (t) 

Where  a  partnership  for  a  limited  period  expires,  and  is 
continued  by  an  agreement  which  does  not  provide  for  any  fur- 
ther limitation,  the  effect  of  the  original  limitation  is  wholly 
exhausted,  and  the  new  partnership  is  dissoluble  at  the  will  of 
any  partner ;  although  all  the  other  pi'ovisions  and  arrange- 
ments are  continued  over,  either  expressly  or  by  implica- 
tion, (w)  It  may  be  said,  however,  that  where  all  these  are 
carried  over,  if  they  seem  distinctly  to  imply  that  the  partner- 
ship must  needs  continue  for  a  definite  period,  the  law  might 
be  more  willing  to  im[)ly  such  a  bargain,  than  it  is,  as  we 
have  seen,  from  a  mere  lease  for  a  time,  or  from  similar 
circumstances. 

2.  At  what  Time  and  in  ivhat  Manner  a  Partner  may  ter- 
minate a  Partnership. 

A  partnership  without  any  limitation  as  to  time  is 
construed  *  as  one   at  will,  and  any  partner  may  dis-    *402 

(s)  Peacock  v.  Peacock,  16  Ves.  49;  loy,  465,  the  Lord  Chancellor  states 
Featherstonhaugh  v.  Pen  wick,  17  id.  the  rule  thus  :  "  The  partners,  after 
298,  307  ;  Alcock  v.  Taylor,  1  Tanilyn,  the  expiration  of  the  partnership  term, 
506;  Crawshay  v.  Maule,  1  Svvanst.  continuing  to  carry  on  the  trade  with- 
495,  508;  Ex  parte  Nokes,  1  Mont,  on  out  a  new  deed,  all  the  old  covenants 
Part.  114,  n. ;  Skinner  v.  Tinker,  34  are  infused  into  the  new  series  of  trans- 
Barb.  333.  actions,  with  the  single   exception  of 

(ss)  This  was  so   held  in   the  well-  the  covenant  for  duration  ;  for  either 

considered  case  of  Howell  v.  Harvey,  may   insUuder   dissolve  the   prolonged 

5  Pike,  270.  partnership,  but  the   original   stipula- 

[t)  Eagle  V.  Bucher,  0  Ohio  St.  295.  tions  are  continued."     See  also  Gould 

See  also  Van  Sandau  v.  Moore,  1  Kuss.  v.    Horner,  12  IJarb.  GOl  ;   Bradley  v. 

464;  Wlieelery.  Van  Wart,  9Sim.  193.  Ciianiberlin,  10  Vt.  013;   U.  S.  Bank 

(m)  Featlierstonhaugh   v.   Fenwick,  v.   Binney,    6   Mason,    170,    185.     See 

17  Ves.  298,  307  ;  Crawshay  v.  Collins,  post,  p.  *405,  note  (d). 
15  id.  218.     In  Booth  v.  Parks,  1  Mol- 


436  THE   LAW   OF   PARTNERSHIP.  [CH.  XII. 

solve  it  at  any  moment,  (v)  The  Roman  law,  as  stated  in 
the  Digest,  {w}  and  as  explained  or  exhibited  by  Domat,  (a:) 
contains  principles  on  this  subject  which  are  not  only  not 
expressly  adopted  in  the  English  or  American  jurisprudence, 
but  which  might  seem  to  be  opposed  to  the  highest  and  clear- 
est authority.  It  may  be  inferred  from  Domat,  tliat  every 
partner  has  a  perfect  riglit  to  terminate  the  partnership  when 
he  will,  even  if  entered  into  for  a  time  certain.  He  must,  how- 
ever, take  a  convenient  and  suitable  opportunity  and  method 
for  the  exercise  of  this  right ;  and  must  do  this  for  honest  pur- 
poses, and  with  due  regard  to  the  safety  and  advantage  of  the 
other  partners.  The  line  is  not  very  distinctly  drawn.  But 
it  seems  that  he  may,  at  any  moment  and  for  any  cause,  dis- 
solve the  partnership  so  as  to  renounce  or  lose  all  the  benefit 
of  it;  but  that  he  would  not  be  permitted  to  free  himself  or  his 
property  from  the  just  claims  of  the  other  partners,  which 
may  extend  so  far  as  to  require  that  the  partnership  sliall  con- 
tinue for  a  season.  He  cannot  therefore  seize  a  moment  to 
dissolve  a  partnership  when  he  sees  the  opportunity  of  making 
a  great  gain  by  a  separate  transaction,  which  ought,  with  all 
its  advantages,  to  belong  to  the  firm.  And  if  he  does,  in  this 
way  and  for  this  purpose,  seek  to  dissolve  the  partnership,  the 
court  would  declare  the  dissolution  void,  or  ineffectual  for  the 
time,  and  the  partnership  to  continue  until  it  could  be  termi- 
nated without  wrong  to  anybody.  We  think  a  court  of  equity 
would  apply  similar  principles  to  this  question.  (?/) 

If  we  suppose  a  partner,  with  wrongful  intent,  to  declare  a 
dissolution  at  such  a  time,  and  for  such  purposes,  or  with  such 
an  effect,  that  the  Roman  law  would  declare  that  there  was  no 
dissolution,  and  so  preserve  the  rights  of  the  partners,  it  may 
be  asked  what  an  English  or  American  court  would  do.  They 
would  not,  we  apprehend,  deny  the  right  of  dissolution,  or  the 
fact  of  dissolution  ;  nor  perhaps  in  any  way  restrain  the  part- 
ner from  the  exercise  of  this  right.  But,  it  being  settled  that 
the  partnership  is  now  dissolved,  the  whole  effect  and  influence 

{v)  See  supra,  note  (s).  3   Woodd.    Lect.   416,   n.,    1    Swanst. 

(w)  Dig.  lib.  17,  tit.  2,  1.  14.  512,  n.  ;   Blisset   v.   Daniel,  10  Hare, 

(.t)  1  Domat,  tit.  8,  §  5,  art.  1-8.  493. 
(y)  See  Chavany  v.   Van  Sommer, 


CH.  XII.]  OF   DISSOLUTION.  437 

of  this  dissolution  is  in  the  hands  and  within  the  power  of 
equity.  It  may  be  that  the  other  partners  would  be  subjected 
to  wrong  and  loss,  if  the  use  of  the  firm  name  could  not 
be  continued  in  completing  its  transactions,  *  or  other-  *  403 
wise  in  protection  of  their  interests ;  and  yet  that  the 
court  would  be  reluctant  to  authorize  the  use  of  the  name  of 
a  firm  which  had  ceased  to  exist.  But  it  is  hardly  possible 
that  the  same  results  could  not  be  reached  in  some  other  way,, 
which  would  be  within  the  resources  of  equity.  And  it  must 
be  certain  that  any  court  of  equity  would  be  willing  to  use  all 
its  authority,  in  any  lawful  way,  to  carry  the  dissolution  into 
effect ;  or,  in  other  words,  to  direct  the  winding  up  of  the  con- 
cern in  such  a  way  as  to  protect  the  honest  partners  from  any 
loss  through  the  wrongful  act  or  wrongful  purpose  of  a  copart- 
ner. And  if  it  be  true,  as  we  suppose,  that  equity  could  always 
do  this,  and  would  always  do  it  when  practicable,  it  follows 
that  the  difference  between  the  Roman  law  and  the  English,  or 
our  owu,  is  only  a  difference  in  the  rules  or  methods  by  which 
the  two  systems  of  law  accomplish  the  same  results. 

There  is  no  exactly  defined  way  in  which  a  partner  who  has 
the  right  to  terminate  a  partnership  must  or  should  exercise 
this  right.  All  that  is  requisite  is,  that  he  should  make  this 
purpose  distinctly  known  to  the  otlier  partners ;  and,  as  soon 
as  it  is  known,  it  takes  effect.  (2)  The  notice  must  be  explicit ; 
and  it  is  not  enough  to  propose  to  dissolve  on  certain  terms, 
unless  these  terms  are  accepted,  (a)  So,  a  notice  that  a  part- 
ner's share  has  been  forfeited  is  not  enough  ;  because  this  is 
construed  to  mean  merely  that  the  partner  named  has  ceased 
to  have  any  interest  in  the  concern.  (l>^  A  partner  may  un- 
doubtedly make  this  dissolution  prospective  ;  and  this  is  the 
usual  way  of  doing  it.  It  is  obvious  that  only  peculiar  circum- 
stances could  justify  a  partner  morally  speaking,  however  it 
might  be  legally,  in  saying  to  his  copartners,  at  once  and 
without  notice  or  preparation,  From  this  moment  the  partner- 
ship ceases  to  exist.     And  such   conduct  would  certainly  in- 

(z)  See  an^<?,  p.  *401  and  note  (s).        er   v.    Van    Wart,    9    Sim.    103.     See 
(«)  Hall  V.  Hall,  12  Beav.  4U;  Van     Meller.sli  i-.  Keen,  "27  Beav.  2:W. 
Sandau  v.  Moore,  1  Kuss.  \<>i  ;  Wheel-  (b)  ilarty.  Clarke,  U  De  G.,  M.  &  G. 

232. 


438  THE    LAW    OF   PARTNERSHIP.  [CH.  XII. 

cluce  a  court  of  equity  to  examiue  closely  into  the  motives  which 
led  to  it,  and  into  the  effects  resulting  from  it,  that  they  might 
prevent  injurious  consequences.  Still,  however,  it  is  always 
possible  that  there  may  be  good  reason  for  the  sudden  exercise 
of  this  riglit,  of  the  existence  of  which  there  seems  to  be  no 

doubt,  where  the  partnership  is  not  formed  for  a  time 
*  404    certain.   It  *  may  be  that  no  other  course  would  prevent 

the  firm  from  rushing  into  wasteful  and  dangerous  con- 
tracts, or  from  pursuing  a  path  which  might  lead  to  ruin.  And, 
therefore,  on  the  one  liand,  the  court  would  not  presume  that 
such  a  dissolution  was  wrongful  in  intent  or  effect,  although 
they  would  listen  to  evidence  showing  it  to  be  so.  And,  on  the 
other  hand,  as  soon  as  such  a  declaration  was  made,  be  its  pur- 
pose or  circumstances  what  they  might,  we  are  not  aware  of 
any  reason  for  supposing  that  the  partnership  would  exist  a 
moment  longer,  (c) 

The  dissolution  of  the  partnership  by  the  act  of  a  partner, 
or  at  his  will,  does  not  require  a  written  declaration  of  his  will ; 
nor  even  any  especial  spoken  words,  or,  indeed,  any  words 
whatever.  He  must  manifest  his  desire  of  withdrawing  from 
the  partnership.  He  may  do  this  as  he  pleases  ;  and,  however 
it  be  done,  it  has  the  same  effect.  But,  if  he  only  manifest  his 
desire  of  leaving  the  partnership  at  a  future  time,  this  is  not 
a  present  dissolution.  Nor  is  there  any  way  to  manifest  the 
purpose  of  immediate  withdrawal,  except  by  such  withdrawal ; 
and  this  is  a  dissolution.  This  could  hardly  be  by  act  without 
words.    But  he  may  manifest,  by  a  course  of  action,  such  with- 

(c)  Tlie  question  whether  one  part-  than  the   mere    will  of   one   party   to 

ner  may,  by  his  own  mere  will,  dissolve  justify  a  dissolution.     But  it  seems  to 

a  partnership  formed  for  a  definite  pe-  me  that  but  little  more  should  be  de- 

riod,  has  been  much  discussed  in  this  manded.     The   principle   of  the    civil 

country  and  in  England.      It  appears  law   is   the   most   wise.     Wiiy   should 

to  have  been  assumed  that  there  is  no  this  court  compel  the  continuance  of  a 

such  power,  in  Peacock  v.  Peacock,  16  union,  when  dissension  has  marred  all 

Ves.  57  ;  Crawshay  v  Maule,  1  Swanst.  prospect   of   the   advantages    contem- 

508  ;  Wheeler  v.  Van  Wart,  9  Sim.  193,  plated  by  its  formation  ]     By  refusing 

2  Jur.  252 ;   Pearpoint  v.    Graliam,  4  to  dissolve  it,  the   power   of  binding 

AA^ash.  C.  C.  232.     The  right  is  forcibly  each   other,  and  of  dealing   with  the 

maintained   in   Skinner  r.  Dayton,  19  partnership  property,    remains,   when 

Johns.  538  ;  Mason  r.  Connell,  1  Whart.  all  confidence  and  all  combination  of 

381.    In  Bishop  tJ.  Breckles,  1  Hoflf.  Ch.  effort  is  at  an  end.     Tlie  object  of  the 

534,  the  court  said  :  "  The  law  of  the  contract  is  defeated." 
court   then   requires  something  more 


CH.  XII.] 


OF   DISSOLUTION. 


439 


drawal.  He  may  engage  wholly  in  other  business,  and  take 
no  part  whatever  in  the  interests  or  concerns  of  the  partner- 
ship. This  would  rather  make  him  a  silent  partner,  or  give 
good  cause  for  the  other  partners  to  reject  him,  or  perhaps  ob- 
tain a  decree  for  his  removal,  tlian  amount  to  evidence  that  he 
had  in  fact  withdrawn  himself.  It  may,  however,  be  said,  hy- 
pothetically,  that  such  conduct  might  be  carried  so  far  as 
to  have  that  significance  and  effect.  And  then  the  *  dis-  *  405 
solution  would  take  place,  not  when  the  other  partners 
acceded  to  his  wish,  but  when  it  became  certain  what  his  wish 
w^as.  The  only  rule  applicable  to  such  questions  must  be  this : 
The  wish  of  a  partner  to  dissolve  a  partnership  which  is  at 
will,  while  it  remains  unexpressed,  can  have  no  force  nor 
effect ;  but  it  operates  to  cause  a  dissolution  as  soon  as  it  is 
distinctly  expressed,  whatever  be  the  form  or  manner  of  this 
expression,  {d} 

partnership  dealings  and  transactions 
taken,  up  to  that  very  moment) ;  yet 
one  difficulty  which  has  often  occurred 
to  me  as  of  great  weight  in  cases  like 
the  present,  with  reference  to  the  dis- 
solution of  the  company  by  notice,  is 
this  :  What  avails  it  that  you  give  no- 
tice to  A.  B.  of  putting  an  end  to  the 
company,  if  you  do  not  give  notice  to 
the  three  hundred  other  individuals  of 
whom  it  is  composed  1  Has  not  every 
one  of  these  individuals  the  same  com- 
mon-law right  to  notice,  before  the 
partnership  can  be  so  dissolved  ?  If, 
on  the  other  hand,  it  is  said,  that  it  is 
not  necessary  to  give  notice  to  all  the 
partners,  it  must  be  on  the  ground  that 
the  deed  has  made  some  provision 
declaring  that  notice  not  to  be  neces- 
sary, which,  but  for  particular  provi- 
sions, would  be  necessary ;  and  that 
case  must  be  proved  from  the  deed 
itself." 


{(i)  In  Van  Sandau  v.  Moore,  1  Russ. 
463,  Lord  Eldon  says :  "  The  bill  pro- 
ceeds on  two  grounds  :  one,  that  Mr. 
Van  Sandau  could  by  mere  notice  put 
an  end  to  the  company  ;  the  other,  that 
if  notice  alone  was  not  sufficient  for 
that  purpose,  yet  there  has  been  such 
conduct  on  the  part  of  the  secretary 
and  other  members  as  to  entitle  the 
plaintiff  to  call  for  a  dissolution  ;  and, 
in  either  case,  he  prays  that  an  account 
may  be  taken  of  the  partnership  deal- 
ings and  transactions.  Now,  though, 
according  to  the  law  of  the  country,  a 
company  or  partnership  formed  by 
parties  agreeing  to  become  copartners 
may  be  dissolved  at  any  moment  by 
one  of  the  partners,  and  tliough  his 
copartners  cannot  answer  his  notice  of 
dissolution  by  saying,  'Here  is  your 
money,  get  out  of  the  concern,  and 
leave  us  to  ourselves  '  (because  he  has 
a  right  to  have  all  the  accounts  of  the 


440  THE   LAW   OF   PARTNERSHIP.  [CH.  XIII. 


CHAPTER    XIII. 

OF   A    CHANGE   IN   THE   PARTNERSHIP. 
SECTION    I. 

OF   THE   EFFECT   OF   ANY   CHANGE   IN   THE   PARTNERSHIP. 

The  retirement  of  a  partner  may  take  place  in  many  ways. 
He  may  simply  withdraw,  carrying  with  him  and  retaining  all 
his  interest  in  the  property.  Or  he  may  retire,  by  transferring 
his  interest  to  a  stranger,  who  then  holds  it  as  tenant  in  com- 
mon with  the  other  partners.  Or  he  may  transfer  it  to  one  who 
is  received  by  the  other  partners,  and  becomes  a  copartner  with 
them.  However  it  takes  place,  it  is  plain  that,  if  a  partnership 
consists  of  but  two  persons,  the  retirement  of  either  one  puts  an 
end  to  that  partnership.  And  it  may  now  be  considered  as  a 
settled  rule  of  the  law  of  partnership,  in  England  and  in  this 
country,  that  the  retirement  of  any  one  partner  from  a  firm 
consisting  of  any  number  of  partners  operates  a  dissolution 
of  that  firm.  The  Institute  says,  "  Cum  aliquis  renunciaverit 
societati,  solvitur  societas.^^  (a)  In  Roman  practice,  mercantile 
copartnerships  consisting  of  many  partners,  if  not  common, 
were  certainly  known.  Only  of  late  years  has  this  rule  been 
asserted ;  and  it  was  qualified  by  Lord  Eldon,  who  was  almost 
its  author,  and  ever  was  its  highest  authority,  by  the  phrase, 
"  unless  it  was  otherwise  provided."  (^>)  We  apprehend,  how- 
ever, that  the  rule  comes  of  necessity  from  the  very  nature  of 
partnership,  and  admits  of  no  qualification  whatever.  Thus, 
if  we  take  the  qualification  mentioned  by  Lord  Eldon,  —  that 
of  an  express  provision  to  the  contrary, —  it  is  plain  that,  even  if 

(a)  Inst.  L.  3,  t.  26,  §  5  ;  Pothier  on  228  ;  Peacock  v.  Peacock,  16  id.  49  ; 
Part.  ch.  8,  §  3,  p.  141.  Howe  v.  Thayer,  17  Pick.  95. 

(b)  Crawsliay  v.   Collins,   15  Ves. 


CH.  XIII.]  OF   A    CHANGE   IN   THE   PARTNERSHIP.  441 

it  is  SO  provided,  the  remaining  partners  can  only  *  form  *  407 
a  new  partnership.  The  qualification  is,  therefore, 
equivalent  to  saying,  that  the  old  partnership  is  dissolved 
unless  a  new  one  is  formed  ;  which  is  meaningless.  "We  sup- 
pose the  truth  to  be,  that  if  a  partner  retires, —  whether  by 
voluntary  act,  bankruptcy,  expulsion,  or  death,  or  if  a  new 
partner  comes  in,  by  any  means  whatever, —  in  either  of  these 
cases,  the  old  partnership  ceases  to  exist,  (c) 

Where  a  mortgage  was  given  to  a  firm  consisting  of  "  A.  and 
B."  to  secure  advances  to  the  mortgagor,  and  a  third  partner 
was  taken  in,  and  the  name  changed  to  "  A.,  B.,  and  Co.,"  and 
the  business  was  continued  and  conducted  precisely  as  before, 
it  was  held  that  this  addition  dissolved  the  first  firm,  and  that 
the  new  firm  could  not  avail  themselves  of  the  mortgage,  (cc) 

But  a  deceased  partner  may  have  provided  by  will,  or  a  retir- 
ing partner  by  assignment,  that  his  interest  shall  be  so  retained 
or  reserved  in  the  partnership  as  to  prevent  the  determination  of 
the  partnership  as  to  his  estate ;  and  then  the  estate  of  the  de- 
ceased or  retiring  partner  personally  continues  liable,  (ccc) 

If  it  is  provided  by  the  articles  that,  if  either  party  dies,  his 
personal  representatives,  or  his  son,  or  some  one  else,  shall 
take  his  place,  and  this  partner  dies,  his  death  does  not  ipso 
facto  introduce  this  other  party.  The  assets  of  the  deceased 
are  responsible,  of  course,  for  the  debts  of  his  firm,  but  his 
representatives  are  not ;  nor  are  they  bound  by  the  new  con- 
tracts of  the  firm,  nor  have  they  power  to  bind  the  firm  by 
their  acts,  unless  some  agreement  is  entered  into  which  con- 
stitutes them  partners.  And  this  agreement  makes  a  new 
partnership.  And,  in  the  case  of  an  association  for  some  spe- 
cial purpose,  the  articles  might  so  provide  as  to  continue  the 
association  (which,  however,  would  be  different  from  a  common 
partnership)  after  a  change  of  members.  (ccZ) 

This  rule  is  directly  o{)posed  to  a  common  practice,  and,  per- 

(c)  Vulliamy   v.    Noble,    3    Meriv.  McC.   659.     And   see  post,   p.   *  452- 

614;    Crawshay  v.   Maule,    1    Swanst.  454. 

609;    Crawford  i'.  Hamilton,  3  Madd.  (cc)  ALat   v.   Penny,    19  La.  Ann. 

251 ;    Scliolefield    v.    Eichelbert,'er,    7  289. 

Pet.  586;  Dyer  ;;.  Clark,  5  Mete.  575;  {crc)  Ex  partc^  Wilson,  Buek,  48. 

Washburn  v.  Goodman,  17  Pick.  519  ;  (cd)  Troy  Factory  v.   Corning,   45 

White   V.   Union  Ins.    Co.,   1   Nott  &  Barb.  2:31. 


442  THE    LAW   OF   PARTNERSHIP.  [CH.  XIII. 

hapsi,  to  a  common  imderstanding.  We  have  in  this  country 
many  ancient  firms,  in  which  there  may  not  be  one  person  who 
was  a  partner  from  the  beginning.  In  England,  there  are  firms 
wliich  have  survived  some  generations ;  (fZ)  but  the  name  lias 
never  been  changed,  and  the  business  has  gone  on  without 
deviation  or  interruption.  But  we  still  say  that  the  partner- 
ship is  dissolved  by  every  change,  because  every  partnership 
consists  of  certain  persons  who  are  all  liable  for  the  debts,  who 
all  own  a  certain  joint  property,  and  who  all  have  certain  pow- 
ers to  act  for  and  to  bind  each  other.  Those  who  owe  the  firm 
owe  only  them,  and  those  to  whom  the  firm  is  indebted  have 
claims  only  on  them.  If  from  this  partnership  any  persons 
go  out,  or  if  any  come  into  it,  and  the  old  partners  and  the  old 
debtors  and  creditors  agree,  there  will  be  the  least  possible  break 
to  the  succession.  But  this  agreement  no  more  makes  the  old 
firm  identical  with  the  new,  than  the  son's  inheritance  of  his 

father's  property,  coupled  with  an  accepted  promise  to 
*408    be  responsible  for  all  his  debts,  makes  the  *  son  the 

same  individual  with  the  father.  That  this  mere  agree- 
ment, however  effectual  in  sustaining  and  continuing  a  busi- 
ness, cannot  preserve  the  identity  of  the  old  partnership,  may 
be  seen  from  this  supposition:  If  A.,  B.,  &  C.  have  for  a  long 
time  been  partners,  and  conclude  to  retire,  and  D.,  E.,  &  E.  say 
to  them.  It  is  a  pity  to  scatter  so  profitable  a  business  and  lose 
so  good  a  custom,  and  we  will  buy  your  good-will,  and  take  all 
your  stock,  and  pay  all  your  debts,  and  hold  by  assignment 
all  the  debts  due  to  you,  and  bring  to  you  the  consent  of  all 
your  debtors  and  creditors,  —  one  would  hardly  say  that  the  old 
firm  continued  over,  or  was  identical  with  the  new  one.  One 
firm  succeeds  the  other  ;  and,  if  the  later  firm  chooses  to  adopt 
the  name  of  the  earlier,  this  does  not  make  them  one  and  the 
same.  And,  if  one  member  of  the  old  firm  comes  into  the  new 
firm,  this  does  not  make  them  one.  And  if  all  remain  but  one, 
or  all  remain  and  a  new  one  is  added,  here  also  is  a  new  firm, 
which  can  no  more  have  the  effects  and  choses  in  action  of  the 
old,  nor  be  liable  for  its  debts,  without  a  new  and  distinct 
agreement  between  all  parties  interested  therein,  than  if  the 
change  were  entire,  and  the  name  also. 

(d)  See  Blisset  v.  Daniel,  10  Hare,  49B,  23  Eng.  L.  &  Eq.  105. 


CH.  XIII.]  OF   A    CHANGE   IN   THE    PARTNERSHIP.  443 

We  have  dwelt  the  more  strongly  on  this  principle,  —  and 
shall  have  occasion  to  refer  to  it  again,  —  because  a  disregard 
of  it  has  led  to  some  confusion  in  the  authorities  in  relation 
to  the  rights  and  obligations  of  a  retiring  partner,  and  of 
an  incoming  partner,  —  a  sul)ject  which  we  shall  now  proceed 
to  consider. 

SECTION   11. 

OF    A    RETIRING   PARTNER. 

1.    How  Retirement^  of  itself,  affects  the  Liahility  of  the 

Partner. 

The  right  of  a  partner  to  retire  is  the  same  thing  as  the  right 
to  dissolve  a  partnership ;  because  retirement  is  dissolution. 
This  we  have  already  considered ;  and  it  has  also  been  stated, 
that  he  may  retire  in  either  of  many  ways.  The  effect  of  the 
retirement  (excepting  so  far  as  mutual  agreements  vary 
it)  is  nearly  the  same  in  all.  *  He  neither  loses  prop-  *  409 
erty  by  it,  nor  relieves  himself  from  any  liability.(/)  If 
he  retires  with  the  consent  of  the  other  partners,  there  is  an 
implied  promise  on  their  part  to  pay  the  debts  of  the  firm  and 
save  him  harmless,  but  only  to  the  extent  of  the  assets  of  the 
firm.  He  is  still  liable  in  solido  for  the  debts  existing  when  he 
retired.  But,  if  he  pays  more  than  his  proportion,  he  may 
have  contribution  from  his  former  copartners,  (if)  If  he 
"sells  out,"  —  to  use  a  common  phrase,  —  either  to  the  re- 
maining partners,  (^)  or  to  a  stranger,  the  question  may 
arise  whether,  in  addition  to  what  he  actually  transfers,  he 
comes  under  any  obligation  which  a  court  of  law  or  of  equity 
could  recognize.  Not  unfrequently,  the  articles  of  copartner- 
ship provide  that  the  remaining  partners  may  take  the  interest 
of  an  outgoing  partner  at  a  valuation,  or  they  prescribe  other 
terms  ;  and  these  agreements  a  court  of  equity  will  enforce.  Q<jg^ 
If  he  sells  his  share  of  all  the  joint  property  and  effects,  he 

( f)  But  see  Savage  v.  Rockwell,  32  ner  takes,  see  Diiuon  v.  Hazard,  82 
N.  Y.  501.  N.  Y.  05. 

(  (D  IIoLbs  V.  Wilson,  1  West  Va.  (vy)  Quinlivan  v.  English,  42  Mo. 

60.  ■  302.' 

[g)  As  to  Low  the  remaining  part- 


444  THE   LAW   OP   PARTNERSHIP.  [CH.  XIII. 

certainly  sells  his  share  of  so  much  of  the  good-will  of  the  busi- 
ness as  is  attached  to  the  property  and  effects,  and  goes  with  them 
to  the  purchaser.  Does  any  obligation  rest  on  the  seller  to 
do  nothing  which  shall  lessen  the  value  of  what  he  sells  ? 
Suppose  that  the  business  is  very  lucrative,  and  the  purchaser 
has  paid  much  more  than  the  value  of  the  partner's  interest  in 
the  merchandise,  because  of  the  profit  of  the  business  connected 
with  the  stock  ;  can  the  seller  forthwith  set  up  the  same  busi- 
ness in  the  immediate  vicinity,  and  use  his  experience  to 
establish  his  new  concern  at  the  expense  of  the  old  one  ?  The 
answer  of  the  law  is,  that  he  may  do  this  very  thing,  with  an 
exception,  perhaps,  as  to  the  use  of  the  old  name,  (^h)  In 
other  words,  the  purchasers  of  a  partner's  share  in  the  prop- 
erty, and  the  "  plant  "  (as  it  is  called  in  England),  buy  the  good- 
will attached  to  the  merchandise,  but  do  not  purchase  from 
him  any  obligation  not  to  lessen  the  value  of  what  they  buy  by 
his  interference  with  it,  unless  there  be  an  express  stipulation 
to  that  effect.  Then  this  bargain  "  in  restraint  of  trade,"  as 
it  is  called,  would  be  governed  by  precisely  the  same  principles 
in  the  case  of  a  retiring  partner  as  if  it  were  a  sale  of  a  busi- 
ness by  a  sole  trader  to  a  stranger.     These  principles  are  now 

established  with  a  considerable  degree  of  precision.  A 
*  410    promise  on  a  consideration,  *  not  to  carry  on  a  certain 

trade  within  certain  limits,  is  valid  at  law  as  well  as  in 
equity,  (e)     But  a  general  promise,  not  to  carry  on  a  certain 

(A)  Kennedy  v.  Lee,  3  Meriv.  455.  j'et  he   was   not  at   liberty  to   do  so 

See  also  Farr  v.  Pierce,  3  Madd.   74.  under  the  old  style  or  firm,  although 

In    Churton    v.   Douglas,    H.    R.    V.  his  name  should  be  the  only  one  ap- 

Johns.   Ch.    174,  one  of  the  partners  pearing  in  the  firm, 

liaving  sold  to   his  copartners  his  in-  (/)  Broad  i\  Jollyfe,  Cro.  Jac.  596; 

tei'est   in    the    concern,   including   the  Mitchell  v.  Rej'nolds,  Fortescue,  296, 

good-will   of   the   business,  the    latter  1    P.    Wms.    181  ;    Davis  v.   Mason,  5 

complained   that    he    purposed  to   es-  T.  R.  118;  Bunn  v.  Guy,  4  East,  190; 

tablish  the  same  line   of  business   in  Gale    v.   Reed,    8   id.    80 ;    Bryson   v. 

their  immediate  neighborhood,  and  to  Whitehead,   1   Sim.  &  S.   74;    Young 

conduct  it  under  the  old  firm  name,  v.  Timmins,  1  Cromp.  &  J.  331 ;   Proc- 

that   name   being    his    own    personal  tor  v.  Sargent,  2  Man.  &  G.  20;  Hilton 

name,  with  the  addition  of  the  word  v.  Eckersley,  6  Ellis  &  B.  47,  32  Eng. 

"Co."    The  court  AeW,  that,  though  up-  L.   &    Eq.    198;    Pierce   v.   Fuller,    8 

on  the  sale  of  the  good-will  of  a  business,  Mass.  228;  Stearns  v.  Barrett,  1  Pick, 

the  vendor  was  at  liberty  to  set  up  a  443  ;    Nobles   v.  Bates,    7    Cow.    307  ; 

precisely    similar    business,   and   that  Chappel  v.  Brockway,  21  Wend.  157  ; 

next  door  to  the  premises  where  the  Jarvis    v.    Peck,    1    Hoff.    Ch.    479 ; 

original  business  had  been  carried  on,  Grasselli  v.  Lowden,  11  Ohio  St.  349. 


CH.  XIII.]  OF   A    CHANGE   IN   THE    PARTNERSHIP. 


445 


trade  anywhere,  is  void  as  against  the  policy  of  the  law.  (/) 
The  courts  of  England,  and  still  more  of  this  country,  are  quite 
liberal  in  the  application  of  this  rule ;  and  almost  any  limits 
are  sufficient.  It  may  be  added,  that  the  contract  of  sale  by  a 
retiring  partner  might  contain  such  phrases  as,  "  I  being  about 
to  change  my  business,"  or  "  intending  to  give  up  all  business," 
or  other  words  so  distinctly  indicative  of  his  purpose  not  to 
interfere  witli  the  fullest  enjoyment  of  what  he  sells,  that  a 
court  of  equity  would  either  construe  this  as  a  contract  to  that 
effect,  or  as  a  fraudulent  deception  by  the  seller,  and  on  one  or 
other  of  these  grounds  restrain  him  from  injurious  interference, 
although  there  might  not  be  enough  in  the  contract  to  sustain 
an  action  at  law  for  the  breach  of  it.  (^) 


2.   Of  Notice. 

Much  the  most  important  question  in  relation  to  a  retiring 
partner,  is,  by  what  means  and  to  what  extent  he  may  termi- 
nate his  liability  for  the  debts  of  the  partnership,  so  that 
it  shall  attach  to  *  no  new  obligations  ;  and  how  he  may    *  411 
escape  from  his  liability  for  existing  obligations.  (J) 

To  the  first  question,  the  immediate  and  general  answer  is, 


Tlie  cases  show  a  gradual  enlarge- 
ment of  the  rule  which  prohibits 
contracts  in  restraint  of  trade,  until 
at  the  present  day  —  at  least  in  this 
country  —  almost  any  tiling  in  tiie 
contract  which  can  be  construed  as 
a  limitation  of  it  is  deemed  sufficient 
to  take  it  out  of  the  rule.  Thus,  in 
Stearns  v.  Barrett,  supra,  a  promise 
not  to  use  certain  machines  in  any  of 
the  United  States,  except  Massachu- 
setts and  Rhode  Island,  was  held  good, 
because  "agreements  to  restrain  trade 
in  particular  places  are  valid  in  law, 
and  may  be  enforced." 

ij)  Alger  V.  Thacher,  19  Pick.  51; 
a  leading  case,  wliich  fully  presents 
the  earlier  authorities,  English  and 
American ;  Hilton  v.  Eckersley,  0 
Ellis  &  B.  47.  See  also  Jones  v.  Lees, 
1  Hurlst.  &  N.  180 ;  Dunlop  v.  Greg- 
ory, 6  Seld.  241 ;  also,  cases  cited  in 
preceding  note. 

(k)  The  obligation    of  the   retiring 


partner  is  frequently  determined  by 
the  language  of  the  articles,  or  in 
some  such  way.  Thus,  where  it  was 
provided  that,  on  giving  notice,  either 
party  should  have  liberty  "  to  quit  the 
trade  and  mystery  of  a  brewer,"  and 
the  other  might  continue  the  trade 
upon  his  own  account,  it  was  held, 
that  the  party  leaving  could  not  en- 
gage in  the  brewery  trade  on  his  own 
account,  but  was  bound  to  quit  it 
altogether.  Cooper  v.  Watson,  3  Doug. 
443,  2  Chitty,  451. 

(/)  See  ante,  p.  *  397.  And  see 
Park  V.  Wooten's  Ex.,  35  Ala.  242; 
Williams  v.  Bowers,  15  Cal.  321.  One 
partner  may  exempt  himself  from 
future  liability  by  giving  express 
previous  notice  that  he  will  not  be 
bound.  Matthews  v.  Dare,  20  Md. 
273.  See  Am.  Linen  Tiiread  Co.  v. 
Wortendyke,  24  N.  Y.  550;  Spaulding 
V.  Ludlow  Woollen  Mill,  30  Vt.  150. 


446.  THE   LAW   OF    PARTNERSHIP.  [CH.  XIII. 

He  must  give  notice  of  tliis  retirement,  and  cannot  be  held  as  a 
partner  for  any  new  obligation,  by  those  who  have  this  notice 
of  dissolution  or  of  retirement ;  (II)  nor  by  those  who  have 
knowledge  thereof,  however  communicated.  (///)  But  many 
nice  questions  have  arisen  under  the  application  of  this 
rule,  (wt) 

The  reason  of  the  rule  is  perfectly  obvious.  They  whom  he 
authorizes  to  think  him  a  partner  may  hold  him  as  such ;  and 
being  a  partner,  and  being  known  as  a  partner,  he  authorizes 
all  to  think  hira  so  who  do  not  know  that  he  has  ceased  to  be 
one.  If  we  suppose  no  fraud  on  his  part,  there  is  negligence 
on  his  part ;  and,  of  two  innocent  persons,  he  should  suffer 
whose  negligence  caused  the  error,  (w) 

The  commercial  world  fully  recognizes  this  necessity  of 
notice ;  and  the  custom  of  giving  it  is  universal.  Sometimes 
personal  notice  is  given  orally,  or,  which  is  better,  by  letter  to 
all  who  deal  with  the  concern  ;  sometimes  by  advertisement ; 
sometimes  only  by  a  change  of  name  upon  the  signs  of  the 
firm,  and  sometimes  by  a  change  in  the  name  of  the  firm 
itself;  sometimes  by  all  these  methods  together.  In  this 
country,  much  the  most  usual  methods  are  advertisement,  with 
a  change  in  the  names  upon  the  sign ;  (o)  in  addition  to  this, 
notice  by  letter  is  frequently  given  to  the  customers  of  the 
firm.  If  a  change  is  made  in  the  name  of  the  firm,  this  is  the 
most  effectual  of  all.  Indeed,  if  it  be  a  change  which  leaves 
out  the  name  of  the  retiring  partner,  it  would  be,  of  itself, 

(//)  Kobb  V.  Mudge,  14  Gray,  534  ;  son,  56  ;   Lansing  v.   Gaine,   2  Johns. 

Lange  v.  Kennedy,  20  Wis.  279.  300 ;  Ketcham  v.  Clark,  6  id.  144,  148  ; 

(///)  Davis  V.  Keyes,  38  N.  Y.  94.  Le  Roy  v.  Johnson,  2  Pet.  198,  200  ; 

(m)  See  Vice  v.  Fleming,  1  Younge  Princeton    &    K.     Turnpike     Co.     v. 

&  J.  227 ;    Willis   v.   Dyson,   1   Stark.  Gulick,    1    Harr.    161  ;    Buffalo    City 

164 ;    Rooth   o.    Quin,    7    Price,    193 ;  Bank  v.  Howard,  35  N.  Y.  500 ;  Ennis 

Galway    v.   Matthew,    1    Camp.    4(34,  v.  Williams,  30  Ga.   691  ;    Pursley   v. 

10   East,   203;    Godfrey   v.    Turnbull,  Ramsey,  31  Ga.  619 ;   Ellis  y.  Bronson, 

1   Esp.  371;    Abel  v.  Sutton,  3   Esp.  40  111.  455;    Denman   v.  Dosson,    18 

108 ;  Kilgour  i'.  Finlyson,  1  H.  Bl.  155 ;  La.    Ann.   9  ;    ZoUar    v.    Janvrin,    47 

Bernard  v.  Torrance,  5  Gill  &  J.  383.  N.  H.  324. 

(n)  Parkin  v.  Carruthers,  3  Esp.  (o)  See  Wrightson  v.  Pullan,  1 
246  ;  Williams  v.  Keats,  2  Stark.  290  ;  Stark.  375,  called  Wright  v.  Pulham, 
Brown  v.  Leonard,  2  Chitty,  120 ;  2  Chitty,  121 ;  Watkinson  v.  Bank  of 
Newsome  f.  Coles,  2  Camp.  617;  Dol-  Penn.,  4  Whart.  432;  Prentiss  v.  Sin- 
man  V.  Orchard,  2  Car.  &  P.  104;  clair,  5  Vt.  149;  Graves  v.  Merry,  6 
Carter  v.  Whalley,  1  B.  &  Ad.  11;  Cowen,  701;  Ketcham  v.  Clark,  6 
Tombeckbee  Bank  v.  Dumell,  5  Ma-  Johns.  144,  147. 


CH.  XIII.]  OF    A   CHANGE   IN   THE    PARTNERSHIP.  447 

nearly  sufficient  and  decisive.  For  every  new  contract 
would  be  *  in  the  name  of  a  firm  of  which  he  never  was  *  412 
a  member ;  and,  if  the  change  is  by  dropping  liis  name, 
it  would  seem  to  be  complete  notice.  It  is  true,  however,  that 
a  partner  may  be  not  named  ;  and  it  may  be  true  that  a  part- 
ner who  has  been  active  and  known  may  wish  to  become  silent 
and  unknown,  and  therefore  wish  his  name  dropped.  In  such 
case,  he  would  still  be  liable  ;  and  therefore  he  would  be  liable 
if  the  circumstances  connected  with  his  supposed  responsibility 
justified  strangers  or  customers  in  believing  this  to  be  the 
case.  (/») 

An  important  distinction  is  made  between  those  who  are 
customers  of  the  firm,  or  who  have  dealt  with  it  as  having  the 
retiring  partner  among  the  partners,  and  those  who  are  only 
new  customers,  beginning  their  dealings  with  the  firm  after 
the  retirement.  For  a  new  customer  holds,  generally,  only 
those  who  are  actually  partners ;  because  he  has  no  past  deal- 
ings to  furnish  a  foundation  for  the  belief  that  the  retiring 
member  is  a  partner.  To  this  rule  there  are  exceptions. 
Precisely  as  one  who  buys  for  the  first  time  has  a  valid  claim 
on  a  party  who  by  his  own  act  or  consent  is  held  out  as  a 
partner,  although  he  is  not  one,  so  a  new  customer  of  an  old 
firm  may  sell  to  it  on  the  credit  of  one  who  has  long  been 
known  as  a  partner,  and  whose  retirement  has  been  kept 
secret.  This  credit  would  appear  to  be  justified  by  the  retiring 
partner,  and  therefore  would  hold  him.  But  it  would  seem 
that  the  notice  which  would  destroy  this  credit  with  new  cus- 
tomers is  quite  different  from  that  which  would  have  this 
effect  upon  old  customers.  Perhaps  a  general  rule  may  be 
stated  thus :  In  respect  to  persons  who  have  had  dealings  with 
the  firm,  it  is  necessary  to  show  either  notice  to  them  of  a 
dissolution,  (5-)  or  actual  knowledge  on  their  part,  or,  at 
least,  adequate  means  of  knowledge,  of  the  fact,  (r)     And, 

{}})  3  Kent  Comm.  Lect.  43,  p.  67 ;  Clapp  v.  Rogers,  2  Kern.  283 ;  Magill 

Gow  on  Part.,  ch.  6,  §  2,  pp.  248-2ol,  v.    Merrie,   5   B.    Mon.    1G8 ;    Pope  v. 

3d  c(l. ;  Watson  on  Part.,  cli.  7,  p.  384;  Risley,  23  Mo.  185;  Ilutcliins  v.  Bank 

2  Bell  Comni.,  b.  7,  pp.  4G0-043,  5th  of  Tenn.,  8   llumpii.   418;    Detonl  r. 

edit.  Reynolds,  3(j  Penn.  St.  325;  Schcittlln 

(7)  Conro  V.  Port  Henry  Iron  Co.,  v.  Stevens,  1  Wins.  No.  1,  106. 

12  Barb.  54;  Graves  i>.  Merry,  6  Cow.  (r)  See   wfra.      And   see  Reilly  v. 

701;  Ketcliam  v.  Clark,  0  Johns.  144;  Smith,  IG  La.  Ann.  31;    Williamson 


448  THE   LAW   OP   PARTNERSHIP.  [CH.  XIII. 

*  413  *  as  to  those  who  have  not  been  dealers,  a  retiring 
partner  can  exonerate  himself  from  liability  by  publish- 
ing notice  of  the  dissolution,  (s)  or  by  showing  knowledge  of  the 
fact.  A  notice  by  public  advertisement,  in  a  usual  way  and  to 
a  usual  extent,  or  any  notice  which,  under  the  circumstances,  was 
equal  to  a  public  advertisement,  would  always  be  sufficient  to  pro- 
tect the  retiring  partner  against  new  customers  ;  (i)  because  it  is 
obviously  impossible  for  him  to  know  who  may  thereafter  deal 
with  that  firm.  But  he  does  know  or  may  know  who  have  dealt 
with  it,  and  may  make  it  sure  that  they  have  notice  ;  and 
therefore  it  is  his  duty  to  make  this  certain,  and  he  takes  upon 
himself  the  risk  of  their  ignorance.  Mr.  Justice  Story  appears 
to  go  so  much  further  as  to  hold  that  no  new  customers  can 
hold  the  retiring  partner,  unless  he  permits  his  name  to  be 
used  by  the  old  firm,  although  he  gives  no  notice  whatever. 
But,  in  this  remark,  he  goes  somewhat  beyond  the  prevailing 
authorities.  And,  in  his  note  to  the  passage,  he  seems  to  apply 
his  rule  only  to  new  customers  who  do  not  know  who  were  the 
old  partners,  or  who  had  no  reason  to  believe  the  retiring  part- 
ner to  have  been  and  still  to  be  one.  And  such  new  customers 
could  not,  of  course,  hold  a  retiring  partner.  A  considerable 
lapse  of  time  between  the  retirement,  and  the  contracting  of  the 
new  debt,  would,  of  course,  go  very  far  to  show  that  it  was 

V.    Fox,    38    Penn.    214;    Vernon   v.  ton  Turnpike  Co.  v.   Gulick,   1   Ilarr. 

Manhattan  Co.,  17  Wend.  526,  22  id.  161  ;    Clapp   v.   Rogers,  2  Kern.  283  ; 

183;    Watkinson   v.   Bank   of   Penn.,  Magill  v.  Merrie,  5  B.  Mon.  168;    Si- 

4  Whart.  482;    Mitchum  v.  Bank   of  monds  ;;.  Strong,  24  Vt.  642. 

Ky.,  9  Dana,  166;  Mauldin  v.  Bank  (t)  Minnit  r.  Wliinnery,  5  Bro.  P.  C. 
of  Mobile,  2  Ala.  N.s.  502  ;  Coddington  489,  2  id.  (Dublin  ed.)  323;  Abel  v. 
1-.  Hunt,  6  Hill  (N.  Y.),  595;  Goddard  Sutton,  3  Esp.  108;  Wrightson  v. 
V.  Pratt,  16  Pick.  431,  434  ;  Ex  parte  Pullan,  1  Stark.  375,  called  Wright 
Burton,  1  Gill  &  J.  207  ;  Ex  parte  Leaf,  v.  Pulham,  2  Cliitty,  121  ;  Kilgour  v. 
1  Deacon,  176;  Shurlds  v.  Tilson,  2  Finlyson,  1  H.  Bl.  155;  Nott  v.  Down- 
McLean,    458;    Prentiss    v.    Sinclair,  ing,  6  La.  680;  .Lansing   v.  Gaine,   2 

5  Vt.  149;  Pitcher  v.  Barrows,  17  Johns.  300;  Shurlds  v.  Tilson,  2  Mc- 
Pick.  365.  Lean,   458 ;    Mowatt    v.    H^wland,    3 

(s)  Parkin   v.    Carruthers,    3    Esp.  Day,  353 ;  Taylor  v.  Young,  3  Watts, 

248;    Gorham   v.    Thonipson,   Peake,  339.     [Other    circumstances    may    go 

42  ;    Anderson    v.    Weston,    6    Bing.  to  the  jury  as  the  equivalent  of  public 

N.   C.  296;    Graham  i;.  Hope,  Peake,  advertisement,  in  a  newspaper,  —  such 

154 ;  Bernard  i'.  Torrance,  5  Gill  &  J.  as  cliange  in  the  firm  name,  notoriety 

383 ;     Lucas    v.    Bank    of    Darien,   2  of  the  dissolution,  remoteness  of  tlie 

Stewart,   280;    Amidown    v.    Osgood,  residence   of   the   new  customer,   and 

24  Vt.  278 ;  Burgan  v.  Lyell,  2  Mich,  the  like.     Lovejoy  v.  Spafford,  93  U. 

102;   Johnson  v.  Totten,  3  Cal.  343;  S.  430.     See  also  Deering  f.  Flanders, 

Davis  V.  Allen,  3  Comst.  168 ;  Prince-  49  N.  H.  225.] 


CH.  XTII.]  OF    A    CHANGE   IN   THE   PARTNERSHIP. 


449 


not,  or  should  not  have  been,  contracted  on  the  credit  of  tlie 
retiring  partners,  (m) 

Notice  is  intended  to  give  knowledge ;  and  therefore  knowl- 
edge, however  acquired,  generally  renders  notice  unnecessary, 
and  protects  a  retiring  partner  who  has  done  nothing,  (v) 
Whether  a  person  has  actual  knowledge  of  a  dissolution,  is  a 
question  of  fact  for  the  jury,  and  not  of  law  for  the 
court,  (w^  But  a  partner  who  *  actually  retires  as  to  *  414 
all  his  rights  and  interests  may  consent  to  leave  his 
name  in  the  firm,  or  to  a  use  of  it  by  the  old  partners  ;  and, 
while  he  thus  consents,  even  by  his  silence  alone,  if  he  knows 
it,  he  does  not  retire  as  to  his  responsibilities,  (^x)     And  a 


(u)  See  Merrit  v.  Pollys,  16  B.  Mon. 
355.     See  post,  p.  *  418. 

(v)  Hart  V.  Alexander,  2  M.  &  W. 
484 ;  Prentiss  v.  Sinclair,  5  Vt.  149 ; 
Martin  v.  Walton,  1  McCord,  16. 

(w)  Deford  v.  Reynolds,  36  Penn. 
St.  325  ;  Hart  v.  Alexander,  2  M.  &  W. 
484  ;  Hutcliins  v.  Sims,  8  Humph.  423  ; 
Merrit  v.  Pollys,  16  B.  Mon.  355.  In 
Deford  v.  Reynolds,  supra,  A.  &  B., 
under  the  style  of  A.  &  Co.,  had  done 
business  for  some  time  with  C.  &  Co. 
In  April,  1853,  B.  retired.  Prior  to 
this  time,  all  drafts  drawn  by  C.  &  Co. 
were  upon  the  firm  of  A.  &  Co.,  and 
their  letters  were  so  addressed.  But, 
from  the  time  of  the  dissolution,  C. 
&  Co.  drew  on  A.  alone,  and  their 
letters  were  addressed  to  him  alone. 
Their  accounts  were,  however,  kept 
with  A.  &  Co.  until  December,  1853  ; 
and  their  clerk  testified  that  he  did 
not  know  of  the  dissolution  until  this 
time.  The  jury  found  that  C.  &  Co. 
were  ignorant  of  the  dissolution;  and 
the  court  refused  to  set  aside  the  ver- 
dict, although  not  satisfied  witii  it. 

In  Irby  v.  Vining,  2  McCord,  379, 
it  is  said  to  be  sufficient  evidence  of 
knowledge,  if  sucli  circumstances  be 
proved  as  to  leave  no  rational  doubt 
that  the  party  knew  of  the  dissolution. 
[Actual  notice  is  necessary  to  persons 
theretofore  dealing  with  the  firm.  Den- 
man  V.  Dosson,  ly  La.  Ann.  'J;  Zoliar 
V.  .Janvrin,  47  N.  H.  324 ;  Kirkman  v. 
Snodgrass,  3  Head  (Tenn.),  37b;  Aus- 


tin V.  Holland,  N.  Y.  Ct.  of  App.  16 
Alb.  L.  J.  36.  Only  those  who  have 
habitually  dealt  with  a  firm  are  en- 
titled to  actual  notice.  A  single  trans- 
action does  not  amount  to  habitual 
dealing.  Merritt  v.  WiUiams,  17  Kan. 
287;  Clapp  v.  Rogers,  12  N.  Y.  283. 
Actual  knowledge,  however  obtained, 
is  notice.  Davis  v.  Keyes,  38  N.  Y. 
94;  Young  v.  Tibbetts,  32  AVis.  79; 
Deering  v.  Flanders,  49  N.  H.  225. 
See  also  Tudor  v.  White,  27  Tex.  584. 
And  the  burden  of  proof  of  notice  is 
on  the  partner  denying  liability  on 
account  of  dissolution.  Kenney  v. 
Atwater,  77  Penn.  St.  34.  It  may 
be  inferred  from  circumstances  ;  but 
publication  in  two  newspapers,  neither 
of  them  published  in  the  place  where 
the  creditor  resides  or  taken  by  Jiim, 
is  insufficient.  Howell  v.  Adams,  N.  Y. 
Ct.  of  App.,  4  N.  Y.  Weekly  Dig.  164. 
Perhaps,  if  the  papers  were  regularly 
sent  to  the  creditor,  the  notice  would 
be  sufficient.  Roberts  v.  Spencer, 
Sup.  Jud.  Ct.  Mass.,  March,  1877. J 

(x)  A  person  who  continues  to  act 
as  a  partner  after  dissolution,  is  liable 
as  a  partner.  iMnniet  v.  Butler,  7 
Taunt.  599;  Mulford  v.  Griffin,  1  Post. 
&  F.  145;  Fuldo  v.  Griffin,  id.  147; 
Ketciiam  i'.  Clark,  6  Johns.  144.  So 
it  is  generally  held  that  a  jjcrson  al- 
lowing his  name  to  remain  is  liable. 
Parkin  v.  Carruthers,  3  I'^sp.  248; 
Williams  v.  Keats,  2  .Stark.  290;  Dol- 
man   V.   Orchard,  2   Car.   &  P.    104 ; 


29 


450  THE   LAW   OF  PARTNERSHIP.  [CH.  XIII. 

customer  who  knows  that  he  has  retired  as  to  his  interests, 
but  has  no  notice,  and  lias  no  notice  of  Ihe  retirement,  may  be 
led  to  believe  that  notice  is  withheld  because  the  partner  intends 
to  continue  responsible.  And,  if  he  is  justified  in  this  belief  by 
all  the  circumstances,  however  erroneous  it  might  be,  the  mere 
knowledge,  on  his  part,  of  the  retirement,  without  notice,  would 
not  prevent  him  from  holding  the  partner.  (?/)  If  one  of  several 
partners  retires,  and  notice  thereof  is  given,  but  the  business 
continues  to  be  carried  on  as  before,  those  partners,  as  to 
whom  no  notice  is  given,  will  be  presumed  to  hold  the  same 
relation  to  the  concern  as  before,  (z) 

Whether  there  has  been  a  previous  dealing  with  the  firm,  — 
that  is,  whether  a  plaintiflF  had  a  right  to  require  one  kind  of 
notice,  or  only  another,  —  is  sometimes   a  difiicult  question. 

That  the  dealing  must  be  with  the  firm  directly,  and 
*  415    not  merely  the  purchase  *  of  their  paper  for   a   third 

person,  is,  we  think,  evident,  (a)  A  mere  purchase  for 
cash  would  probably  not  be  enough.  (6)  But  selling  goods  to 
a  firm  and  delivering  them,  to  be  paid  for  afterwards,  although 
no  term  of  credit  is  fixed,  would  make  the  sellers  dealers,  and 
entitle  them  to  notice,  (c)  So  a  bank  which  has  previously 
been  in  the  habit  of  discounting  notes  and  bills  for  a  firm,  (c?) 
or  a  person  who  has  been  in   the   habit  of  indorsing  for  a 

Stables  v.  Eley,  1  irl.  614  ;   Aniidown  sucli  notice  is  given,  for  the  acts  of  the 

V.  Osgood,  24  Vt.  278.     But  see  Jen-  other  partners. 

kins  V.  Blizard,  1  Stark.  418.  (z)  Howe  v.  Thayer,  17  Pick.  91. 

In  Conro  v.  Port  Henry  Iron  Co.,  12  (a)   Hutchins  v.  Bank  of  Tennessee, 

Barb.  56,  the  court  said:    "The  con-  8  Humph.  418.     See  Grinnau  r.  Baton 

tinuance  of  the  same  sign  on  tiie  store.  Rouge  Mills  Co.,  7  La.  Ann.  638. 
the  form  of  the  bills  against  the  com-  (i)  Dictum  in   Ciapp   v.   Kogers,   2 

pany,   not  objected   to,  of   notes   and  Kern.  283. 

receipts   given,   of  notices   posted    in         (c)  Clapp  v.  Rogers,  2  Kern.  283. 
the  name   of  the  company,  contracts  (d)  Hutchins  *•.  Bank  of  Tennessee, 

made  in  the   company    name    by  the  8  Humpli.  418.     See  also  City  Bank  of 

president  and  other  officers,  and  other  Brooklyn  v.  McChesney,  20  N.  Y.  240; 

acts  and  declarations   of  the   officers.  Id.    i;.    Dearborn,    id.    244;    National 

indicated  a  continuance  of  the  business  Bank  v.  Norton,  1  Hill,  572.     In   Ver- 

on  the  responsibility  of  the  company."  non  v.  Manhattan  Co.,  17  Wend.  524, 

[y]  Thus,  in  Brown   v.   Leonard,  2  22  id.  183,  the  note  was  the  last  of  a 

Chitty,  120,  it  is  held,  that  a  partner  series  of  accommodation  notes.     The 

who  gives  notice  that  he  has   ceased  first  note   was  discounted   by  the  de- 

to  be  a  partner,  but  who  has  said  that  fendants,  and   renewed  several  times, 

his  name  is  to  continue  for  a  certain  Held,  that  the  defendants  were  dealers, 
time,  is  liable  to  a  person  to  whom 


CH.  XIII.]  OF    A    CHANGE   IN   THE   PARTNERSHIP.  451 

firm,  (e)  or  of  lending  his  note  to  it  for  its  benefit,  (/)  is  a 
dealer.  As  a  general  rule,  previous  dealing,  which  would  en- 
title a  person  to  notice,  must  be  during  the  continuance  of  the 
partnership ;  but  in  one  case  where  goods  had  been  delivered 
after  dissolution,  but  before  any  publication  of  it,  at  the  store 
formerly  occupied  by  the  old  firm,  in  which  the  retiring  part- 
ner still  remained,  though  in  the  capacity  of  a  clerk,  and  the 
old  sign  was  up,  it  was  held  that  the  seller  was  to  be  consid- 
ered a  dealer,  and  entitled  to  notice.  (</) 

The  same  principle  which  makes  this  distinction  between 
new  customers  and  old  customers,  protects  a  dormant  or  un- 
known partner  who  retires  and  gives  no  notice  whatever.  He 
was  bound  for  any  obligations  incurred  by  the  firm  while  he 
was  in  it,  because  he  was  then  a  partner  in  fact,  and  not  be- 
cause he  was  supposed  to  be  one  :  in  other  words,  he  was  bound 
because  of  his  participation  in  the  business  and  profits,  and  not 
because  the  creditors  of  the  firm  became  so  on  his  credit. 
When  he  leaves  the  firm,  therefore,  all  the  reason  for  holding 
him  responsible  expires  ;  and  he  is  not  obliged  to  give  any 
notice,  or  take  any  step  to  withdraw  a  credit  which 
never  existed.  (7i)  A  dormant  partner  *  is,  however,  *  416 
liable  for  the  whole  of  a  debt  contracted  during  his  part- 
nership, just  as  any  other  partner  is.  And,  if  he  is  known  to 
any  customer,  so  far  as  relates  to  that  customer  he  is  not  a 
dormant  or  unknown  partner,  and,  therefore,  notice  should  be 
given  to  that  customer.  Whether  the  customer  was  ignorant 
of  the  partnership  or  not,  is  a  question  of  fact,  and  sometimes 
is  a  difficult  one.  But  a  knowledge  on  his  part  must  be  clearly 
shown,  to  entitle  him  to  notice,  if  the  partner  were  generally 
unknown.  («)     As  the  fact  of  the  partnership  may  have  been 

(e)  Hutcliins    v.    Sims,   8    Humph.  Cow.   534;    Evans    v.   Drummond,   4 

423.  Esp.   89;    Armstrong    i-.    Ilussey,    12 

(/)  Hutchins  v.  Hudson,  8  Humph.  Serg.  &  U.  315;  Benton  v.  Chamborhn, 

426.  23  Vt.  711;  Kennedy  v.  Bohannon,  11 

((])  Amidown  v.  Osgood,  24  Vt.  278.  B.  Mon.  120;  Ayrault  v.  Chamlierlin, 

In  Wardwell  v.  Ilaight,  2  Barb.  .54U,  a  26  Barb.  89;    Warren  v.  Ball,  37  111. 

person  who  had  two  previous  dealings  76;  Ellis  v.  Bronson,  40  111.  455. 

with  a  firm  was  held  entitled  to  actual  (/)  Carter  v.  Whallcy,  1  B.  &  Ad. 

notice.  11 ;  Farrar   v.   Defiinne,  1   Car.  &  K. 

{h)  Scott    V.    Colmesnil,    7    J.    J.  580;  Edwards  v.  McFall,  5  La.  Ann. 

Marsh.   41G;    Kelley    v.    Ilurlburt,   6  167. 


452 


THE    LAW    OF    PARTNERSHIP. 


[CH.  XIII. 


accidentally  divulged  without  the  knowledge  or  intention  of 
the  dormant  partner  himself,  it  would  always  be  wise  to  guard 
against  a  danger  of  this  kind,  by  giving  the  usual  notice.  The 
question  has  arisen,  whether,  if  A.,  B.,  and  C.  are  in  business, 
under  the  firm  and  style  of  A.,  B.,  &  Co.,  and  C.  retires,  he  is 
bound  to  give  notice  to  dealers  with  the  firm  who  have  no 
knowledge  that  he  is  a  partner.  We  exhibit  the  present  state 
of  the  authorities  in  our  note,  (j)  In  Scotland,  a  dormant 
partner  must  give  notice  of  dissolution,  as  well  as  an  ostensible 

one.  (k) 
*  417  *  An  existing  contract  may  contemplate  future  pay- 
ments to  any  extent ;  and,  if  this  be  a  specialty,  as  a 
lease  to  the  partners  by  name,  the  retirement  or  dissolution 
or  settlement  will  in  no  way  exonerate  the  retiring  partner, 
or  any  one  who  is  lessee  ;  nor  will  any  thing  else  which  would 
not  operate  his  discharge,  if  there  were  no  partnership  between 
the  lessees.  In  such  a  case,  notice  to  the  lessor  of  his  retire- 
ment would  not  discharge  him  ;  nor  would  receiving  rent  by 
the  lessor  from  the  remaining  partners.  And  the  same  .lia- 
bility exists  as  to  the  contracts  generally,  if  executory. 


(j)  In  Edwards  v.  McFall,  5  La. 
Ann.  167,  the  defendant  was  a  partner 
ofA.  &Co.  It  was  contended  that,  as  his 
name  did  not  appear  in  the  style  of  the 
firm,  he  was  a  dormant  partner.  But 
the  court  said  :  "  We  are  not  prepared 
to  say  tliat  a  person  can  be  stj'led  a 
dormant  partner  who  enters  into  a 
partnership  with  A..,  under  tlie  style 
of  A.  &  Co.  The  words  '  &  Co.'  hold 
out  to  the  world  that  some  one  else  is 
concerned  beside  A.  The  term  '  dor- 
mant '  seems  more  properly  applicable 
to  the  case  of  a  party  associating  him- 
self in  business  with  A.,  wlio  transacts 
the  business  in  his  (A.'s)  sole  name." 
See  Mitchell  v.  Dall,  2  Harris  &  G. 
159,  171.  Where  A.  &  B.  were  in 
business  under  the  name  of  A.  &  Co., 
and  a  person  dealing  with  the  firm  did 
not  know  that  B.  was  in  the  firm,  it 
was  held  that  B.  was  not  a  dormant 
partner.  Deford  v.  Reynolds,  30  Penn. 
St.  325.  See  also  Western  Bank  of 
Scotland  v.  Needell,  1  Fost.  &  F.  461. 
A  similar  rule  is  laid  down  in  Goddard 


V.  Pratt,  16  Pick.  428 ;  but  the  case  of 
Grosvenor  v.  Lloyd,  1  Mete.  19,  has 
been  thought  to  countenance  the  doc- 
trine that  an  unnamed  partner  in  such 
a  firm  would  not  be  bound  to  give  no- 
tice in  such  a  case.  This  inference 
does  not  necessarily  follow,  however; 
because  the  ruling  of  the  court  below, 
upon  which  the  case  came  up,  was 
somewhat  peculiar,  and  did  not  present 
this  precise  question.  The  court  below 
had  instructed  the  jury  that  a  secret 
partner  was  liable  after  his  withdrawal, 
if  no  notice  of  the  dissolution  was  given. 
The  effect  of  that  instruction  was  to 
make  the  partner  designated  under  the 
"  Co."  secret ;  and  the  higher  court, 
by  ordering  a  new  trial,  may  perhaps 
be  taken  to  have  repudiated  that  doc- 
trine, and  to  have  sustained  the  con- 
trary doctrine  of  Goddard  v.  Pratt. 
See  also  Benton  v.  Chamberlin,  23  Vt. 
711  ;  Heath  v.  Sansom,  4  B.  &  Ad. 
172 ;  Carter  v.  Wlialley,  1  B.  &  Ad.  11 ; 
Bernard  v.  Torrance,  5  Gill  &  J.  583. 
(Ic)  Hay  V.  Mair,  Ross  on  Part.  639. 


CH.  XIII.]  OF    A    CHANGE   IN   THE   PARTNERSHIP.  453 

The  question,  whether  notice  has  been  given,  or,  if  given 
generally,  whether  it  was  brought  home  to  the  knowledge  of  a 
customer,  is  governed,  in  the  case  of  a  retiring  partner,  by  tlie 
rules  applicable  to  a  question  of  notice  in  other  cases.  It  is 
usually  a  mixed  question  of  law  and  fact ;  although,  if  the  facts 
are  found,  the  reasonableness  of  the  notice  is  properly  a  ques- 
tion of  law  only.  In  England,  or  at  least  in  London,  a  usage 
sanctioned  by  the  courts,  requires  that  notice  of  retirement  and 
dissolution  should  be  given  in  a  newspaper,  published  in  Lon- 
don, under  the  name  of"  The  London  Gazette."  (/)  There,  also, 
all  bankruptcies  are  published  ;  and  it  is  a  cant  phrase  for  be- 
coming a  bankrupt,  that  a  party  "  finds  himself  in  the '  Gazette,'  " 
No  such  usage  is  known  here,  and  would  be  impossible  as  to 
any  one  paper  for  the  whole  nation  ;  but  it  might,  perhaps,  use- 
fully obtain  as  to  some  one  paper  in  each  of  our  principal  com- 
mercial cities.  As  the  law  stands,  however,  the  party  giving 
notice  by  advertisement  may  take  his  choice  of  newspapers. 
If,  however,  he  selected  one  which  was  very  obscure  and  un- 
known, or  had  but  little  circulation  among  merchants,  it  might 
be  a  fact  which  would  lead  a  court  or  jury  towards  the  con- 
clusion that  the  party  intended  to  satisfy  the  letter  of  the  law, 
but  not  its  spirit,  and  to  withhold  notice  rather  than  to  give 
it ;  and,  of  course,  such  a  notice  would  not  be  deemed  "  rea- 
sonable "  by  the  court.  A  similar  remark  may  be  made,  but 
with  less  force,  perhaps,  as  to  the  number  of  times  the  adver- 
tisement was  published,  and  even  as  to  the  place  which 
*  it  occupied  in  the  newspaper.  There  can  be  but  one  *  418 
general  rule  applicable  to  all  these  questions ;  and  that 
is,  that  the  retiring  partner  cannot  have  the  benefit  of  the 
notice,  unless  he  shows  that  it  was  such  reasonable  and  suffi- 
cient notice  as  the  usage  of  merchants  requires,  (???)  or  brings 

(/)  In  Troughton  v.  Hunter,  18  (m)  In  Grinan  v.  Baton  Eouge 
Beav.  470,  tlie  partnership  liad  been  Mills  Co.,  7  La.  Ann.  G38,  tlie  business 
dissolved  by  judicial  decree.  One  of  of  making  bricks  and  sawing  lumber 
the  partners  refused  to  sign  the  notice  was  carried  on  at  Baton  Kouge.  The 
of  the  dissolution  which  liad  been  pre-  members  of  the  firm  all  lived  in  New 
pared  for  publication  in  "  Tiie  London  Orleans,  where  thej*  had  an  office,  kept 
Gazette,"  and  it  appeared  that  it  was  by  an  agent.  It  was  ln'ld  that  notice 
the  usage  of  that  paper  not  to  publish  of  dissolution  publislied  in  a  paper  at 
any  notice  unless  signed  l)y  all  the  Baton  Rouge  was  not  sufficient  to  ex- 
partners.  The  court  ordered  the  part-  onerate  those  known  to  be  partners  as 
ner  to  sign  the  notice.  to  persons  residing  at  New  Orleans,  who 


454 


THE  LAW    OF   PARTNERSHIP. 


[CH.  XIIT. 


home  actual  knowledge  of  it  to  the  customer.  For,  even  if  he 
tried  to  prevent  the  notice  from  being  known,  he  will  still  have 
the  full  benefit  of  it  so  far  as  it  was  known.  If  the  retiring 
partner  does  not  publish  the  fact  in  any  newspaper,  the  mere 
notoriety  of  it  will  seldom  or  never  protect  him.  (n)  It  is, 
however,  always  possible  that  this  notoriety  may  be  so  extreme, 
and  so  connected  by  circumstances  with  an  individual  cus- 
tomer, that  both  court  and  jury  would  regard  it  as  dispensing 
with  special  notice,  (o)  And  a  sufficient  lapse  of  time  since 
the  retirement  might  supply  the  want  of  notice,  (oo) 

The  taking  a  note  of  one  partner  (the  firm  having  been  dis- 
solved two  years  before),  signed  with  the  firm  name,  and  the 
words  added,  "  in  liquidation,"  would  be  evidence  from  which 
the  jury  might  infer  knowledge,  (jt?)  And  a  change  of  part- 
nership in  a  banking-house  is  sufficiently  notified  to  the 
*  419  customers  of  the  *  house  by  a  change  in  the  printed 
cheques.  (^)  So  a  change  in  a  name  painted  on  a 
counting-house,  and  circulars  sent  to  old  correspondents,  but 
no  public  notice  given,  is  sufficient  notice  to  the  world,  (r) 


had  had  no  previous  dealings  with  the 
firm.  See  also  Deford  v.  Eeynolds,  36 
Penn.  St.  325.  In  Wardwell  v.  Haight, 
2  Barb.  549,  the  dissolution  of  a  firm 
doing  business  in  Rochester  was  con- 
cealed fifteen  months  ;  and  notice  then 
was  published  in  Rochester  six  days 
before  goods  were  purchased  in  New 
York  on  the  credit  of  the  firm.  The 
court  considered  the  sellers  as  dealers, 
and  tlierefore  entitled  to  actual  notice ; 
but  said,  if  they  had  not  been,  this 
notice  would  have  been  insuflacient. 
It  was  also  said  that  a  notice  must  be 
public  and  notorious,  so  as  to  put  the 
public  on  its  guard.  See  Bank  of  the 
Commonwealth  v.  Mudgett,  45  Barb. 
663. 

(n)  Pitcher  v.  Barrows,  17  Pick. 
361 ;  City  Bank  of  Brooklyn  v.  Mc- 
Chesney,  20  N.  Y.  240;  Gorham  v. 
Thompson,  Peake,  42.  The  testimony 
of  a  witness,  that  he  had  notice  of  the 
dissolution  of  a  partnership  at  a  par- 
ticular time,  cannot  be  given  in  evi- 
dence in  a  suit  between  others,  in 
which  the  dissolution  of  the  partner- 


ship at  that  time  becomes  material. 
ShafTer  v.  Snyder,  7  Serg.  &  R.  503. 

(o)  Where  a  witness  testified  that 
he  had  given  notice  of  the  retirement 
of  a  partner,  and  of  the  general  disso- 
lution of  the  partnership,  and  that  he 
was  "confident  that  all  the  neighbor- 
hood were  notified  in  two  days," 
and  on  cross-examination  was  asked 
whether  he  gave  such  notice  to  the 
other  creditors  as  he  had  testified  he 
gave  to  the  one  in  question,  and  he 
said  he  had,  and  gave  the  names  of  the 
persons,  —  it  was  held  that  it  was  com- 
petent to  call  the  persons  named,  and  to 
prove  that  such  notice  had  not  been 
given  them  ;  but  that  it  was  not  com- 
petent for  the  other  side  to  call  any  of 
the  persons  named  to  prove  that  they 
had  received  such  notice.  Howe  v. 
Thayer,  17  Pick.  91. 

{ooj  Farmers'  Bank  v.  Green,  1 
Vroom,  316. 

ip)  jMerrit  v.  Pollys,  16  B.  Mon. 
355. 

(q)  Barfootr.  Goodall,3  Camp.  147. 

(/•)  M'lver  V.  Humble,  16  East,  169. 


CH.  XIII.]  OP   A    CHANGE   IN   THE    PARTNERSHIP.  455 

Bat  a  mere  change  of  name  is  not  always  enough ;  (s)  nor  a 
change  of  pursuits,  or  a  removal  from  the  state  of  one  part- 
ner ;  (^)  nor  is  the  incorporation  of  the  firm  ;  (m)  or  the  fact 
that  a  deed  of  assignment,  constituting  a  dissolution,  was  put 
on  record.  Qv}  If  the  notice  was  only  by  advertisement,  it 
must  go  further.  It  has  been  held  that  proof  that  the  customer 
regularly  received  the  newspaper  was  sufficient,  (w)'  But  the 
prevailing  rule  now  seems  to  be,  —  at  least  in  this  country, 
where,  as  has  been  said,  we  have  no  one  newspaper  in  which 
merchants  may  expect  to  find  all  information  of  this  kind,  — 
that  it  is  not  enough,  of  itself,  to  prove  that  the  very  number 
of  the  paper  containing  the  advertisement  was  delivered  at  his 
house,  or  even  traced  to  his  hand,  (a;)  And,  in  point  of  fact, 
the  multiplication  of  newspapers,  to  say  nothing  of  their  size, 
seems  to  forbid  all  reasonable  inference  that  he  who  takes  a 
newspaper,  or  even  reads  in  it,  reads  the  whole  of  it,  or 
becomes  apprised  of  all  the  facts  stated  'in  it.  But,  if  it 
could  be  shown  that  the  customer's  attention  was,  in 
any  *  especial  way,  drawn  to  the  advertisement,  —  even,  *  420 
perhaps,  by  being  placed  prominently  before  him,  —  the 
evidence  might  be  thus  made  sufficient.     But  our  courts  seem  to 

(s)  As  if  a  firm  wliich  consistefl  of  who  have  been  dealers  with  the  firm, 

A.,  B.,  &  C,  doing  business  under  the  notice  in  the  "Gazette"  is  not  sufficient, 

name  of  A.  &  B.,  on  the  retirement  of  Graham  v.  Hope,  Feake,  154.     In  Jen- 

C.  and  of  A.,  slioukl  do  business  under  kins  v.  Blizard,  1  Stark.  418,  it  is  not 

the  style  of  B.  &  D.,  even  if  the  fact  stated    expressly   whether    the    party 

of  the  change  of  name  were  known,  it  sought  to  be  charged  with  notice  was 

would  not  be  equivalent  to  notice  of  a  previous  dealer  or  not;  but  it  would 

the  retirement  of  C,  especially  if  the  seem  that  he  was,  from  the  concluding 

firm  was  carried  on  under  a  more  gen-  remarks  of  Lord  Ellenborough.  Notice 

eral  designation  which   remained    un-  was  pubhshed  in  the  "  Gazette,"  and 

changed.      Howe  v.  Thayer,  17  Pick,  once  in  the  "  Morning  Chronicle."  This 

91.  last    paper  was   taken   by    the   party 

(t)  Lucas    V.    Bank    of    Darien,    2  sought  to  be  charged      Held,  that  this 

Stew.  280.  was    evidence    to   go   to   the  jury   of 

((()  Goddard  v.  Pratt,  16  Pick.  432.  knowledge  of  the  dissolution. 

(v)  Pitcher    v.   Barrows,    17    Pick.  (.?)   Vernon    v.    ^Manhattan    Co.,  17 

361.  Wend.  526,  22  id.  192  ;  Boyd  v.  Cann, 

(w)  For  the  rule    in   England,   see  10  Md.  118;  Pope  v.   Kisley,  23  Mo. 

Godfrey    i'.    TurnbuU,    1    Ksp.     371;  185;  Watkinson  «?.  Bank  of  Penn.,  4 

Wrightson    v.    Pullan,    1   Stark.   .375,  Whart.    482;    Hutchins    v.    Bank    of 

called    Wright   v.   Pulham,    2    Chitty,  Tenn.,  8  Humph.  418 ;  White  r.  Mur- 

121;    Godfrey  v.  Macauley,  1    Peake,  phy,  H  Rich.  309.     But  see   Bank  of 

155;  Newsome  )'.  Coles,  2  Camj).  617;  South  Carolina  v.  Humphreys,  1  JMc- 

Norwich  Nav.  Co.  v.  Theobald,  Moody  Cord,  388. 
&  M.  151.     But,  in  respect  to  persons 


456  THE   LAW    OF   PARTNERSHIP.  [CH.  XIII. 

be  tending — wisely,  as  we  tliink  —  to  the  requirement  of  per- 
sonal notice,  by  circulars,  to  all  the  customers  of  the  firm,  if 
the  old  name  be  retained. 

Some  question  may  arise  as  to  the  person  to  whom  notice 
should  be  given.  If  given  to  one  of  a  partnership,  in  this  as 
in  all  other  eases  of  hand  fide  notice  all  are  certainly  bound.  (?/) 
So,  if  to  an  agent,  the  principal  is  bound,  (z)  If  to  a  stock- 
holder in  a  corporation,  (a)  —  a  bank,  for  example,  —  it  is  no 
notice  to  the  bank,  unless  it  can  be  carried  further,  and  shown  to 
have  reached  those  who  were  intrusted  with  its  management.  It 
has  been  held,  that  casual  notice,  by  an  advertisement,  reaching 
a  director,  did  not  bind  the  bank.  (?*)  And,  upon  the  whole, 
the  actual  practice  of  the  country  may  supply  sufficient  reason 
for  the  distinction.  But  if  a  notice  were  given  to  a  director, 
expressly  for  the  bank,  and  to  be  communicated  to  the  board 
or  cashier  and  acted  upon,  this  must  be  sufficient,  (c)  We 
should  doubt,  however,  whether  notice  to  a  stockholder,  with  a 
distinct  request  that  he  should  communicate  the  fact  to  the 
directors  or  officers,  would  bind  the  bank,  unless  this  communi- 
cation was  made  ;  because  a  stockholder  is  under  no  obligation 
to  communicate  such  information,  and  has  no  official  authority 
to  receive  it.  (^  )  It  may  be  considered  as  a  general  rule,  that, 
where  it  is  necessary  to  give  notice,  it  is  not  sufficient  that  the 
necessary  steps  for  this  purpose  were  taken,  if  notice  was  not 
received,  (g) 

The  principle,  that,  after  a  partnership  is  dissolved,  one  part- 
ner dealing  with  a  person  having  no  notice  of  the  dissolution 
may  bind  his  late  copartner,  applies  only  to  transactions  in  the 
usual  course  of  the  firm's  business.  (/) 

{y)  Bignold  v.  Waterliouse,  1  Maule  Stew.  280,  tlie  fact  that  one  partner 

&  S.  249  ;  Ex  parte  Waitliman,  1  Mont,  after  dissolution  became  a  director  in  a 

&  A.  374  ;  Haywood  v.  Harmon,  17  111.  hank  was  not  notice  to  the  bank  of 

417 ;    Bouldin   v.   Paige,   24   Mo.  594.  the   dissolution.      And   see    preceding 

See  Lansing  v.  M'Kilhip,  7  Cow.  416 ;  note. 

Powell  V.  Waters,  8  id.  670;  Watson  (c)  National  Bank  i-.  Norton,  1  Hill, 

v.  Welles,  5  Conn.  468.  578;    Bank   of   the   United   States   v. 

(2)  Page  V.  Brant,  18  111.  37.  Davis,  2  id.  264. 

(rt)  1  Pars,  on  Cont.  (5th  cd.)  77  and  (cl)  See  cases  in  preceding  notes, 

notes.  (f)  Johnson  v.  Totten,  3  Cal.  343. 

(/i)  National  Bank  r.  Norton,  1  Hill,  (/)  Whitman  v.  Leonard,   3  Pick. 

572.     In  Lucas  i-.  Bank  of  Uarien,  2  177. 


CH.  XIII.]  OF    A    CHANGE   IN   THE   PARTNERSHIP.  457 


8.    Wheti  the  Retiring  Partner  is  discharged  hy  the  Creditors. 

*  A  retiring  partner  is,  as  we  have  seen,  liable  for  the  *  421 
existing  debts  of  the  firm,  in  precisely  the  same  way  and 
to  the  same  extent  as  before  he  left  it :  and  yet  it  is  very 
common  for  the  partners  to  agree  that  they  who  remain,  per- 
haps with  the  new  ones  who  come  in,  shall  pay  all  the  debts; 
and  the  retiring  partner, as  a  consideration  fortius  agreement, 
gives  up  or  leaves  behind  him  a  proportionate  part  of  the- 
joint  property.  Such  an  agreement  is  perfectly  valid  between 
the  partners  ;  but  has  no  effect  at  all  upon  the  creditors,  unless 
they  become  parties  to  it.  (^)  It  follows,  therefore,  that  the 
creditors  of  the  firm  may  not  only  include  the  retiring  partner 
in  any  action  against  the  firm,  but  may  satisfy  an  execution 
against  the  firm  from  his  property,  as  freely  as  from  that  of 
any  remaining  partner.  (Ji)  But,  when  they  have  done  so,  the 
retiring  partner  has  his  action  against  the  remaining  partners, 
on  their  contract  to  pay  that  debt.  It  is  usual  to  add,  in 
the  bargain  between  the  partners,  a  clause  of  indemnity  ;  but 
whether  they  do  or  do  not  promise  to  hold  him  harmless, 
if  they  promise  to  pay  the  debt,  and  he  pays  it,  he  has  his 
action,  (i) 

If,  however,  the  creditors  become  parties  to  this  agreement, 
for  consideration,  they  are  of  course  bound  by  it ;  and  then  they 
cannot  sue  the  retiring  partner.  In  such  case,  something  like 
the  novation  of  the  civil  law  has  taken  place.  A  debt  due 
from  the  whole  firm  has  been  discharged,  and  a  new  debt  from 
a  part  of  the  firm  has  been  created.  The  old  debt  has  been 
paid  by  the  new  one.  But  there  must  be  some  consideration 
for  the  release  of  the  retiring  partner.  In  almost  all  cases 
where  the  creditor  agrees  to  this,  there  is  some  reason  for  it 
in  fact,  which  serves  as  a  consideration.  Either  the  retiring 
partner  gives  up  something  because  of  the  assent  of  the  cred- 
itor,   or  the  creditor  gains   something   in  time,  or   in   busi- 

(//)  Harris  !•.  Lindsay,  4  Wash.  C.  C.  Jameson,    5   T.    R.    556;    Wooley    v. 

98,  271;  Kirwan  v.  Kirwan,  2  Crorap.  Kelly,  1  B.  &  C.  68.     And  see  Allen 

&  M.  617.  V.  Wells,  22  Pick.  450. 

(h)  Lodge  V.  Dicas,  3  B.  &  Aid.  611  ;  (/)  Hobart  r.  Howard,  9  Mass.  304  ; 

per  DeGrey,  C.  J.,  2  W.  Bl.  947,  and  Brewer  v.  Wortliingtnn,  10  Allen,  329. 

Ld.   Eldon,    6   Ves.   119;    Harries    v.  See  Thurber  f.  Corbin,  51  Barb.  215. 


458  THE   LAW   OP   PARTNERSHIP.  [CH.  XIII. 

*  422  ness,  or  in  some  other  way  ;  and  tliere  *  are  few  cases 
in  the  books,  and  few  we  apprehend  in  practice,  in 
which  a  creditor,  who  agrees  with  partners  that  one  of  them 
shall  retire  and  be  released  from  his  debt  on  the  engagement 
of  the  others  to  pay  it,  is  afterwards  permitted  to  sue  this 
partner.  It  is  seldom,  of  course,  that  such  bargains  are  made 
in  cases  of  insolvency  ;  for  the  obvious  futility  of  it,  and  entire 
absence  of  motive  for  it,  or  effect  from  it  in  such  a  case,  would 
prevent  an  attempt  to  make  or  carry  out  an  agreement  of  this 
kind  by  an  insolvent  firm.  And,  if  the  firm  be  solvent,  no  harm 
is  done  to  the  creditor  by  limiting  his  choice  among  debtors, 
all  or  any  of  whom  can  pay  him. 

It  is  said  that  the  adequacy  of  the  consideration  cannot  be 
inquired  into.  (7)  And,  if  a  creditor  of  a  firm  contracts  or 
agrees  with  a  new  firm  to  take  their  security  in  discharge  of 
that  of  the  old,  the  retiring  partner  is  discharged  from  any  lia- 
bility to  pay  the  debt ;  and  whether  such  an  agreement  has 
taken  place  is  a  question  of  fact  for  the  jury.  (A;)  To  discharge 
the  retiring  partner,  however,  it  is  not  sufficient  to  take  a 
new  security  ;  but  there  must  be  an  agreement  to  discharge 
him  from  the  liability  of  the  old  firm.  (/) 

(j)  Lyth  V.  Ault,  7  Exch.  667,  11  ing  found  the  issue  of  fact  in  favor  of 

Eng.  L.  &  Eq.  580,  per  Pollock,  C.  B.  the  defendant,  a  motion  was  made  for 

In  Lodge  V.  Dicas,  3  B.  &  Aid.  611,  judgment  for  the  plaintiff  non  obstante 
a  creditor  of  a  firm,  on  its  dissolution,  veredicto,  on  the  ground  that  there  was 
agreed  to  look  only  to  one  partner,  no  new  consideration  for  the  agree- 
Helcl,  that  the  agreement  was  void  for  ment.  Parke,  B.,  said  that  Thompson 
want  of  consideration.  See  also  David  v.  Percival,  5  B.  &  Ad.  925,  suhstan- 
r.  Ellice,  5  B.  &  C.  196  ;  Thomas  v.  tially  overruled  Lodge  v.  Dicas,  3  B. 
Shillibeer,  1  M.  &  W.  124,  and  Wildes  &  Aid.  611.  Pollock,  C.  B.,  said,  that 
V.  Fessenden,  4  Mete.  12,  where  this  it  was  not  easy  to  make  a  distinction 
question  is  discussed  at  length.  Lodge  between  the  case  at  bar  and  Lodge  v. 
V.  Dicas  is,  however,  no  longer  author-  Dicas  ;  but  in  that  case  the  defendant 
ity  in  England.  In  Lyth  r.  Ault,  7  was  not  proved  to  have  known  of  the 
Exch.  667,  11  Eng.  L.  &  Eq.  580,  debt  agreement  of  the  plaintiff  to  take  the 
was  brought  against  A.  &  B.  A.  liability  of  the  other  partners.  Mar- 
pleaded  that  the  action  was  for  goods  tin,  B.,  said  :  "  I  think  that  Lodge  v. 
sold  to  A.  &  B.  as  partners  ;  that  after-  Dicas  is  overruled,  and  it  is  better  to 
wards  A.  being  about  to  retire,  and  the  say  so  than  to  attempt  to  distinguish 
business  to  be  carried  on  by  B.  alone,  between  the  cases." 
of  which  the  plaintiff  had  notice,  an  {k)  Harris  v.  Farwell,  15  Beav.  31, 
agreement  was  made  between  the  15  Eng.  L.  &  Eq.  70 ;  Thompson  v. 
plaintiff  and  defendant,  by  which  the  Percival,  5  B.  &  Ad.  925. 
plaintiff  was  to  be  paid  12/.  in  part  (/)  Harris  v.  Farwell,  15  Beav.  31, 
payment  of  lier  debt,  and  the  plaintiff  15  Eng.  L.  &  Eq.  70 ;  Bedford  v.  Dea- 
was  to  abandon  her  claim  against  A.  kin,  2  B.  &  Aid.  210. 
and  look  to  B.  alone.    The  jury  hav- 


CH.  XIII.]  OP   A   CHANGE    IN    THE   PARTNERSHIP.  459 

*  It  is  quite  seldom  that  creditors  of  a  firm  assent  to  *423 
such  an  arrangement  expressly  and  directly,  but  it  is 
very  common  for  them  to  do  so  by  implication ;  and  numerous 
cases  turn  upon  the  question,  What  circumstances  imply  such 
assent  on  the  part  of  the  creditors  ?  The  cases  we  cite  will 
show  that  tlie  courts  construe  with  some  liberality  the  question 
of  assent ;  and  that  of  consideration,  with  so  much  that  it  seems 
to  be  now  almost  imi)lied  in  the  assent.  (??j)  But  a  creditor's 
mere  transfer  in  his  ledger  of  an  account  against  a  firm,  to  the 
private  account  of  one  partner,  without  the  knowledge  of  the 
firm,  does  not  preclude  the  creditor  from  suing  the  firm,  (w) 

If  the  creditor  has  no  security,  and  no  paper  evidence  of  his 
debt  from  the  firm,  and,  after  the  partner  retires,  he  accepts 
from  the  new  firm,  with  knowledge  of  the  retirement,  the 
security  or  paper  of  the  new  firm,  —  this  would  seem  to  be  not 
only  an  assent  on  his  part,  but  an  assent  on  consideration  ; 
for  the  acquiring  either  of  additional  security,  or  of  paper 
which  he  may,  by  discount,  at  once  convert  into  money,  is 
consideration  enough  for  the  promise  implied  in  his  assent, 
even  though  there  is  no  new  partner  in  addition  to  the  old 
in  the  new  firm,  (o) 

If  he   has   securities   from  the  old  firm,   and  gives  them 

[m)  See  Hart  v.  Alexander,  2  M.  &  tlie  promisee  against  the  administrator 

"W.  464 ;    Harris  v.  Lindsay,  4  Wash,  of  the  deceased  and   the  partner  who 

C.  C.  98,  271 ;   Deland  v.   Amesbury  gave  the  note,  and  there  was  a  count 

Man.  Co.,  7  Pick.  244.  for  the  note  and  one  for  goods  sold  and 

(n)  Barker  v.  Blake,  11  Mass.  16.  delivered.  The  court  held  that  the 
See  also  Armsby  v.  Farnara,  16  Pick,  inquisition  of  lunacy  found  against  the 
318;  Averill  v.  Lyman,  18  id.  351;  partner,  ipso  facto,  dissolved  the  part- 
Baring  V.  Crafts,  9  Mete.  380.  nership  ;  but  that  the  note,  being  good 

(o)  Evans  v.  Drummond,  4  Esp.  92  ;  against  the  giver,  discharged  the  debt 
Reed  v.  Wiiite,  5  id.  122  ;  Thompson  of  the  firm  on  account ;  and,  a  verdict 
V.  Percival,  5  B.  &  Ad.  925  ;  Slieehy  v.  having  been  found  against  the  joint 
Mandeville,  6  Cranch,  264  ;  Stephens  defendants,  ordered  a  new  trial. 
V.  Thompson,  28  Vt.  77  ;  Islerr.  Baker,  In  Harris  v.  Lindsay,  4  Wash.  C.  C. 
6  Humph.  85.  In  this  latter  case,  how-  98,  271,  A.  &  B.  were  in  partnership, 
ever,  the  plaintiff  had  taken  a  note  and  A.  retired,  and  B.  went  on  with 
signed  by  tlie  firm  name,  which  the  another  person  ;  and  afterwards  this 
court  held  good  as  against  the  signer,  firm  was  dissolved  and  another  formed, 
but  not  as  against  the  estate  of  the  which  was  also  dissolved.  The  amount 
deceased  partner ;  an  inquisition  of  due  from  tliese  three  firms  to  a  cred- 
lunacy  liaving  been  found  against  the  itor  of  all  of  them  was  consolidated, 
latter,  after  the  goods  were  bought  by  and  three  notes  given  for  the  amount, 
the  firm,  but  before  the  firm  note  was  signed  by  B.  Held,  that  A.  was  there- 
given.     A  joint  action  was  brought  by  by  discharged. 


460  THE   LAW   OF    PARTNERSHIP.  [CH.  XITI. 

*  424  up,  and  *  receives  from  the  new  firm  what  is  only  the 
same,  excepting  that  the  paper  loses  one  name  and  gains 
another,  being  that  of  a  present  instead  of  a  past  firm, — here 
there  is  undoubtedly  consideration  enough,  whether  the  new 
name  be  better  or  worse,  commercially  speaking,  than  the  name 
that  is  lost,  (p)  And  if  the  old  security  is  given  up  for  the 
new,  it  seems  that  the  old  is  so  effectually  destroyed  that,  if 
the  creditor  afterwards  returns  the  new  to  the  remaining  part- 
ner or  partners,  and  receives  from  them  the  old,  this  will  not 
revive  the  obligation  of  the  retiring  partner,  (g) 

If  he  takes  new  security,  agreeing  to  hold  the  retiring  part- 
ner only  as  surety  for  the  debt,  there  must  be  some  considera- 
tion, even  for  this  modified  discharge  ;  but  if  there  is  one,  or 
any  thing  which  can  be  called  one,  then  the  retiring  partner 
will  be  held  only  as  surety,  and  not  as  a  joint  debtor.  He  will, 
therefore,  be  discharged  by  any  indulgence  to  the  remaining 
partners,  who  are  the  principal  debtors,  which  would  suffice  to 
discharge  any  surety ;  and  the  general  rule  here  is,  that  mere 
delay  in  calling  for  the  debt  does  not  discharge  the  surety  ;  (r) 
nor  even  a  promise  of  delay,  if  it  be  not  so  far  binding  as  to 
estop  the  creditor  from  a  suit  against  the  new  firm,  (s)  But,  if 
it  would  have  this  effect,  then  it  injures  the  guarantor,  because 
he  can  no  longer  secure  himself  by  paying  the  debt  and  suing 
for  it  in  the  name  of  the  creditor ;  and,  therefore,  by  such 
indulgence  he  is  discharged.  (^) 

If  the  creditor  takes  new  security,  retaining  the  old,  without 
any  specific  arrangement,  it  might  be  thought  that  such  a  trans- 
action implied  precisely  the  change  above  spoken  of;  that  is,  an 
acceptance  of  the  new  firm,  who  give  this  security,  as  principal 
debtors,  and  of  the  former  partner  as  their  surety.     It  seems 

(/?)  Bedford  w.  Deakin,  2  B.  &  Aid.  Townsend   v.    Riddle,   2  N.   H.   448; 

210;    Hart  v.  Alexander,  2  M.    &  W.  Strong  v.  Foster,  17  C.  B.  201;  Hunt 

484 ;  Harris  v.  Farwell,  15  Beav.  31,  3  v.  Bridgham,  2  Pick.  581.     See  also  2 

Eng.  L.  &  Eq.  70;  Yarnell  v.  Ander-  Pars,  on  Cont.  (5th  ed.)  26,  note  (/) 

son,  14  Mo.  619.     See  also  Sheehy  v.  and  cases  cited. 

Mandeville,  6  Cranch,  264;  Stephens  (s)  In  such  a  ease,  the  agreement  is  of 

V.  Thompson,  28  Vt.  77  ;  Isler  f.  Baker,  no  effect.     Reynolds  i;.  Ward,  5  AVend. 

6  Humph.  85.  501 ;  Hogaboom  v.  Herrick,  4  Vt.  131 ; 

iq)  Arnold  v.  Camp,  12  Johns.  409.  Creath  v.  Sims,  5  How.  192. 

(r)  That  mere  delay  to  sue  a  princi-  (0  Oakelley  v.  Pasheller,  4  Clark  & 

pal   does  not  discharge  a  surety,  see  Fin.  207,  10  Bligh,  n.  s.  548. 
Freeman's  Bank  v.  Rollins,  13  Me.  202  ; 


CH.  XIII.]  OF   A   CHANGE   IN   THE   PARTNERSHIP.  461 

rather  to  be  regarded,  however,  as  not  affecting  tlie  lia- 
bility of  the  *  retiring  partner  at  all.     And  the  creditor    *425 
in  such  case  retains  the  liability  of  the  retiring  partner, 
although  tiiat  partner  did  not  himself  know  that  the  old  secu- 
rities were  retained.  (?^) 

Generally,  if  a  person  having  a  demand  against  a  firm  gives 
up  the  evidence  of  it  to  one  of  the  partners,  that  he  may  collect 
it  from  the  others,  and  thus  enables  him  to  represent  to  the 
others  that  he  has  paid  the  debt,  and  they  settled  with  him  on 
this  basis,  we  should  not  consider  the  partners  so  settling  as 
liable  to  the  creditor ;  but  if  the  partner  merely  says  to  them 
that  he  has  the  evidence  of  the  debt,  and  does  not  produce  it, 
and  they  settle  with  liim  as  above,  they  do  it  at  their  own 
risk,  (y) 

It  is  quite  clear,  that  if  the  creditor,  when  he  receives  the 
new  securities,  expressly  reserves  all  his  rights  against  the  old 
firm  or  retiring  partner,  he  retains  them  unimpaired,  (^t')  And 
the  question  always  exists,  where  there  is  neither  express 
reservation  nor  express  release,  whether  the  whole  trans- 
action, illustrated  by  such  circumstances  as  indicate  the  in- 
tention of  the  parties,  falls  within  one  or  other  of  the  principles 
above  stated. 

Frequently,  the  new  firm  goes  on  in  its  regular  business,  the 
accounts  of  the  customers  are  transferred  from  the  old  to  the 
new,  and  the  customers,  knowing  the  retirement  and  change  of 
parties  and  transfer  of  accounts,  say  nothing,  but  continue  their 
dealings  with  the  new  firm ;  perhaps  depositing  and  drawing,  or 
buying  and  selling,  or  receiving  interest  and  settling  accounts, 
all  just  as  before,  taking  no  particular  notice  of  the  change. 
The  question  then  occurs.  What  is  the  legal  significance  and 
effect  of  such  conduct  ?  and  it  seems  to  be  well  settled  that 
the  mere  receiving  of  interest  from  the  new  firm  will  not  dis- 
charge the  old ;  (x)  and  although   the   transferring  the   old 

(u)  See  Harris  v.  Linrlsay,  4  Wash.  14  Mo.  619;  Smith  v.  Rogers,  17  Johns. 

C.    C.   271,  and   cases   cited   in   note  340. 
(v),  infra.  (.r)  In  Gough  v.  Davies,  4  Price,  200, 

{v)  Featherstone  v.  Hunt,  1  B.  &  C.  it   was  held   that  a  person  depositing 

1130.  money    with   his  bankers,   and  taking 

(w)  Bedford  v.  Deakin,  2  Stark.  178,  their  accountable  receipts,  does  not,  by 

2  B.  &  Aid.  210 ;  Yarnell  v.  Anderson,  continuing  to  leave  his  money  in  the 


462 


THE   LAW   OF    PARTNERSHIP. 


[CH.  xiir. 


*  426  account  to  the  *  new  firm  is  not  necessarily  an  adoption 
by  the  creditor  of  the  new  firm  as  his  sole  debtors,  (y) 
yet  this  fact,  together  with  the  other  circumstances  of  the  case, 
may  be  evidence  from  which  a  jury  would  be  authorized  to  find 
that  the  creditor  liad  impliedly  assented  to  the  discharge  of  the 
old  firm,  (z)  An  eminent  English  judge,  speaking  of  a  case  in 
whicli  the  retiring  partner  was  held,  says :  "  The  court  was 
substituted  for  a  ;jury  in  that  case  ;  and  I  very  much  doubt 
whether  twelve  merchants  would  have  determined  it  as  the 
court  did."  (a)  And  he  appears  to  think  that  what  the  mer- 
chants would  do,  that  the  court  should  do. 

In  respect  to  the  burden  of  proof,  it  has  been  held,  that  when 
the  liability  at  a  given  time  of  all  the  partners  is  proved,  the 
burden  is  on  those  of  them  who  seek  to  escape  continued  liabil- 
ity, to  show  a  cessation,  (b') 

In  a  few  cases,  the  question  has  arisen,  as  to  the  continued 
liability  of  a  retiring  partner  for  money  applied  to  partner- 
ship uses  with  the  knowledge  of  the  partners,  by  one  of  the 


bank  after  tlie  dissolution  of  the  origi- 
nal firm  and  the  constitution  of  a  new 
one,  which  consists  of  some  members  of 
the  old  bank  and  of  other  persons,  dis- 
charge the  partners  who  have  retired, 
although  he  receives  interest  regularly 
from  the  new  firm,  gives  them  no  no- 
tice, and  continues  to  transact  business 
■with  them  for  four  years  and  until  tiieir 
insolvency.  In  Harris  v.  Farwell,  15 
Beav.  31,  15  Eng.  L.  &  Eq.  70,  a  cus- 
tomer of  a  banking  firm  had  deposited 
money  in  it  on  interest.  On  tlie  death 
of  one  of  the  firm,  the  business  was 
carried  on  by  the  survivors  and  a  new 
member.  A.  received  interest  from 
tiie  new  firm  imtil  their  bankruptcy, 
and  then  made  an  affidavit  that  the 
new  firm  was  indebted  to  him  for 
money  had  and  received  by  them  to 
his  use.  Ilifid,  that  the  fact  that  inter- 
est was  paid  was  not  conclusive,  be- 
cause it  might  have  been  paid  by  them 
as  agents,  and  that  the  affidavit  could 
not  be  construed  as  an  agreement  to 
discharge  the  old  firm.  See  also  Dan- 
iel V.  Cross,  3  Ves.  277  ;  Devaynes  v. 
Noble,  1  Meriv.  52!),  566  ;  Blew  v. 
Wyatt,  5  Car.  &  P.  397. 


(y)  See  Ex  parte  Appleby,  2  Deacon, 
482 ;  Kirwan  v.  Kirwan,  2  Cromp.  &  M. 
617. 

{z)  See  Thompson  v.  Percival,  5  B. 
&  Ad.  925;  Hart  v.  Alexander,  2  M.  & 
VV.  483;  Brown  v.  Gordon,  16  Beav. 
302,  15  Eng.  L.  &  Eq.  310.  In  Benson 
V.  Hadfield,  4  Hare,  32,  there  is  a  dictum, 
tliat  wliere  a  partner  retires  from  a 
firm,  and  a  customer  has  notice  of  his 
retirement,  and  afterwards  continues 
his  dealing  with  the  new  firm,  without 
making  any  claim  on  the  retired  part- 
ner, a  jury  may,  from  the  circum- 
stances, presume  that  the  customer 
agreed  to  discharge  the  retired  partner, 
and  to  accept  the  new  firm  as  debtors, 
instead  of  the  old  one.  In  deciding 
whether  such  an  agreement  ought  to 
be  presumed,  the  nature  of  the  dealings 
subsequently  to  the  retirement,  the  form 
of  the  accounts  rendered,  the  time 
elapsing,  and  other  circumstances,  are 
most  material. 

(a)  Hart  v.  Alexander,  2  M.  &  W. 
493. 

(h)  Kirwan  v.  Kirwan,  2  Cromp.  & 
M.  617. 


CH.  XIII.]  OF   A    CHANGE   IN   THE    PARTNERSHIP.  463 

partners  who  had  the  money  in  his  possession  as  trust-money. 
We  cannot  doubt  wliat  the  law  should  be  in  such  cases.  In 
the  first  place,  this  is  to  all  intents  a  borrowing  of  money  by  the 
firm.  It  may  be  said,  it  is  a  borrowing  from  one  of  the  part- 
ners, and  if  he  agrees  with  another,  who  retires,  never  to  call 
upon  him  for  the  debt,  there  is  an  end  of  it.  But  it  is 
plain  that  the  borrowing*  is  not — at  least  in  equity,  *427 
and  we  think  that  courts  of  law  would  adjudicate  such  a 
question  on  principles  of  equity  —  a  borrowing  from  the  part- 
ner who  is  trustee,  but  from  the  cestui  que  trust,  or  from  the 
trust-fund.  It  is  scarcely  possible  that  such  use  of  trust- 
money  is  legal  and  proper  as  against  the  cestui  que  trust,  with- 
out his  express  consent.  Nothing  is  gained,  therefore,  by 
showing  that  the  legal  estate,  and  all  legal  rights,  are  in  the 
lending  partner;  for,  if  he  exercises  these  rights  in  an  illegal 
way,  they  who  are  participant  of  the  wrong  cannot  be  permitted 
to  profit  by  it.  We  say,  therefore,  that  a  retiring  partner 
should  be  held  for  such  a  debt,  unless  he  show,  expressly  or 
by  sufficient  implication,  a  receipt  or  release  from  the  parties 
who  are  actually  interested  in  the  trust-fund,  and  are  competent 
to  give  such  release,  and  who  give  it  for  some  legal  considera- 
tion, {c)  But  if  a  partner  holding  the  money  of  a  stranger,  as 
his  agent,  puts  that  money  into  the  firm,  this  does  not  make 
the  stranger  a  partner,  (cc) 

4.    When  the  Retiring  Partner  is  discharged  hy  Appropriation 

of  Payment. 

The  general  principles  which  are  applicable  to  this  subject 
are  these :  If  money  is  paid,  the  paying  debtor  may  appropri- 
ate it  as  he  will ;  if  he  does  not,  the  creditor  may  ;  if  neither 
do,  the  law  will  appropriate  it  in  such  way  as  will  do  justice  to 
all  parties.  (cZ)     Of  these  three  rules,  the  first  is  clear  and 

(c)  Dickenson  j».  Lockyer,  4  Ves.  36 ;  Alexandria  v.  Patten,  4  Cranch,  317; 
Smith  V.  Jameson,  5  T.  K.  601.  Cremer  v.  Higginson,  1  Mason,  338 ; 

(cc)  Harper  y.Lampsing,  33  Cal.  650.  Franklin    Bank    v.    Hooper,   36    Me. 

(d)  Simson  v.  Ingliam,  2  B.  &  C.  222;  Hamilton  v.  Benbury,  2  Hayw. 
65;  Jones  v.  Maund,  3  Younge  &  C.  385;  Hargroves  v.  Cooke,  15  Ga.  221; 
Exch.  347 ;  Brazier  v.  Bryant,  2  Dowl.  Pennypacker  r.  Umherger,  22  Penn. 
P.  C.  477;  Cliitty  v.  Naish,  id.  511;  St.  4!)2;  Sneed  v.  Wiester,  2  A.  K. 
Peters    v.   Anderson,   5   Taunt.   61>6  ;  Marsh.  277. 


464  THE   LAW    OF   PARTNERSHIP.  [CH.  XIII. 

unqualified :  no  doubt  exists  that  one  who  owes  many  debts 
may  insist  that  his  payment  shall  dis<jliarge  which  of  them  he 

will ;  and,  if  he  points  it  out,  the  acceptance  of  the  money 
*  428    discharges  that  debt,  (e)     The  second  may  *  not  be  so 

certain.  Some  authorities  have  inclined  to  require  of 
the  creditor  an  appropriation  at  the  time  of  payment,  saying 
that,  if  it  be  not  then  appropriated,  the  law  will  determine  any 
subsequent  appropriation.  This  is  the  rule  of  the  civil  law.  (/) 
But  we  consider  it  well  settled  that  this  is  not  the  rule  of  the 
common  law  ;  for  although  it  is  clear  that  a  creditor  cannot 
wait  until  the  time  of  the  trial  to  make  his  appropriation,  (^) 
or,  it  would  seem,  until  a  controversy  has  arisen,  (A)  yet  he  is 
not  obliged  to  make  the  appropriation  immediately,  but  may 
wait  a  reasonable  time,  (i)  The  reason  of  the  rule  would  be, 
perhaps,  as  well  satisfied  by  saying,  that  the  creditor  may 
make  his  election  and  appropriation  at  any  time  before  a 
change  of  circumstances  takes  place  which  would  vary  the 
rights  of  the  parties,  and  therefore  render  an  appropriation 
favorable  to  the  creditor  injurious  to  some  one  else,  {j)      The 

(e)  Whetlier  the  debtor  has  appro-  (/)  Tliat  tliis  is  the  rule  of  the  civil 
priated  the  payment  or  not,  is  a  ques-  law,  see  Dig.  lib.  46,  tit.  3,  §  1,  3.  See 
tion  of  intent  for  the  jury.  As  to  what  also  Clayton's  Case,  Devaynes  v.  Noble, 
circumstances  will  warrant  a  finding  1  Meriv.  572.  In  Hill  v.  Southerland, 
of  such  appropriation  by  tlie  debtor,  see  1  Wash.  (Va.)  133,  it  is  said,  tliat  it  is 
Tayloe  v.  Sandiford,  7  Wheat.  14  ;  incumbent  on  the  creditor  to  make  a 
Mitchell  V.  Dall,  2  Harris  &  G.  159,  4  recent  application  by  entries  in  his 
Gill  &.  J.  361  ;  Fowke  v.  Bowie,  4  books  or  papers,  and  not  to  keep  par- 
Harris  &  J.  666 ;  Robert  i'.  Garnie,  3  ties  and  securities  in  suspense,  chang- 
Caines,  14  ;  West  Branch  Bank  v.  ing  their  situation  from  time  to  time, 
Moorehead,  5  Watts  &  S.  542;  Scott  as  his  interest  governed  by  events 
V.  Fisher,  4  T.  B.  Mon.  387 ;  Stone  v.  might  dictate. 

Seymour,    15    Wend.    19;    Newraarch  (r/)  United  States  v.  Kirkpatrick,  9 

V.  Clay,  14  P^ast,  239;  Shaw  v.  Ficton,  Wlieat.  737. 

4  B.  «&  C.  715.     If  the  debtor  pay  with  (/()  See   dicta   in   United    States   v. 

one  intent  and  the  creditor  receive  with  Kirkpatrick,  9  Wheat.  737,  per  Story, 

another,  the  intent  of  the  debtor  shall  J. ;  Fairchild  r.  Holly,  10  Conn.  184, 

govern.     Keed  i-.  Boardman,  20  Pick,  per  Williams,  J. 

441.     It  is  not  necessary  for  the  debtor  (/)  See  Fairchild  v.  Holly,  10  Conn, 

who   pays  money  to  make   a   specific  184,  per   Williams,  J. ;    Alexandria  v, 

appropriation  of  it  at  the  time  of  the  Fatten,  4  Cranch,  317  ;  Simson  v.  Ing- 

payment :  it  is  sufficient,  if  it  can  be  ham,  2  B.  &  C.  65. 

collected    from    other    circumstances,  (j)    In    Alexandria    v.     Fatten,    4 

that  he  intended  at  the  time  of  pay-  Cranch,  317,  the   judge   in   the  court 

ment   to   appropriate    it  to  a   specific  below  ruled,  that  if  the  debtor  at  the 

purpose.     Shaw   v.  Ficton,  4  B.  &  C.  time  of  making  the  payment  did  not 

715;  Waters  v.  Tompkins,  2  Cromp.,  direct   to  which  account  it  should  be 

M.  &  K.  723.  applied,  then  the  creditor  might  imme- 


CH.  XIII.]  OP   A   CHANGE    IN   THE   PARTNERSHIP. 


465 


right  of  an  appropriation  by  the  creditor  is  not  conclusively 
exercised  by  entries  in  his  books,  if  tliese  are  not  com- 
municated to  the  other  party  ;  (/c)  *  but  the  entries  are    *  429 
decisive  of  the  question,  if  the  charges  are  made  by  the 
consent  of  all  tlie  parties.  (Z) 

AVe  apply  these  principles  to  the  case  of  a  retiring  partner, 
thus :  For  the  debts  existing  when  he  retires,  he  continues 
responsible  ;  for  new  ones,  created  after  his  retirement  (the 
requisite  notice  having  been  given),  he  is  not  responsible  ;  and 
when  the  remaining  partner,  or  the  new  firm,  pay  money  after 
his  retirement,  if  that  is  appropriated  to  the  old  debts,  it  re- 
lieves the  retiring  partner  ;  if  to  the  new  debts,  the  old  debts 
are  not  paid,  and  the  retiring  partner  remains  responsible. 

Now,  the  firm  which  pays  is  the  paying  debtor ;  and,  by  the 
first  rule  above  stated,  has  the  right  of  appropriating  its  pay- 
ment. Nor  is  there  any  limit  to  the  exercise  of  this  right, 
excepting  the  universal  limit,  that  it  must  not  be  exercised 
fraudulently.  If  the  new  firm  pay  money  which  is  a  part  of 
its  old  fund  or  of  the  profits  of  its  old  business,  and  which  the 

diately  make  the  application  ;  "  but 
such  application  must  have  been  recent, 
and  before  anj'  alteration  had  taken 
place  in  the  circumstances  of "  the 
debtor.  In  delivering  the  opinion  of 
the  court,  granting  a  new  trial,  ^Slar- 
shall,  C.  J.,  said :  "  No  principle  is 
recollected  which  obliges  the  creditor 
to  make  this  application  immediately 
...  In  declaring  that  the  election, 
which  they  supposed  to  devolve  on  the 
plaintiff,  if  the  application  of  the  money 
was  not  understood  at  the  time  by  the 
parties,  was  lost  if  not  immediately 
exercised,  the  court  erred."  No  notice 
appears  to  have  been  taken  of  the  other 
branch  of  the  ruling,  viz.,  that  the  ap- 
plication must  be  before  any  change 
of  circumstances,  wliich  certainly  ap- 
pears to  be  a  reasonable  rule. 

(k)  In  Simson  v.  Ingham,  2  B.  &  C. 
65,  tliere  were  transactions  between  a 
London  banking  company  and  a  coun- 
try firm.  On  the  death  of  one  of  the 
members  of  the  country  bank,  a  bal- 
ance was  due  the  London  bankers. 
During  the  month  following,  the  Lon- 
don banker  received  sums  in  payment 


more  than  sufficient  to  discharge  the 
balance  due;  but  during  the  same  time 
they  advanced  money  on  account  of 
the  country  bank,  to  an  equal  amount. 
At  first,  the  London  bankers  entered 
in  their  books  all  receipts  and  payments 
made  after  the  death  of  the  deceased 
partner  to  the  account  of  the  old  firm ; 
but  they  did  not  send  any  account  to 
the  country  bankers  until  two  months 
after  the  death  of  the  deceased  partner, 
and  then  they  sent  two  distinct  ac- 
counts, —  one  the  account  of  the  old 
firm  up  to  the  time  of  the  death  of  the 
partner  ;  and  the  other,  a  new  account, 
containing  all  payments  and  receipts 
subsequent  to  that  time.  The  court  held, 
that  the  entry  of  the  payments  to  the 
credit  of  the  old  account,  by  the  Lon- 
don bankers,  not  being  communicated 
to  the  coimtry  bank,  did  not  amount  to 
a  complete  appropriation  ;  and  that  the 
London  bankers  might  apply  the  pay- 
ments received  subsequently  to  the 
death  of  the  deceased  partner  to  the 
debt  of  the  new  firm.  See  also  Barker 
V.  Blake,  11  Mass.  16. 

(/)  Allcott  V.  Strong,  9  Cash.  323. 
30 


466  THE   LAW    OF    PARTNERSHIP.  [CH.  XIII. 

retiring  partner  had  a  riglit  to  liave  appropriated  to  tlie  old 
debts,  and  believed  was  so  appro[)riated,  any  appropriation  by 
the  new  firm  of  such  payment  to  the  new  debts  would  be  fraud- 
ulent, and  therefore  void  so  far  as  /the  new  firm  was  con- 
cerned. If  the  receiving  creditor  knew  nothing  of  the 
appropriation,  he  could  not,  on  learning  it  afterwards,  set  it 
up  against  the  retiring  partner ;  if  he  knew  it  and  the  accom- 
panying facts,  he  would  be  participant  in  the  fraud,  and  there- 
fore could  not  enforce  it ;  if  he  knew  the  appropriation,  but 
did  not  know  the  attendant  circumstances,  and  therefore  was 
personally  innocent,  the  question  would  be  more  difficult.  We 
should  say,  however,  that  the  retiring  partner  now  would  not 
be  bound  by  it.  It  would  be  somewhat  like  a  transfer 
*  430  of  his  property,  *  without  his  consent  or  authority, 
which  could  give  no  title  to  it  even  to  an  innocent 
holder.  Nor  could  the  holder  complain ;  because,  not  having 
himself  appropriated  the  money,  he  would  be  in  the  same  posi- 
tion as  if  the  firm  had  not.  (?») 

But  if  the  new  firm,  honestly,  and  for  adequate  business 
causes,  appropriated  the  payment  to  the  new  debts,  —  as,  for 
example,  because  they  had  bought  goods  on  a  very  short  credit 
of  an  old  customer  whose  earlier  claims  had  not  matured,  or 
in  any  such  cases,  —  the  appropriation  would  doubtless  bind  the 
retiring  partner. 

If  the  paying  firm  make  no  appropriation  at  all,  the  receiv- 
ing creditor  may  make  any  which  is  honest.  If,  in  expectation 
of  the  insolvency  of  the  new  firm,  he  discharged  their  debts, 
leaving  those  unpaid  on  which  he  could  hold  the  retiring  part- 
ner, it  might  well  be  doubted  whether  this  appropriation  was 
honest,  and  Uierefore  whether  it  was  valid.     So,  if  he  made  no 

(m)  Tliompson  v.  Brown,  Moody  &  T.   after   the   dissolution   must   go   in 

M.  40.     See  also  Fairchild  v.  Holly,  10  reduction   of   the  entire  account,  and 

Conn.  175;  Johnson  v.  Boone,  2  Har-  discharge  the  earliest  items;  and  that 

ring.  (Del.)  172  ;  Sneed  v.  Wiester,  2  A.  the  case  of  Thompson  v.  Brown,  supra, 

K.  Marsh.  277.  did  not  apply,  because  T.  was  liable  to 

In  Smith  v.  Wigley,  3  Moore  &  S.  the  plaintiff   for  the  entire   debt   due 

174,  W.  &  T.  were   partners,  and  in-  upon   both   accounts.     But  in   such  a 

debted  to  tlie  plaintiff.    They  dissolved  case  it  has  heen  held,  that  the  creditor 

the   partnership,   and   T.   became    in-  may  apply  the  payment  in  discharge 

debted  afterwards  on  his  separate  ac-  of  the  individual  debt,  and  not  to  the 

count.     It  was  held,  that  payments  by  debt  due  by  the  firm. 


CH.  XIII.]  OF    A    CHANGE   IN   THE    PARTNERSHIP.  467 

appropriation  until  he  had  learned  the  insolvency  of  the  new 
firm,  and  then  made  his  entries  so  as  to  hold  the  retiring  part- 
ner, this  would  not  be  valid,  {n}  But,  as  before,  an  appropria- 
tion made  by  him  of  una])propriated  payments,  made  in  a 
manner  and  at  a  time  not  indicative  of  wrongful  purpose,  would 
be  binding  on  all  parties.  It  scarcely  needs  to  be  said,  that  no 
party,  having  distinctly  made  an  appropriation,  would  be  per- 
mitted afterwards  to  change  it,  for  his  own  benefit  and  to  the 
injury  of  others,  (o) 

If  the  appropriation  became  matter  of  law,  the  leading  prin- 
ciple would  be,  to  do  justice  by  it  to  all  concerned,  and  the 
first  rule  for  carrying  this  into  effect  is,  to  appropriate  pay- 
ments in  order  of  time ;  that  is,  the  first  payment  would  be 
appropriated  to  the  oldest  debt,  the  next  to  the  next,  and  so 
on.  And  no  general  equities  between  the  parties  would 
be  suffered  to  disturb  this  order,  *  unless  they  were  very  *  431 
strong,  (i?)  But  the  court  would  respect  any  indication 
of  appropriation  arising  from  the  payments  themselves.  Thus, 
if,  when  purchases  were  made,  bills  were  given,  a  bill  for 
each  purchase,  each  identified  by  its  exact  amount,  or  by  the 
term  of  credit,  or  both,  the  payment  of  money  for  that  bill 
would  of  course  not  only  take  it  up,  but  would  pay  for  that 
purchase  ;  and  the  same  principle  would  require  that  if  no  bills 
were  given,  but  purchases  were  made  on  definite  credits,  pay- 
ments answering  exactly  in  time  and  amount  to  those  credits 
would  be  appropriated  to  them,  without  inquiring  whether  these 
were  earlier  or  later  debts.  Qq')  And,  generally,  any  payments 
of  which  the  appropriation  seemed  to  be  indicated  or  required 
by  business  arrangements  would  be  adopted  by  the  courts,  (r) 

(n)  See  cases  OHfe,  p.  *  428  and  notes,  first  applied  to  the   extinction  of   the 

(o)    This   principle   is    admitted   in  previous   balance,  where   the   receipts 

Simson  v.  Ingham,  2  B.  &  C.  65  ;  which  were  equal  to  the  payments.     Lysagt 

case  see,  mtte,  p.  *428,  note  (i).  v.  Walker,  5  Bligh,  n.  s.  1. 

{/>)  See  cases  in  the  two  following  (r)  See  Taylor  i-.  Kymer,  3  B.  &  Ad. 

notes.  320  ;    Stoveld    v.   Eade,  4    Bing.    154 ; 

(r/)  See  Taylor  y.  Kymer,  .3  B.  &  Ad.  Newmarch  v.  Clay,  14  East,  240.     In 

320.     Thus,  where  an  agent  wiio  had,  Wickham  v.  Wickham,  2  Kay  &  J.  478, 

in  a  previous  account,  charged  himself  J.  F.  &  Sons,  as  agents  of  the  plaintiffs, 

with  a  balance  due  from  him,  continued  supplied  goods  to  the  firm  of  S.  &  W. 

to  receive  money  for  his  principal  and  upon  the  footing  of  the  hitter  becon)ing 

to  pay  money  out,  it  was  lield,  that  his  debtors   to    the   plaintiff's.     They  also 

payments  were   not  necessarily  to  be  supplied    the    same    firm   with    other 


468 


THE   LAW    OF   PARTNERSHIP. 


[CH.  xiir. 


One  of  the  most  certain  indications  might  arise  from  asking 
to  whom  did  the  money  belong.  It  is  perfectly  obvions  that 
if  tlie  money  belongs  to  an  old  firm,  it  must  pay  the  debts  of 
that  firm  ;  if  to  the  new  firm,  it  must  pay  their  debts.    Indeed, 

this  is  saying  no  more  than  "  No  creditor  can  pay  the 
*  432    debt  of  one  person  with  *  the  money  of  another."  (s) 

If  a  person  has  an  account  with  a  banking  firm  which 
is  dissolved,  and  his  account  continues  as  before,  so  that  the 
transactions  before  and  after  the  dissolution  are  comprised  in 
one  account,  payments  made  by  the  new  firm  are  construed  to 
be  in  liquidation  of  the  earliest  items  on  the  joint  account,  and 
not  of  the  new  account  merely.  (^)     And  if,  upon  the  dissolu- 


goods  on  their  own  behalf,  and  made 
no  distinction  in  tlieir  accounts.  E.  F. 
was  a  partner  in  both  firms.  It  was 
hdd,  that  communications  made  by  the 
firm  of  J.  F.  &  Sons  to  tlie  jjiaiutiffs, 
admitting  a  large  debt  due  from  tlie  firm 
of  S.  &  W.,  and  undertaking  tliat  E. 
F.  would  use  his  influence  as  a  partner 
with  S.  &  W.  to  secure  its  reduction, 
upon  the  faith  of  which  communication 
the  plaintiffs  forebore  to  sue  S.  &  W., 
precluded  tlie  firm  from  treating  their 
debt  to  tlie  plaintiffs  as  one  wliich  had 
been  liquidated  by  the  appropriation 
of  the  payments  made  by  them  to  the 
firm  of  J.  F.  &  Sons,  in  order  of  date. 
In  Henniker  v.  Wigg,  4  Q.  B.  793, 
where  a  bond  was  given  to  secure 
payments  by  A.  to  B.  of  a  specified 
sum,  and  certain  payments  were  after- 
wards made  by  A.,  Lord  Denman,  C. 
J.,  after  stating  the  general  rule,  that, 
where  there  is  an  open  account,  the 
first  item  on  the  debit  side  is  discharged 
by  the  first  item  on  the  credit  side, 
said  :  "  But  it  is  equally  certain  that  a 
particular  mode  of  dealing,  and  more 
especiallj-  any  stipulation  between  the 
parties,  may  entirely  vary  the  case  ; 
and  this  would  be  the  effect  in  the 
present  instance,  if  it  should  appear 
that  this  bond  was  given  to  secure  the 
plaintiffs  against  advances  which  they 
might  from  time  to  time  make  to  the 
defendant." 

(s)  See  cases,  ante,  pp.  *429,  4.30, 
and  note  (/). 

(t)  Clayton's  Case,  Devaynes  v.  No- 


ble, 1  Meriv.572;  Pembertony.  Oakes, 
4  Russ.  168 ;  Simson  v.  Ingham,  2  B. 
&  C.  65,  per  Bayley,  J. ;  Simson  v. 
Cooke,  1  Bing.  4.52  ;  Williams  v.  Kawl- 
inson,  .3  id.  71  ;  Field  v.  Carr,  5  id.  13  j 
Bodenham  v.  Purchas,  2  B.  &  Aid.  .39; 
Smith  V.  Wigley,  3  Moore  &  S.  174 ; 
Livermore  v.  Hand,  6  Fost.  85  ;  Allcott 
V.  Strong,  9  Cush.  323 ;  Farnam  v. 
Boutelle,  13  Mete.  1-59.  See  also  Pen- 
nell  V.  Deffell,  4  De  Gex,  M.  &  G.  372 ; 
Beale  v.  Caddick,  2  Hurlst.  &  N.  326. 
And  this  rule  ajiplies  as  well  between 
partners  themselves  as  between  part- 
ners and  third  persons.  Toulmin  v. 
Copland,  3  Younge  &  C,  Exch.  625,  7 
Clark  &  Fin.  349.  In  Newmarcli  v. 
Clay,  14  East,  239,  there  were  three 
partners,  one  of  them  being  dormant 
and  unknown.  Goods  had  been  fur- 
nished to  them  by  the  plaintiff,  and 
bills  received  in  payment.  The  part- 
nership was  then  dissolved,  the  dormant 
partner  retiring.  Other  goods  were 
then  furnished,  and  the  bills  given  be- 
fore the  dissolution  of  the  partnership 
were  dishonored,  and  new  bills  given, 
which  were  more  than  sufficient  to 
cover  the  debts  of  the  old  partnership. 
Held,  that  the  delivering  up  the  old 
bills,  on  receipt  of  the  new,  was  evi- 
dence of  a  particular  appropriation  of 
the  new  bills  in  payment  and  discliarge 
of  the  old  debt,  of  which  the  dormant 
partner  might  avail  himself  in  an  ac- 
tion on  tlie  case  for  goods  sold  and 
delivered,  brought  against  him  jointly 
with  the  other  two  partners. 


CH.  XIII.]  OF   A    CHANGE   IN   THE   PARTNERSHIP. 


469 


tion,  the  old  account  is  struck,  and  the  balance  due  carried  to 
a  new  account,  and  debts  arc  afterwards  incurred  and  payments 
made  generally,  the  payments  are  first  applied  to  liquidate  the 
first  item,  —  the  balance  of  the  old  account,  {ii)  But,  if  a  new 
account  is  opened  with  the  new  firm,  the  creditor  may  apply  a 
general  payment  to  the  new  account,  (r)  And,  in  general,  the 
doctrine  of  appropriation,  and  the  right  of  election,  apply  only 
where  the  debts  or  accounts  are  distinct  in  themselves,  and  are 
so  regarded  and  treated  by  the  parties.  If  the  whole  may  be 
considered  as  one  continuous  account,  the  general  rule  is,  that 
the  payments  are  to  be  applied  to  the  earliest  items  of  the 
account,  (w) 

*  If  debtors  commit  a  breach  of  trust  in  respect  to  *  433 
certain  property,  and  afterwards  make  payment  generally 
on  account  to  their  creditor,  who  is  ignorant  of  the  breach  of 
trust,  these  payments  are  not  considered  as  payment  of  the 
trust  account,  although  it  is  earlier  in  date  than  the  other 
items,  (a;)     And  if  payments  are  made  on  an  open  account  for 


(«)  Sterndale  v.  Hankinson,  1  Sim. 
393 ;  Allcott  v.  Strong,  9  Cush.  323. 

(v)  Logan  v.  Mason,  6  Watts  &  S.  9. 
See  Simson  v.  Ingham,  2  B.  &  C  65, 
cited  sii/ird,  p.  *428,  note  (_/). 

{w)  Clayton's  Case,  Devaynes  v. 
Noble,  1  Meriv.  609.  See  also  Brooke 
V.  Enderby,  2  Brod.  &  B.  70 ;  Smith  v. 
Wigley,  3  Moore  &  S.  174;  United 
States  V.  Kirkpatriek,  9  Wheat.  720 ; 
Jones  I'.  United  States,  7  How.  681; 
Postmaster-General  v.  Furber,  4  Ma- 
son, 332  ;  United  States  v.  Wardwell, 
5  id.  82 ;  Gass  v.  Stimson,  3  Sumner, 
98;  Fairchild  v.  Holly,  10  Conn.  175; 
McKenzie  v.  Nevius,  22  Me.  138 ; 
United  States  i'.  Bradbur}*,  Daveis, 
14(3.  In  Bank  of  Scotland  v.  Christie, 
8  Clark  &  F.  214,  the  doctrine  of  Claj^- 
ton's  Case  was  applied  to  payments 
made  to  a  bank  by  surviving  partners, 
on  a  debt  due  from  the  firm  to  the 
bank.  But  payment  will  not  be  ap- 
plied to  the  earliest  items  in  an  ac- 
count, if  a  different  intention  is  clearly 
expressed  by  the  debtor,  or  by  both 
parties,  or  where  such  intention  can  be 


Kymer,  3  B.  &  Ad.  320 ;  Henniker  v. 
AVigg,  4  Q.  B.  792;  Capen  v.  Alden, 
5  Mete.  268 ;  Dulles  v.  De  Forest,  19 
Conn.  190 ;  Wilson  v.  Hirst,  1  Nev.  & 
M.  742;  Beall  ;;.  McCullough,  27  Md. 
645. 

(x)  Clayton's  Case,  Devaynes  v.  No- 
ble, 1  Meriv.  572.  This  case  decided 
two  points.  First,  that  above  stated  ; 
and,  second,  the  following :  Clayton 
deposited  exchequer  bills  with  a  firm 
of  bankers,  for  safe-keeping ;  and  di- 
rected them  to  take  in  exchange  for 
them,  at  their  maturity,  other  bills  to 
be  held  by  them  in  the  same  manner, 
and  to  apply  the  proceeds  to  their  own 
use.  There  was  also  a  general  bank- 
ing account  between  the  parties.  One 
of  the  partners  died,  and  the  firm  some 
time  afterwards  became  insolvent.  Be- 
tween the  death  and  the  bankruptcy, 
the  payments  made  to  Clayton  by  the 
survivors  exceeded  the  amount  of  the 
cash  balance  due  at  the  death,  and 
the  amount  of  the  bills.  But  their 
receipts  on  his  account,  during  this 
time,  exceeded  the  simi  paid  ;  and  the 


gathered  from   the  particular  circum-     balance  due  at  the  bankruptcy,  exclu- 
stauces   of  the   case.      See  Taylor  v.     sive  of  the  amount  of  the  exchequer 


470 


THE   LAW   OF   PARTNERSmP. 


[CH. 


XIII. 


advances,  and  some  of  these  grew  out  of  illegal  transactions, 
the  payjnents  are  to  be  appropriated  to  the  reduction  of  the 
legal,  and  not  the  illegal,  part  of  the  demands,  (y) 


SECTION  III. 


OF   AN    INCOMING    PARTNER. 


A  new  partner  is  of  course  liable  for  all  the  subsequent  debts 
of  the  firm,  in  the  same  manner  as  any  other  partner  ;  and  it 
is  equally  obvious  that  he  is  not  liable  for  the  old  debts,  unless 
he  assumes  them  for  consideration,  (z)  If,  however,  he  as- 
sumes them  at  all,  there  is  consideration  enough  in  his 
*  434    admission  into  *  the  firm's  business  to  bind  him  to  those 


bills,  exceeded  the  amount  of  the  bal- 
ance due  at  the  time  of  the  death. 
The  estate  of  tlie  deceased  partner  was 
held  liable  for  the  amount  of  the  ex- 
chequer bills. 

(y)  Ex  parte  Randleson,  2  Deac.  & 
Ch.  534. 

(z)  Thus,  in  Young  v.  Hunter,  4 
Taunt.  582,  and  in  Ketchum  v.  Dur- 
kee,  Hoff.  Ch.  538,  it  was  held,  tliat  the 
fact  that  the  new  partners  derived  a 
benefit  from  goods  sold  to  the  old  firm 
did  not  render  them  liable  for  the  price 
of  the  goods.  So,  if  the  goods  are 
ordered  before  and  delivered  after  he 
joins,  he  is  not  liable.  Whitehead  v. 
Barron,  2  Moody  &  R.  248.  See  also 
Beale  v.  Mouls,  10  Q.  B.  976  ;  Brem- 
ner  v.  Chamberlayne,  2  Car.  &  K.  560 ; 
Kerridge  v.  Hesse,  9  Car.  &  P.  200  ; 
Beech  v.  Eyre,  5  Man.  &  G.  415.  And 
a  member  of  a  provisional  committee 
is  not  liable  for  services  performed  for 
the  company  after  he  joins,  if  they  are 
performed  in  consequence  of  an  order 
given  previously  to  his  joining.  New- 
ton V.  Belcher,  12  Q.  B.  921.  And  if 
goods  are  sold  to  a  firm,  and  the  old 
firm  is  dissolved,  and  one  of  the  old 
partners  unites  with  a  new  one,  and 
forms  a  new  firm,  the  new  partner  is 
not  liable  on  a  note  given  for  the  goods 
by  the  old  partner  in  the  new  firm's 
name.     Poindexter  v.  Waddy,  6  Munf. 


118.  See  also  Shirreff  r.  VVilks,  1 
East,  48.  In  Hart  v.  Tonilinson,  2  Vt. 
101,  it  is  held,  that  a  new  partner  is  not 
liable  for  an  old  debt,  although  the 
firm  name  is  unchanged,  and  no  notice 
is  given  ;  and  that,  if  the  new  partner 
dies  pending  the  suit,  this  makes  no 
difference.  In  Dyke  r.  Brewer,  2  Car. 
&  K.  828,  a  person  agreed  with  A.  to 
furnish  him  with  bricks  whenever  he 
wanted  them,  at  a  certain  price  per 
thousand.  Some  time  afterwards,  B. 
became  a  partner  with  A.,  and  ordered 
bricks  from  time  to  time,  which  were 
used  for  a  partnership  purpose.  Held, 
that  each  order  was  a  new  contract ; 
and  that  B.  was  liable  as  partner  for 
all  the  bricks  received  after  he  became 
a  partner,  though  the  court  said,  that, 
if  the  contract  had  been  for  a  certain 
number  of  bricks  at  so  much  per  thou- 
sand, B.  would  not  have  been  liable. 
See  also  Helsby  v.  Mears,  5  B.  &  C. 
504.  But  see  Scott  v.  Beale,  6  Jur. 
N.  s.  559,  98  Eng.  Com.  L.  R.  878,  for 
a  case  the  soundness  of  which  seems 
very  questionable.  See  Sternburg  v. 
Callanan,  14  Iowa,  251,  confirmed  and 
adopted  in  Cadwallader  v.  Blair,  18 
Iowa,  420 ;  Hartley  i:  Kirlin,  45  Penn. 
49;  Thrall  r.  Seward,  37  Vt.  573; 
Updyke  v.  Doyle,  7  R.  I.  446 ;  Francis 
1-.  Smith,  1  Duvall,  121. 


CH.  XIII.]  OF   A    CHANGE   IN   THE    PARTNERSHIP.  471 

from  whom  the  consideration  comes.  As  to  others,  the 
question  is  more  difficult.  For  instance,  the  new  partner,  by 
his  contract  with  the  old  firm,  agrees  to  assume  all  the  old 
debts,  and  be  liable  for  them  like  the  other  partners ;  and  tliey 
agree  that  he  shall  be  jointly  interested  with  them  in  the  stock, 
the  business,  and  the  profits.  There  is  no  doubt  of  the  validity 
of  this  contract  as  between  the  partners  ;  and,  therefore,  if  they 
or  any  one  of  them  are  obliged  to  pay  any  of  the  old  debts, 
they  will  have  as  effectual  a  remedy  against  the  new  partner  as 
they  would  have  had  if  he  had  been  with  them  when  the  debts 
were  contracted.  It  is,  however,  another  question,  whether 
the  creditors  of  the  firm  can  hold  the  new  partner  merely  on 
his  contract  with  the  old  partners. 

It  is  said  that  where  a  partner  comes  in,  and  agrees  to  take 
all  the  stock  and  be  liable  for  all  the  debts,  it  is  a  novation  of 
the  debts,  and  therefore  the  new  partner  is  bound.  But  by 
the  law  of  novation  (which  is  perhaps  the  latest  law  borrowed 
from  the  civil  law)  the  new  debt  is  not  obligatory,  unless  the 
old  one  is  discharged  ;  and  the  old  one  cannot  be  discharged 
without  thetconsent  and  concurrence  of  the  creditor.  And  on 
this  ground  the  creditor  could  not  hold  the  new  partner 
merely  on  his  contract  *  with  the  old  ones.  If  it  be  *  435 
said  that  the  creditor's  assent  to  the  reception  of  addi- 
tional security  may  be  presumed,  it  must  be  replied,  that  this 
reception  of  new  security  may  also  imply  the  loss  of  the  old 
security  ;  for  it  may  be  and  often  is  the  case,  that  the  new 
partner  takes  the  place  of  an  old  and  retiring  partner.  A 
bargain  between  all  the  parties,  including  the  creditor,  that 
the  old  partner  should  be  released  and  the  new  one  taken, 
would  undoubtedly  be  valid.  But  the  assent  of  the  creditor  to 
such  an  arrangement  cannot  be  presumed,  (a)  on  the  ground 
that  it  is  necessarily  advantageous  to  him.  On  the  whole,  we 
should  say  that  the  law  of  contracts  and  the  law  of  partnership 
lead  to  the  conclusion,  that  the  new  partner  is  not  bound  to 
the  old  creditors,  unless  on  a  promise  to  them,  for  a  consid- 
eration ;  (6)  both  of  which  might  of  course  be  indirect,  and 
implied  by  circumstances. 

(a)  Catt  V.  Howard,  3  Stark.  5.  it  is  said,  that  "  where  new  partners 

(b)  In  Cooke's  Bankrupt  Laws,  538,     are  taken  into  a  trade,  and  it  is  agreed 


472 


THE   LAW    OF   PARTNERSHIP. 


[CH.  XIII. 


Whether  the  new  incoming  partner  has  thus  assumed  the 
old  debts,  is  sometimes  a  difficult  question  of  mixed  law  and 
fact.  It  certainly  may  be  implied  by  circumstances  ;  and  what 
circumstances  should,  in  any  one  case,  imply  it,  is  a  question 
pai-tly  for  the  court  and  partly  for  a  jury.  Paying  of  interest 
on  a  debt,  with  a  knowledge,  without  objection,  that  the  new 
firm  pays  the  interest,  would  warrant  a  jury  in  finding  such  an 
assumption  of  the  old  debt,  (c)     And  perhaps  any  single  fact 

of  like  kind  would  have  the  same  effect.  All  of  these 
*  436    things  are  evidence  for  a  jury,  or  *  matter  for  a  court 

to  infer  such  adoption.  For  it  must  be  obvious  that  a 
transfer  of  the  account  from  the  old  to  Ihe  new,  and  payments 
made  on  it,  through  a  long  course  of  time,  by  the  new  firm, 
with  the  knowledge  and  without  the  objection  of  the  new 
partner,  would  justify  a  belief  that  he  was  submitting  to  this 
actual  assumption  of  the  old  debts  because  it  was  for  his 
interest  or  a  part  of  his  bargain.  (</) 


that  tlie  stock  of,  and  debts  duetto,  the 
old  firm  should  become  the  capital  of 
the  new  partnership,  and  that  the  new 
firm  should  take  upon  tJiemselves  the 
payment  of  the  debts  of  the  old  firm, 
and  the  new  partnership  becomes 
bankrupt,  —  the  creditors  of  the  old 
firm  may  prove  as  joint  creditors  of  the 
new  ; "  citing  Ex  parte  Brigham  (1792)  ; 
Ex  parte  Clowes,  2  Brown,  C.  C.  595, 
&c.  This,  however,  is  not  now  the 
law  ;  for  it  is  well  settled  that,  if  there 
is  an  express  contract  between  the 
partners  tiiat  the  new  ones  shall  be 
responsible  for  the  debts  of  the  old 
firm,  the  creditors  cannot  sue  upon  the 
covenant,  because  they  are  not  parties 
to  it.  Ex  parte  Willlanis,  Buck,  13; 
Ex  parte  Freeman,  id.  471 ;  Ex  parte 
Fry,  1  Glyn  &  J.  96.  In  Ex  parte 
Sandham,  4  Deac.  &  Ch.  812,  it  is  said, 
that,  to  make  the  new  firm  liable  for 
the  debts  of  the  old,  the  new  partners 
must  adopt  the  old  debts,  and  the 
creditors  must  assent,  either  expressly 
or  impliedly.  See  also  Aj'rault  v. 
Chamberlain,  26  Barb.  88.  In  Ex 
parte  Williams,  Buck,  13,  it  is  said, 
that  very  little  would  be  required  to 
show  the  assent  of  the  creditors.     If  a 


debtor,  who  has  entered  into  a  partner- 
ship, proposes  to  a  creditor  to  transfer 
his  debt  to  the  firm,  and  the  creditor 
agrees,  he  cannot  prove  his  debt 
against  the  separate  estate  of  the 
debtor.  Ex  parte  Whitmore,  3  Deac. 
365.    See  Stewart  v.  Rogers,  19  Md.  98. 

(c)  Ex  parte  Jackson,  1  Ves.  Jr.  131. 
See  Kirwan  v.  Kirwan,  2  Cromp.  &  M. 
617.  [Payment  of  interest  by  an  unin- 
corporated banking  association,  on  a 
debt  existing  when  a  new  member 
comes  in,  will  not  of  itself  show  an 
assumption  of  such  debt  by  the  incom- 
ing partner.  Shamburg  v.  Buggies, 
Sup.  Ct.  Penn.  3  L.  &  Eq.  Beptr.  313. 
See  also  Babcock  v.  Stewart,  58  Penn. 
St.  179.] 

(d)  In  Ex  parte  Jackson,  1  Ves.  Jr. 
131,  Lord  Chancellor  Thurlow  said : 
"  If  one  man,  having  debts,  takes  an- 
other into  partnership  with  him,  a  very 
little  matter  respecting  tiiose  debts  will 
make  both  liable  "  In  Beale  v.  Mouls, 
10  Adol.  &  E.  976,  members  of  a  pro- 
visional committee  of  a  company  had 
entered  into  a  written  contract  for  cer- 
tain machinery.  M.  then  joined  the 
committee,  and  several  payments  were 
made  on  account  of  the  work,  and  al- 


CH.  XIII.]  OP   A    CHANGE   IN   THE    PARTNERSHIP.  473 

In  one  case,  where  the  new  and  old  partners  executed  a  deed, 
which  recited  terms  of  contract,  implying  an  assumption  of  the 
debt,  though  the  words  of  covenant  contained  no  such  agree- 
ment, it  was  held  that  the  new  partner  was  bound  l)y  the 
recital,  (g)  And,  in  general,  whatever  might  be  the  form  or 
technical  effect  of  the  contract,  if  in  substance  it  amounted  to 
an  agreement  by  the  incoming  partner  to  share  in  the  debts 
due  from  the  firm,  he  would  be  held  accordingly. 

A  difference  in  regard  to  a  new  partner,  who  is  to  be  an  un- 
known and  dormant  partner,  has  been  pressed,  perhaps,  too  far. 
There  is,  indeed,  no  difference  between  an  unknown  and  a 
known  partner,  excepting  that  the  known  partner  is  liable  on 
the  credit  he  gives,  as  well  as  on  his  interest,  and  the  unknown 
partner  on  his  interest  only.  If  a  dormant  partner  agrees  to 
assume  the  old  debts,  he  stands  in  much  the  same  position  as  a 
known  partner  who  agrees  with  his  partners  to  assume  them, 
but  makes  no  promise  to  the  creditors,  since  they  could  not 
have  contracted  the  debts  on  his  credit  before  he  came  in. 
And,  if  this  assumption  on  the  part  of  the  latter  binds  him  to 
the  creditors,  a  similar  assumption  on  the  part  of  a  dormant 
partner  should  bind  him.  (/) 

*  Where  the  bargain  between  the  partners  is,  that  the  *  437 
new-comer  shall  be  a  partner  as  of  a  preceding  day,  here 
it  is  held^  that  he  is  not  bound  to  the  creditor,  nor  a  party  to 
the  agreement,  for  a  debt  contracted  between  that  previous 
day  and  the  actual  making  of  tlie  contract,  (^^)  although  he 
is  bound  to  the  partners  for  his  share  of  the  debt,  if  they 
pay  it. 

An  infant  partner,  when  he  comes  of  age,  may,  as  we  have 
seen,  at  once  escape  from  all  the  obligations  of  the  firm,  under 
shelter  of  his  minority.     But,  if  he  remains  in  the  firm  after 

terations  suggested  and  adopted  with  quently,  no  subsequent  act,  by  a  person 

his  sanction;  and  he  also  took  an  active  vvlio  afterwards  became  a  member,  — 

part  in  superintending  tlie  work  and  not  even  an  aclinowledgment   of  iiis 

making   experiments    witli   it.      Held,  liability,  or  his  accepting  a  bill  of  ex- 

that  he  was  not  liable  on  the  contract,  change  drawn  on  the  firm  as  partners 

or  on  account  for  .goods  bargained  and  for  the  very  goods,  —  would  make  him 

sold.      And   in    Saville   v.    Robertson,  liable  in  an  action  for  goods  sold  and 

4  T.  R.  720,  it  was  hdd,  that,  if  no  part-  delivered. 

nership  existed  at  the  time  of  a  con-  (e)   Vere  v.  Asliby,  10  B.  &  C.  288. 

tract  made  by  one  who  was  afterwards  (f)  Vere  v.  Ashby,  10  B.  &  C.  288. 

a  member   of   a  firm  formed  subse-         {g)  Saltoun  v.  Houston,  1  Bing.  433. 

4 


474  THE   LAW   OF   PARTNERSHIP.  [CH.  XIII, 

full  age,  he  is  in  a  position,  in  respect  to  the  old  debts,  some- 
what analogous  to  that  of  an  incoming  partner,  who  assumes 
the  old  debts.  It  is  not  the  same  ;  because  he  does  not  adopt 
or  assume  the  debts  of  others,  but  only  confirms  or  leaves  valid 
those  debts  of  his  own  which  he  might  have  avoided.  We 
should  say,  that  this  continuance  in  the  firm,  and  in  the  busi- 
ness, after  full  age,  would  amount  to  such  confirmation  by 
presumption  of  law.  But  it  seems  to  be  a  presumption  which 
may  be  rebutted.  At  least,  there  is  no  very  obvious  reason 
why  the  partner  may  not,  when  he  comes  of  age,  distinctly 
repudiate  and  annul  all  obligation  or  liability  for  any  existing 
debts,  and  yet  go  on  with  the  firm  and  its  business,  and  so  be- 
come liable  for  its  future  debts.  But  the  general  principles  of 
the  law  of  infancy  would  not  permit  him  to  claim  his  share  of 
the  joint  funds  of  the  old  partnership,  and  forbid  an  applica- 
tion of  it  to  the  debts  of  the  partnership.  Personally,  he  may 
escape  all  liability  ;  but  when  he  comes  to  demand  his  share  of 
the  funds,  and  would  apply  a  principle  which  permits  him  to 
take  his  share  before  his  majority,  undiminished  by  payment 
of  debt,  and  his  share  afterwards  on  the  footing  of  another 
partner,  we  are  quite  sure  that  he  can  take  no  such  advantage 
from  his  minority,  and  must  lose  his  share  of  the  profits  if  he 
repudiates  his  liability.  (7i) 

If  a  person  or  a  firm  hold  on  lease  real  estate,  it  seems  that 
a  new  partner,  coming  in  after  the  lease,  will  not  be  holden  to 
the  landlord  for  the  rent.  But,  if  he  joins  with  the  old  part- 
ners in  a  promise  to  the  landlord  to  pay  an  increase  of  rent 
for  a  consideration,  he  will  be  bound  for  this  increase,  although 
the  promise  is  only  oral ;  but  such  collateral  promise  will  not 
bind  him  for  the  rent  originally  payable.  (0  Whether  the 
partnership  be  changed  by  a  former  partner  withdrawing,  or  a 
new  one  coming  in,  it  is  a  general  rule,  that  those  persons 
who  were  partners  when  the  contract  was  formed,  whether  it 
was  express  or  implied,  and  they  only,  can  sue  upon  the 
contract,  (u') 

(h)  See  a«;e,  p.  *  20,  note  (/.).  ('V)  Cunningham    v.    Munroe,     15 

(0  Hoby  V.  Eoebuck,  7  Taunt.  Gray,  471 ;  Tay  v.  Ladd,  id.  296.  But 
157.  see  Page  v.  Wolcott,  id.  536. 


CH.  XIII.]  OF   A    CHANGE   IN   THE    PARTNERSHIP. 


475 


SECTION  IV. 


OF    THE    DEATH    OF    A    PAUTNER. 


1.  Dissolution  by  Death. 


*  What  was  said  of  the  necessary  dissolution  of  a  part-  *  438 
nership,  when  any  change  is  made  in  it,  is  true  of  the 
change  caused  by  the  death  of  a  partner.  Dissolution  follows 
immediately  and  inevitably.  (7)  This  rule  has  been  distinctly 
declared  only  of  late  years  ;  for  it  was  in  1808,  or  about  that 
time,  that  Lord  Eldon  declared,  in  several  cases,  that  the  death 
of  any  one  in  any  number  of  partners  dissolves  the  partnership. 
And  even  then  that  chancellor  put  in  the  qualification,  as  we 
mentioned  in  a  former  section,  that  the  death  of  a  partner 
operates  a  dissolution  of  the  partnership,  unless  provision  is 
expressly  made  to  the  contrary.  (^') 

{j)  This  question  first  came  up  in 
Godfrey  v.  Browning,  7  March,  1742 
(cited  in  2  Yes.  Sen.  33),  where  it  was 
held,  that  one  copartner  could  not 
appoint  a  representative  to  carry  on 
the  trade  after  his  decease;  otlierwise, 
it  might  fall  to  the  lot  of  an  infant  or 
person  not  at  all  fit  to  carry  it  on.  In 
Pearce  v.  Chamberlain,  2  Ves.  Sen.  33, 
a  bill  was  brought  by  the  widow  and 
representative  of  Pearce,  against  the 
representatives  of  Plummer,  for  liberty 
to  carry  on  trade  with  the  defendants. 
Pearce,  the  plaintiff's  intestate,  who 
had  been  a  servant  and  brewer  for 
Plummer,  was  taken  into  partnership 
by  the  latter.  A  provision  was  made 
for  the  continuance  of  Pearce  in  the 
business  in  event  of  Plummer's  death. 
Plummer  and  Pearce  having  both  died, 
this  bill  was  brought.  The  court  Jidld, 
that  articles  of  partnership  do  not  sur- 
vive for  the  benefit  of  executors,  &c., 
without  an  express  provision  for  such 
purpose.  See  Crawshaj'  v.  Maule, 
1  Swanst.  509,  1  Wils.  Ch.  181 ;  Can- 
field  ?•.  Hard,  6  Conn.  184;  Knapp  v. 
McBride  &  Norman,  7  Ala.  28;  Wil- 
liamson V.  Wilson,  1  Bland,  425; 
Thornton  v.   Dixon,    3   Brown's    Ch. 


200;  Gillespie  v.  Hamilton,  3  Madd. 
251 ;  Crosbie  v.  Guion,  23  Beav.  518. 
Lord  Eldon,  in  Vulliamy  v.  Noble,  3 
Meriv.  614,  says  :  "  I  conceive  that  the 
death  of  a  partner,  of  itself,  works  a 
dissolution  of  the  partnership."  And 
see  Dyer  v.  Clark,  5  Mete.  575 ;  Wash- 
burn V.  Goodman,  17  Pick.  519;  Gris- 
wold  V.  Waddington,  15  Johns.  82; 
Jones  V.  McMichael,  12  Rich.  Law 
(S.  C),  176.  In  a  late  case,  Marlett 
V.  Jackman,  3  Allen,  290,  the  general 
propositions  in  the  text  are  supported. 
And  it  was  held,  that,  in  an  action  on  a 
promissory  note  given  in  the  name  of  a 
firm  b_v  a  surviving  partner,  the  other 
surviving  partners,  under  an  answer 
which  avers  that  the  firm  had  expired 
and  was  dissolved  before  the  note  was 
given,  may  prove  that  the  partnership 
had  been  dissolved  by  the  death  of  one 
of  its  members.  See  Bank  of  N.  Y.  v. 
Vanderhorst,  32  N.  Y.  553,  for  the 
effect  of  the  death  of  one  partner  on 
an  agent  of  the  firm. 

{k)  There  are  numerous  authorities 
which  hold  to  this  rule  ;  the  limitation 
or  proper  meaning  of  which  is  consid- 
ered in  the  text,  and  in  the  preceding 
note.      Scholefield  v.   Eichelberger,  7 


476  THE   LAW   OF   PARTNERSHIP.  [CH.  XIII. 

*  439  *  Wc  doubt  very  much  whether  this  qualification  be 
necessary  or  accurate.  For  we  do  not  believe  that  any 
provisions  made  beforehand,  in  reference  to  the  death  of  a  part- 
ner, or  any  agreements  or  arrangements  made  subsequently  to 
his  deatli,  can  prevent  this  dissolution.  We  have,  perhaps, 
sufficiently  indicated  our  reasons  for  this  view,  in  another  place. 
Here,  we  need  only  add,  that,  as  the  partner  who  has  died 
cannot  by  possibility  continue  a  member  of  the  firm,  so  any 
firm  of  which  he  is  not  a  member,  whether  it  contain  his  execu- 
tors or  his  children,  cannot  be  the  same  firm  as  that  of  which 
he  was  a  member.  (Z)  What  is  inaccurately  called  provision 
against  the  dissolution  of  the  partnership,  is  an  agreement  that, 
if  either  party  dies,  his  property  shall  remain  in  the  firm  and 
in  the  business,  or  that  his  executors  shall  carry  on  the  busi- 
ness, for  the  benefit  of  his  children  ;  or  that  his  children,  or 
some  one  of  them,  or  some  other  person,  shall,  immediately  on 
his  death,  take  his  place  in  the  firm,  and  become  partner  in 
his  stead.  All  these  agreements  and  arrangements,  and  all 
that  can  be  made  for  a  similar  purpose,  are,  in  fact,  only  bar- 
gains for  the  creation  of  a  new  partnership  when  the  old  one 
ceases  to  exist.  And  so,  too,  all  arrangements  or  contracts 
which  may  be  made  between  the  surviving  partners  and  the 
representatives  or  appointee  of  the  deceased  have  for  their 
effect  only  the  formation  of  a  new  partnership,  which,  upon 
some  terms  or  other,  takes  tlie  stock,  and  carries  on  the  busi- 

Pet.  586;  Burwell  i'.  Mandeville's  Ex-  lution  of  the  entire  partnership."  And 
ecutor,  2  How.  5G0;  Kershaw  v.  Mat-  Savage  v.  Putnam,  32  Barbour  (S.  C), 
thews,  2  Russ.  62 ;  Gratz  v.  Bayard,  425 :  "  Tlie  ordinary  effect  of  tlie 
11  Serg.  &  R.  41  ;  Warner  v.  Cunning-  death  of  one  of  tlie  members  of  a  part- 
ham,  3  Dow,  76  ;  Balniain  v.  Sliore,  nership  is  to  work  its  dissolution.  The 
9  Ves.  506.  [In  mining  copartnerships,  partnership  is  ended.  The  connection 
there  being  usually  no  delectus  persoiuv,  has  been  dissolved,  and  the  future  rela- 
dissolution  does  not  necessarily  super-  tions  of  the  surviving  parties  to  each 
vene  either  upon  the  death  of  a  part-  other  must  be  determined  by  some 
ner,  or  upon  one  partner's  selling  out  new  agreement  between  them,  or  by 
his  interest.  Taylor  ;;.  Castle,  42  Cal.  the  results  which  the  law  pronounces 
367.]  upon  their  acts  and  proceedings  when 
(/)  Marlett  y.  J.ackman,  3  Allen,  290,  no  new  agreement  is  in  fact  made." 
cited  in  note  (_;')  to  p.  *438.  And  see  See  also  Bank  of  Mobile  v.  Andrews, 
the  authorities  cited  in  preceding  note.  2  Sneed,  535;  Knowlton  v.  Reed,  38 
And  see  Humphries  v.  McCraw,  5  Ark.  Me.  246;  Laughlin  v.  Loreng's  Adm., 
65.  "  The  death  or  withdrawal  of  one  48  Penn.  275. 
member  of  the  firm  is  always  a  disso- 


CH.  XIII.]  OF   A    CHANGE    IN   THE   PARTNERSHIP. 


477 


ness  of  the  old  one.  And,  in  the  consideration  of  the  questions 
which  arise  under  such  provisions  and  arrangements,  we  siiall 
reach  more  accurate  conclusions  if  we  keep  this  principle  in 
mind. 


2.    Of  the  Poivers  and  Interests  of  the  Surviving  Partners. 

*  There  is  not  in  partnership  the  same  survivorship  *  440 
as  in  joint  tenancy  ;  but  there  is  a  survivorship  which 
is  peculiar  to  partnership.  The  death  of  a  partner  invests  the 
surviving  partners  with  the  exclusive  right  of  possession  and 
management  of  the  whole  partnership  property  and  business; 
but  only  for  the  purpose  of  selling  and  closing  the  same,  (m) 
It  is  not  uncommon  for  articles  of  copartnership  to  provide 
how  the  surviving  partner  or  partners  shall  conduct  or  close 
up  the  business  ;  and  these  provisions  must  be  regarded,  (jnni) 


(m)  Loeschigk  v.  Aildison,  19  Abb. 
Prac.  K.  169;  Crawsliay  v.  Maule,  1 
Swanst.  495;  Ex  parte  Williams,  11 
Ves.  5 ;  Peters  v.  Davis,  7  Mass.  256  ; 
Evans  v.  Evans,  9  Paige,  178;  Dyer  v. 
Clark,  5  Meto.  562;  Gleason  v.  White, 
34  Cal.  258;  Miller  v.  Jones,  39  111.  54; 
Remick  v.  Emiz,  41  111.  343;  in  this 
case,  rules  for  the  settlement  of  the 
partnership  funds  and  accounts  are 
given  ;  Loeschigk  v.  Hatfield,  5  Robt. 
26 ;  Crawshay  v.  Collins,  15  Ves.  226. 
In  this  last  case.  Lord  Eldon  says : 
"  There  may  be  a  partnership  where, 
whether  the  parties  have  agreed  for 
tiie  determination  of  it  at  a  particular 
period  or  not,  engagements  must,  from 
the  nature  of  it,  be  contracted,  which 
cannot  be  fulfilled  during  the  existence 
of  the  partnersliip ;  and  the  conse- 
quence is,  that,  for  the  purpose  of 
nuiking  good  those  engagements  with 
third  persons,  it  must  continue ;  and 
then,  instead  of  being,  as  it  was,  a  gen- 
eral partnerslup,  it  is  a  general  part- 
nership determined  except  as  it  sub- 
sists for  tiie  purpose  only  of  winding 
up  the  concerns.  Another  mode  of 
determination  is,  not  by  effluxion  of 
time,  but  by  the  death  of  one  partner; 
in  which  case,  the  law  says  that  the 
property  survives  to  the  others.  It 
survives,  as  to  the  legal  title,  in  many 


cases;  but  not  as  to  the  beneficial  in- 
terest. The  question  then  is,  whether 
the  surviving  partners,  instead  of  set- 
tling the  account,  and  agreeing  with 
the  executor  as  to  tiie  terms  upon 
which  his  beneficial  interest  in  the 
stock  is  still  to  be  continued,  subject 
still  to  the  possible  loss,  can  take  the 
whole  property,  do  what  they  please, 
and  compel  the  executor  to  take  the 
calculated  value.  That  cannot  be 
without  a  contract  for  it  with  the  tes- 
tator. The  executor  has  a  right  to 
have  the  value  ascertained,  in  the  way 
in  which  it  is  best  ascertained,  by 
sale."  If  tliis  authority  of  a  partner, 
which  continues  after  a  dissolution,  for 
all  purposes  of  winding  up,  be  unduly 
exercised,  the  remedy  is  by  applying 
to  the  court  for  the  appointment  of  a 
receiver.  Butchart  v.  Dresser,  4  De 
Gex,  M.  &  G.  542.  See  Allen  v.  Hill, 
16  Cal.   113;    McKowen    v.   McGuire, 

15  La.  Ann.  637  ;  Roys  v.  Vilas,  18 
Wis.  169.     But  see  Skipworth  r.  Lea, 

16  La.  Ann.  247.  The  personal  note 
of  the  survivor,  for  tlie  firm's  debt,  is 
not  a  satisfaction  of  the  debt,  except 
by  special  agreement  of  the  parties. 
Leach  v.  Church,  15  Ohio,  169. 

{nun)  Suydam   v.  Owen,   14   Gray, 
195. 


478  THE   LAW   OF   PARTNERSHIP.  [CH.  XIII. 

If  a  partner  absconds,  his  copartner  may  take  exclusive  pos- 
session of  the  property  of  tlie  firm,  for  the  benefit  of  the  firm  ; 
and  it  has  been  held,  that  the  appointment  of  a  receiver  to  take 
charge  of  the  property  of  the  absconding  partner  does  not 
divest  the  partner  remaining  of  his  riglit  to  the  partnership 
property,  (mmm)  The  survivors  and  the  representatives  of 
the  deceased  are  said  to  become  tenants  in  common  of  the 
partnership  property,  and  they  are  so,  in  fact :  and  survivors 
are  tenants  in  common  as  to  each  other  ;  for  they  are  not 
partners  together  after  the  death  of  any  one  partner,  unless 
they  become  so  by  the  creation  of  a  new  firm.  But  this  they 
may  make  by  words,  or  silently  by  their  acts  and  understand- 
ing ;  for  they  may  go  on  in  their  business  without  a  word  to 
the  public  or  to  each  other,  in  such  a  way  as  to  indicate  clearly 

that  they  are  partners.  But,  as  to  the  survivors  of  the 
*  441    old  firm,  they  are  only  tenants  in  common  *  with  each 

other,  and  with  the  representatives  of  the  deceased,  until 
this  new  firm  is  created.  Sometimes  the  deceased  partner,  by 
his  will,  gives  to  his  surviving  partner  power  to  carry  on  the 
business  for  a  certain  time,  retaining  the  interest  of  the  de- 
ceased in  the  funds  of  the  partnership.  In  this  case,  the  sur- 
viving partner  may  do  so,  complying  with  the  conditions  and 
directions  of  the  will ;  but  with  no  right  generally  to  charge  a 
compensation  for  his  services,  unless  tliere  was  some  agree- 
ment with  the  deceased  partner,  or  some  direction  in  his  will, 
to  that  effect,  (nyi)  It  has,  however,  been  held  that  equity  may 
make  some  allowance  to  a  surviving  partner.  (>iwi) 

A  distinction  has  been  taken  of  this  sort :  It  is  said,  that  the 
representatives  of  the  deceased  are  tenants,  in  common  with 
the  survivors,  as  to  all  things  in  possession,  but  not  as  to 
choses  in  action  ;  for  these  the  survivors  alone  have  the  power 
and  duty  to  hold,  and  collect  the  proceeds,  and  apply  them  to 
the  debts  of  tlie  firm,  and  are  trustees  for  all  concerned  in  the 
balance,  (nnn)  We  apprehend,  however,  that  this  distinction 
is  not  necessary,  even  if  it  be  maintainable,  (o)     The  tenancy 

(mnm)  Hamraill  v.  Hammil,  27  Md.  {mm)  Story  on  Part.  §  346. 

679.  (o)  A  surviving  partner  has  a  right 

(nn)  Tillotson  v.  Tillotson,  34  Conn,  to  collect  all  debts  due  to  the  firm,  and 

S35.  to  sell  the  property.     Hi«  responsibil- 

{nm)  See  pos<,  p.  * 443.  ity  to   the  representatives  of  the  de- 


CH.  XIII.]  OF    A    CHANGE   IN   THE   PARTNERSHIP. 


479 


in  common  exists  as  to  all  the  effects  of  the  partnership,  only 
as  to  the  property/,  and  not  as  to  the  possession.  The  survivors 
have  possession  and  keep  possession  of  every  thing.  Until  a 
settlement,  the  representatives  of  the  deceased  cannot  claim  or 
take  any  one  chattel,  or  any  portion  of  the  merchandise,  (p) 
The  survivors  are,  from  the  death,  trustees  for  all  concerned 
in  the  partnership  ;  for  the  representatives  of  the  deceased,  for 
the  creditors  of  the  firm,  and  for  themselves.  (^)  Their 
trust  is  to  wind  up  the  concern  in  the*  best  manner  *442 
for  all  interested,  and,  therefore,  without  unnecessary 
delay  ;  and  their  powers  are  such  as  enable  them  most  effectu- 
ally to  execute  that  trust.  Nor  do  we  know  any  difference,  in 
this  respect,  as  to  the  choses  in  possession  and  those  in  action. 
After  a  final  settlement,  questions  may  arise  as  to  the  disposi- 


ceased  partner  exists  only  after  tlie 
partnership  aflfairs  are  settled.  Having 
the  right  to  collect  and  dispose  of  the 
property,  he  has  the  power,  for  that 
purpose,  of  assigning  any  chose  in 
action  belonging  to  the  estate.  Pinck- 
ney  v.  Wallace,  1  Abb.  Prac.  11.  82. 
And  see  Roys  v.  Vilas,  18  Wis.  169. 

(/>)  Real  estate,  purchased  by  part- 
ners, for  the  partnership  business  and 
with  the  partnership  funds,  though 
conveyed  to  them  by  such  a  deed  as, 
in  case  of  other  parties,  would  make 
them  tenants  in  common,  is  considered, 
in  equity,  as  part  of  the  partnership 
stock ;  and  is  to  be  applied,  if  neces- 
sary, towards  payment  of  the  partner- 
ship debts.  Though  such  estate  is 
considered  at  law  as  the  several  prop- 
erty of  the  partners,  yet  it  is  held 
subject  to  a  trust  arising  by  implica- 
tion of  law,  by  which  it  is  liable  to  be 
sold,  and  the  proceeds  brought  into  the 
partnership  fund,  so  far  as  is  necessary 
to  pay  tiie  debts  of  the  firm ;  and 
neither  tiie  widow  nor  the  heirs  of  a 
deceased  partner  can  claim  any  bene- 
ficial interest  in  such  estate,  until  the 
claims  of  the  creditors  of  the  firm  are 
first  satisfied.  Burnside  v.  Merrick, 
4  Mete.  537.  And  upon  the  dissolu- 
tion of  tlie  partnersiiip,  by  the  death 
of  one  of  the  partners,  tiie  survivor  has 
au  equitable  lieu  on  such  real  estate 


for  his  indemnity  against  the  debts  of 
the  firm,  and  for  securing  the  balance 
that  may  be  due  to  liim  from  the 
deceased  partner  on  settlement  of  the 
partnership  accounts  between  them ; 
and  the  widow  and  heirs  of  such  de- 
ceased partner  have  no  beneficial  inter- 
est in  such  real  estate,  nor  in  the  rent 
received  therefrom  after  his  death, 
until  the  surviving  partner  is  so  indem- 
nified. Dyer  v.  Clark,  5  Mete.  562. 
See  ante,  ch.  11,  §  4. 

(7)  Case  V.  Abeel,  1  Paige,  393; 
Lake  v.  Gibson,  1  Eq.  Ca.  Ab.  290, 
affirmed  in  3  P.  Wms.  158  ;  Jefferys  v. 
Small,  1  Vern.  217;  Elliot  v.  Brown, 
cited  in  Jackson  v.  Jackson,  9  Ves. 
597  ;  Lyster  v.  Dolland,  1  Ves.  Jr.  434, 
435,  per  Lord  Thurlow  ;  York  v.  Eaton, 
2  Freem.  23  ;  Booth  v.  Parks,  1  Molloy, 
465;  Sigourney  v.  Munn,  7  Conn.  11. 
And  see  Egberts  v.  Wood,  3  Paige, 
517 ;  Ketchum  v.  Durkee,  1  Barb.  Cii. 
480  ;  Whiteright  v.  Stimpson,  2  Barb. 
(S.  C.)  379  ;  Innes  v.  Lansing,  1  Paige, 
583;  Campbell  v.  Mullet,  2  Swanst. 
574;  West  v.  Skip,  1  Ves.  237,  445; 
Ex  parte  RuflSn,  6  Ves.  126, 128;  Wood 
V.  Dummer,  3  Mason,  312 ;  Murry  v. 
Murry,  5  Johns.  Ch.  60;  Taylor  v. 
Fields,  4  Ves.  396 ;  Young  v.  Keighley, 
15  Ves.  557.  And  see  Marlett  v. 
Jackman,  3  Allen,  287. 


480  THE   LAW   OF   PARTNERSHIP.  [CH.  XIII. 

tion  of  the  resulting  property,  —  as  whether  it  shall  he  divided 
or  sold,  or  taken  hy  one  or  another,  and  on  what  terms  :  and 
these  questions  we  shall,  in  another  chapter,  consider  ;  saying 
now,  only,  that  we  perceive  no  difference  in  principle  between 
the  two  kinds  of  property. 

The  surviving  partners  are  held  strictly  as  trustees ;  and 
their  conduct,  in  discharging  their  trust,  is  carefully  looked 
after  by  courts  of  equity.  (?•)  Thus,  like  other  trustees,  they 
cannot  sell  the  property  of  the  firm  and  buy  it  themselves  ;  nor, 
as  the  converse  of  this,  can  they  buy  from  themselves  property 
for  the  firm.  (&)  Their  trust  being  to  wind  up  the  concern, 
their  powers  are  commensurate  with  the  trust.  Hence,  they 
may  collect,  compromise,  or  otherwise  arrange  all  tlie  debts  of 
the  firm  ;  and  their  receipts,  payments,  and  doings  generally, 
in  this  behalf,  are  valid,  if  honest,  and  within  the  fair  scope 
and  purpose'  of  the  trust.  And  if  there  be  negligence,  delay, 
misconduct,  or  gross  mistake,  equity  will  interfere,  and  give 

the  proper  relief. 
*  443        *  It  is  said  tliat  the  surviving  partners  are  trustees,  in 

part,  for  themselves.  But  while,  as  trustees,  they  have 
all  power  and  possession,  they  stand  as  cestui  que  trusts  on  the 
same  footing  as  the  others  ;  or,  rather,  must  postpone  them- 
selves to  the  creditors  of  the  firm  ;  and  only  as  to  wliat  is  left 
after  the  creditors  are  paid  do  they  come  in  on  equal  terms 
with  the  representatives  of  the  deceased,  and  with  each  other. 

(r)  Phillips  V.  Ackerson,  2  Bro.  Ch.  (s)  But  equity  will  not  interfere 
272;  Hartz  v.  Schrader,  8  Ves.  317;  and  deprive  the  surviving  partner  of 
Estwick  V.  Conningsby,  1  Vern.  118;  the  riglit  of  closing  up  the  concern, 
Burden  v.  Burden,  1  Ves.  &  B.  170  ;  b}'  appointing  a  receiver,  if  he  is  re- 
Ames  V.  Downing,  1  Bradf.  321 ;  Wash-  sponsible  and  acts  in  good  faith.  So 
burn  V.  Goodman,  17  Pick.  519;  Case  held  where  tlie  survivor  resided  in 
V.  Abeel,  1  Paige,  398,  per  Wahvortli,  England,  hut  was  engaged  in  closing 
Chancellor:  "The  surviving  partner  up  the  affairs  of  the  firm,  by  a  corn- 
has  the  legal  right  to  the  partnership  petent  agent,  with  all  reasonable  dili- 
effects  ;  but  in  equity  he  is  considered  gence.  Evans  v.  Evans,  9  Paige,  178; 
merely  as  a  trustee  to  pay  the  part-  Jacquin  v.  Buisson,  11  How.  Prac. 
nership  debts  and  dispose  of  tlie  effects  385.  Nor  in  closing  up  the  affairs  of 
of  the  concern  for  the  beilefit  of  him-  the  firm,  is  there  any  such  principle 
self  and  the  estate  of  his  deceased  in  equity,  that  surviving  partners 
partner.  He  cannot,  therefore,  be  per-  cannot  become  purchasers,  from  tiie 
milled  to  make  any  gain  or  profit  by  representatives,  of  the  share  of  de- 
the  use  of  the  partnership  funds  and  ceased  partner.  Chambers  v.  Howell, 
effects  for  his  own  exclusive  benefit."  11  Beav.  6,  12  Jur.  905. 
And  see  Ogden  v.  Astor,  4  Sandf.  311. 


CH.  XIII.]  OF    A    CHANGE    IN    THE    PARTNERSHIP.  481 

And,  if  there  is  not  enougli  to  pay  the  debts  in  full,  then,  all 
being  equally  liable,  they  must  do  nothing  to  disturb  or  pre- 
vent this  equality,  {t) 

The  survivors  are  not  bound  to  continue  the  business  at  all ; 
and  would  probably  be  permitted  to  wind  it  up  quite  abruptly, 
if  they  chose  not  to  engage  in  new  transactions  for  the  firm, 
or  even  continue  old  ones,  although  the  new  or  the  old  seemed 
to  promise  a  much  better  winding  up  at  the  close.  And, 
moreover,  if  the  trustees  choose  to  continue  the  property  in 
trade,  or  to  go  on  in  lousiness  under  the  credit  and  risking  the 
effects  of  the  firm,  not  only  will  equity  restrain  them  doing  so, 
if  injunction  be  desired  by  the  representatives  of  the  deceased, 
but  if,  by  such  new  business,  profit  is  made,  the  survivors  will  be 
bound  to  account  for  this  profit  as  belonging  to  the  firm.  (^^) 
And  if  no  profit,  or  even  a  loss,  is  made,  they  must  be  charged 
with  interest  on  the  funds  they  use,  and  the  whole  loss  will  be 
theirs,  (v)  It  seems,  however,  that,  if  the  survivors  carry  the 
business  on,  and  make  a  profit  which  is  credited  to  the  firm, 
they  may  be  allowed  some  compensation  for  their  services, 
unless  the  articles  of  agreement  provide  otherwise,  (w)  And 
a  surviving  partner  may  be  allowed  for  his  time  and  expenses, 
under  especial  circumstances  justifying  such  a  claim,  (zvw) 
The  survivors  do  not,  however,  bear  more  than  *  their    *  444 


(0  See  cases  cited  in  previous  notes  and  see  Cook  v.  Collingridge,  Jac.  607  ; 

to  this  section.     See  Saving  and  Loan  Burden  v.  Burden,  1  Ves.  &  B.  170; 

Society  v.  Gibb,  21  Cal.  595,  limiting  Stocken  v.  Dawson,  6  Beav.  371.     But 

the  liability  of  the  surviving  partner,  see,  also,  contra,  Ames  v.  Downing,  1 

id.  496.  Bradf.    321,   in    which    the    Surrogate 

(»)  Waring   r.   Cram,   1   Pars.  Sel.  says:    "Nor   can    Mr.    Hicks    charge 

Eq.  Cas.  522 ;  Washburn  v.  Goodman,  commissions,  as  surviving  partner,  for 

17  Pick.  519  ;  Ogden  v.  Astor,  4  Sandf.  the  collection  of  the  debts.     His  legal 

311;   Booth  V.  Parks,  1   MoUoy,  465;  duty   was  to   collect  the    assets    and 

Crawshay   v.   CoUins,   15   Ves.   218,  2  wind  up  the  business  of  the  firm ;    a 

Russ.  325 ;  Brown  v.  Litton,  1  P.  Wms.  duty  the  law  imposes  on  him   as  an 

224 ;    Hammond    v.   Douglas,    5    Ves.  incident  to  the  contract  of  partnership, 

539 ;  Brown  v.  De  Tastet,  Jacob,  284,  and  for  the  performance  of  which  no 

292 ;  Heathcote  v.  Hulme,  1  Jac.  &  W.  remuneration  is  promised  or  implied. 

122.  Such  a  claim  is  new  to  me,  and  I  am 

{v)  Simpson  v.  Feltz,  1  McCord  Ch.  not  aware  that  it  is  supported  by  prece- 

213 ;    Goddard    v.    Bulow,    1    Nott    &  dent  or  authority."     Beatty  v.  Wray, 

McCord,    45 ;    Honore    v.    Colmesnil,  19  Penn.   St.   516 ;    Brown  v.  McFar- 

7  Dana,  201 ;  Moon  v.  Story,  8  Dana,  land's  Ex.,  41  id.  129. 
233;  and  cases  in  previous  note.  {ww)  Newell  v.  Humphrey,  37  Vt. 

(w)  See    CoUyer  on   Part.   §   328;  265. 

31 


482  THE    LAW    OF    PARTNERSHIP.  [CH.  XIII. 

share  of  losses  resulting  after  the  death  of  the  deceased, 
from  transactions  entered  upon  before,  and  only  carried  to 
completion  by  the  survivors. 

If  the  survivor  or  survivors  carry  on  the  business,  they  may 
sometimes  realize  great  advantages  and  large  profits  from  the 
fact  that  the  business  was  so  well  established  during  the  lifetime 
of  the  deceased.  And  then  the  question  may  come,  whether  the 
court  will  require  them  to  make  an  allowance  to  the  represen- 
tatives of  the  deceased,  for  their  profit.  The  question,  in  fact, 
amounts  to  this :  Is  the  good-will  of  the  concern  so  far  part- 
nership property  that,  if  the  survivors  retain  it,  they  must 
allow  for  it  ?  There  is  but  little  adjudication  on  this  subject ; 
but  that  little  leads  to  the  conclusion,  that  the  good-will  goes 
to  the  survivors,  without  payment  or  allowance  on  their  part. 
There  are  some  difficulties,  however,  attending  this  view.  The 
stock  of  goods,  the  lease,  or  the  right  or  expectancy  of  remain- 
ing on  the  premises,  all  belong  to  the  firm.  If  the  merchan- 
dise, if  sold  in  connection  with  the  lease  and  right,  will  bring 
much  more  money  than  if  sold  otherwise,  should  it  not  be  sold 
in  this  way  ;  and  if  the  survivors  buy  it,  or  take  it,  or  keep  it, 
should  they  not,  in  some  form,  allow  for  it  the  price  it  would 
bring  if  others  bought  it  as  they  buy  it  ?  So  much  of  the  good- 
will —  the  meaning  of  which  word  is  not  very  exactly  defined 
—  as  attaches  merely  to  the  goods  and  the  place,  and  the  ex- 
isting contracts,  belongs,  we  should  say,  to  all  alike  ;  but  so 
much  of  it  as  is  personal,  and  originates  in  the  way  of  carry- 
ing on  the  business,  and  might  go  with  the  survivors  wherever 
they  engage  in  the  same  business,  this  belongs  to  them  ex- 
clusively, (a;) 

(.r)  An  examination  of  tlie  author-  Hoff.  Cli.  68,  that,  upon  a  dissoUition, 

ities  will  show  considerable  conflict  on  it  must  be  sold,  and  that  it  does  not 

these  questions.     Crawshay  i-.  Collins,  survive.     In    Holden's   Admr.    v.   Mc- 

15  Ves.  218,  227;  Crutwell  v.  Lye,  17  Makin,    1    Pars.   Sel.  Eq.  Cas.  270,  it 

Ves.  336  ;  Farr  v.  Pearce,  3  Madd.  74;  was  held,  that  the  good-will  (consisting 

Lewis  V.  Langdon,  7  Swinb.  421;  Wil-  of  the  subscription  list,  &c.)  of  a  news- 

lett   V.   Blanford,    1    Hare,    253,   271.  paper   is    partnership   property ;    and, 

Held,  in  Williams  v.  Wilson,  4  Sandf.  when  one  of  the  partners  dies,  it  does 

Ch.  379,  that  the  good-will  of  a  busi-  not  survive  to  the  surviving  partner, 

ness,  built  up  by  a  copartnership,  is  an  but   is   to   be   sold,  with   the    presses, 

important  and  valuable  interest,  which  types,  and   mechanical   appliances   of 

the  law  recognizes    and  will   protect ;  the    establishment.      In   tlie    case    of 

and  in  Dougherty  v.  Van  Nostrand,  1  Wedderburn  v.  Wedderburn,  22  Beav. 


CH.  XIII.]  OP    A    CHANGE    IN    THE    PARTNERSHIP. 


483 


*  It  lias  sometimes  been  supposed  that  the  surviving    *  445 
partners  have  a  right  to  take  all  the  effects  and  mer- 


104,  the  Master  of  the  KoUs,  in  de- 
livering judgment,  says  :  "  The  cjood- 
ivill  of  a  trade,  although  inseparable 
from  the  business,  is  an  appreciable 
part  of  the  assets  of  a  concern,  both  in 
fact  and  in  the  estimation  of  a  court 
of  equity.  Accordingly,  in  reported 
cases,  Lord  Eldon  held,  that  a  share 
of  it  properly  and  as  of  right  belonged 
to  the  estate  of  the  deceased  partner. 
It  does  not  survive  to  the  remaining 
partners,  unless  by  express  agreement ; 
but  it  may  by  agreement,  as  it  may  be 
agreed  that  any  particular  portion  of 
the  partnership  assets  shall  so  survive. 
Good-will  manifestly  forms  a  portion 
of  the  subject-matter  which  produces 
the  profits  (which  constitutes  partner- 
ship property) ;  and  which  is  to  be  di- 
vided between  the  surviving  partners 
and  the  estate  of  the  deceased  partner, 
according  to  the  terms  of  the  contract, 
and,  when  that  is  silent,  according  to 
their  sliares  in  the  concern.  There  is 
considerable  difficulty  in  defining,  ac- 
curately, what  is  included  under  this 
term  good-will :  it  seems  to  be  that 
species  of  connection  in  trade  which 
induces  customers  to  deal  with  a  par- 
ticular firm.  It  varies  almost  in  every 
case ;  but  it  is  a  matter  distinctly  ap- 
preciable, which  may  be  preserved 
(at  least  to  some  extent),  if  the  busi- 
ness be  sold  as  a  going  concern,  but 
which  is  wholly  lost  if  the  concern  is 
wound  up,  its  liabilities  discharged, 
and  its  assets^  got  in  and  distributed. 
I  am  of  opinion,  then,  that  both  on 
principle,  on  the  authority  of  the  de- 
cided cases,  and  on  the  ordinary  rules 
of  common  sense,  I  must,  whenever 
there  is  a  reputation  and  connection  in 
business,  constituting  good-will,  treat 
that  as  part  of  the  assets  of  the 
concern."  But  this  opinion  may  be 
regarded,  to  some  extent,  obiter;  as 
the  case  really  holds  that,  as  there 
was  an  express  agreement  in  the  arti- 
cles that  the  good-will  should  belong 
to  the  surviving  partner,  the  plaintiffs 
were  not  entitled  to  participate  in  the 


profits,  so  far  as  those  profits  were 
attributable  to  the  good-will  and  con- 
nection in  trade  of  the  old  firm.  And, 
indeed,  the  case  itself  was  finally  set- 
tled by  a  compromise.  See  further,  on 
this  question,  Hammond  v.  Douglas, 
5  Ves.  539 ;  Farr  v.  Pearce,  3  Madd. 
74 ;  Chippendale  v.  Tomlinson,  Cooke's 
Bankr.  L.  431 ;  Silk  v.  Osborn,  1  Esp. 
140;  Coslake  v.  Till,  1  Russ.  376 
Kennedy  v.  Lee,  3  Meriv.  441,  452 
Webster  v.  Webster,  3  Swanst.  490,  n. 
Harrison  v.  Gardner,  2  Madd.  198 
Butler  V.  Burleson,  16  Vt.  176.  In 
Lewis  V.  Langdon,  7  Sim.  421,  it  was 
contended  that  the  right  to  use  the 
designation  of  a  partnership  ranges 
itself  under  the  head  of  good-will,  and 
that  good-will  survives,  —  the  personal 
representatives  of  the  deceased  part- 
ner having  nothing  to  do  with  it.  The 
Vice-Chancellor,  Sir  S.  Shadwell,  in 
sustaining  this  position,  said  :  "  The 
question  in  this  case  depends  on  the 
right,  in  the  surviving  partner,  to 
carry  on  the  business  under  the  name 
of  the  partnership.  Lord  Eldon,  cer- 
tainly, has  expressed  a  doubt,  in  the 
case  of  Crawshay  v.  CoUins  (15  Ves. 
227),  upon  what  has  been  understood 
as  the  proposition  laid  down  by  Lord 
Rosslyn,  in  the  case  of  Hammond  v. 
Douglas  (5  Ves.  539).  It  is  true,  that 
the  question  might  have  been,  to  a 
certain  degree,  whether,  having  regard 
to  what  had  taken  place,  the  money 
should  be  considered  to  belong  to  one 
party  rather  than  to  another  ;  and  it  is, 
also,  observable,  that  Lord  Eldon 
might  have  been  throwing  out  his 
observations  with  reference  to  a  sup- 
posed connection  between  the  place 
where  the  business  was  carried  on  and 
the  good-will.  But  it  occurs  to  me, 
that,  if  the  good-will  is  to  be  con- 
sidered as  a  salable  article  which  be- 
longs to  the  partnership,  then  this 
consequence  must  follow  ;  namely,  that 
the  surviving  partner  must  be  under 
an  obligation  to  carry  on  the  trade  for 
some  time  after  his  partner's  death,  in 


484 


THE    LAW    OF    PARTNERSHIP. 


[CH.  XIII. 


*  446  cliandise  (after  the  *  debts  are  paid  or  secured)  at  a 
valuation.  And,  undoubtedly,  there  may  be  cases  in 
which  this  would  be  a  just  and  beneficial  mode  of  settlement, 
and  the  court  would  therefore  permit  or  order  it.  But 'it  must 
be  clear  that  they  have  no  such  right.  Indeed,  the  right  on 
this  point  is  on  the  other  side  ;  for  it  would  seem,  both  from 
the  reason  of  the  case  and  on  the  authorities,  that  the  repre- 
sentatives of  the  deceased  have  a  right  to  require  a  sale  of  the 
eifects,  as  the  only  certain  way  of  ascertaining  their  value 
and  making  a  fair  division.  But  this  again,  although  a  rule, 
cannot  be  deemed  a  universal  rule ;  for  equity  may  find  in  par- 
ticular circumstances  good  reason  for  not  decreeing  a  sale, 
although  it  must  be  admitted  that  it  strongly  inclines  to  that 
mode  of  settlement,  as,  on  the  whole,  the  fairest  and  the 
safest.  (?/)     That   the   representatives   of   the   deceased   may 


order  that  the  thing  which  is  said  to 
be  salable  may  be  preserved  until  it 
can  be  sold.  If  a  partnership  were 
carried  on  between  A.  and  B.,  under 
the  name  of  Smith  &  Co.,  and  the 
surviving  partner  chose  to  discontinue 
the  business,  and  to  write  to  the  cus- 
tomers, and  say  that  his  partner  was 
dead,  and  that  the  business  was  at  an 
end,  —  the  effect  would  be,  that  that 
which  is  said  to  be  salable  would  cease 
to  exist.  Now,  what  power  is  there 
in  a  court  of  equity  to  compel  a  part- 
ner to  carry  on  a  trade  after  the  death 
of  his  copartner,  merely  that,  at  a 
future  time,  the  good-will  (as  it  is 
called)  may  be  soldi  It  is  plain  that, 
unless  there  is  such  a  power  in  this 
court,  it  must  be  in  the  discretion  of 
the  surviving  partner  to  determine 
what  shall  be  done  with  the  good-will ; 
and,  if  that  is  the  case,  it  must  be  his 
property.  I  cannot  but  think,  when 
two  partners  carry  on  a  business  in 
partnersiiip  together,  under  a  given 
name,  that,  during  the  partnership, 
it  is  the  joint  right  of  them  both  to 
carry  on  business  under  that  name  ; 
and  that,  upon  the  death  of  one  of 
them,  the  right  which  they  before  had 
jointly  becomes  the  separate  right  of 
the  survivor."  It  was  accordingly 
held,  that,  as  the  plaintiff  in  this  case 


had  never  abandoned  the  right  which 
accrued  to  him  on  the  death  of  his 
partner,  an  injunction  would  be  granted 
to  restrain  the  defendant,  wlio  was  ex- 
ecutor of  the  deceased  partner,  from 
using  the  partnership  name  in  carry- 
ing on  his  business.  See  Wade  v. 
Jenkins,  2  Giffard,  509.  See  ante,  ch. 
7,  sect.  8,  subs.  2,  where  the  Good- 
Will  is  treated  of. 

{tj)  Crawshay  v.  Maule,  1  Swanst. 
495,  523 ;  Featherstonhaugli  v.  Feu- 
wick,  17  Ves.  298;  Cook  v.  Colling- 
ridge,  Jac.  007 ;  Simmons  v.  Leonard, 
3  Hare,  58L  In  winding  up  the  con- 
cerns of  a  partnership,  after  a  dissolu- 
tion, one  partner  cannot  take  the 
partnership  stock  at  a  valuation  ;  but 
its  value  must  be  ascertained  by  the 
conversion  of  it  into  money.  Sigour- 
ney  v.  Munn,  7  Conn.  11  ;  Evans  v. 
Evans,  9  Paige,  178 ;  Dougherty  v. 
Van  Nostrand,  1  Hoff.  Ch.  68;  Con- 
well  V.  Sandidge,  8  Dana,  278.  See 
also,  on  this  subject,  Mifflin  v.  Smith, 
17  Serg.  &  R.  165 ;  Bradley  v.  Cham- 
berlin,  16  Vt.  613  ;  U.  S.  Bank  v.  Bin- 
ney,  5  Mason,  185;  Dickinson  v.  Bold, 
3  Desaus.  501 ;  Wilson  v.  Greenwood,  1 
Swanst.  471 ;  Leach  v.  Leach,  18  Pick. 
75 ;  Fereday  v.  Wiglitwick,  1  Tamlyn, 
261 ;  Rigden  v.  Pierce,  6  Madd.  353 ; 
Pierce  v.  Trigg,  10  Leigh,  406. 


CH.   XIII.]  OF    A    CHANGE    IN    THE    PARTNERSHIP. 


485 


have  an   account  taken  —  or,  rather,  that  their  right  in 
this  respect  is  as  complete  as  *  the  right  of  the  de-    *  447 
ceased  while  he  lived  and  vras  a  partner  —  seems  to  be 
certain.  (2) 

At  law,  the  creditors  of  the  firm  must  bring  their  actions 
against  the  surviving  partners  only  ;  who,  of  course,  charge 
what  payments  they  are  obliged  to  make,  in  account  with  the 
estate  of  the  deceased.  On  the  other  hand,  the  survivors  alone 
bring  any  action  to  collect  a  partnership  debt,  in  their  own 
names.  At  common  law,  the  executor  or  administrator  of  the 
deceased  cannot  be  joined ;  and  the  executors  or  administra- 
tors of  the  last  survivor  sue  alone,  without  joining  the  repre- 
sentatives of  the  first  or  of  any  later  deceased,  (a) 


(z)  Waring  v.  Cram,  1  Pars.  Sel. 
Eq.  Cas.  522;  Washburn  v.  Goodman, 
17  Pick.  519  ;  Ogden  v.  Astor,  4  Sandf. 
S.  C.  311.  In  Scott  V.  Milne,  5  Beav. 
215,  the  court  refused  to  open  accounts, 
though  of  a  general  and  summary 
nature,  not  containing  the  items,  and 
which  had  been  indorsed  by  a  surviv- 
ing partner  to  the  representatives  of  a 
deceased  partner,  and  had  remained 
unquestioned  for  twenty-two  years ; 
but  it  decreed  an  account  limited  to 
the  subsequent  receipts  of  the  surviv- 
ing partner,  which,  it  was  admitted, 
had  taken  place.  In  Wedderbum  v. 
Wedderburn,  22  Beav.  84,  it  is  said, 
that  the  liability  to  account  for  profits 
derived  from  trade,  carried  on  after 
the  death  of  the  testator,  must  depend, 
in  the  absence  of  contract,  upon  the 
nature  of  the  trade,  the  mode  of  carry- 
ing it  on,  the  capital  employed,  the 
state  of  the  account  between  the  part- 
nership and  the  deceased  partner,  and 
the  conduct  of  the  parties  after  his 
death.  And  see  Stoughton  v.  Lynch, 
1  Johns.  Ch.  469 ;  Brown  v.  Litton,  1 
P.  Wms.  140;  Hammond  v.  Douglas, 
5  Ves.  539 ;  Brown  v.  Vidler,  15  id. 
223;  Brown  v.  De  Tastet,  Jac.  284; 
Fearns  v.  Young,  9  Ves.  549. 

(a)  Barney  v.  Smith,  4  Harris  &  J. 
485 ;    Murray    v.    Mumford,    6     Cow. 


441;  Davis  i;.  Church,  1  Watts  & 
S.  240 ;  Clark  v.  House,  23  Me.  560 ; 
Peters  v.  Davis,  7  Mass.  257  ;  Wallace 
V.  Fitzsimmons,  1  Dall.  248  ;  McCarty 
V.  Nixon,  2  id.  65,  note;  Smyth  v. 
Hawthorn,  3  Eawle,  355 ;  Yale  v. 
Fames,  1  Mete.  487  ;  Beach  v.  Hay- 
ward,  10  Ohio,  455  ;  [Pfeffer  v.  Steiner, 
27  Mich.  537.]  In  Louisiana,  the  sur- 
viving partner  does  not  possess  the 
right,  until  he  is  autliorized  by  the 
Court  of  Probate,  to  sue  alone  for,  or 
to  receive,  partnership  debts.  Flower 
V.  O'Conner,  7  La.  194 ;  Connelly  v. 
Cheevers,  16  id.  130;  Hyde  v. 
Brashear,  19  id.  402;  Babcock  v. 
Brashear,  id.  404.  On  actions  against 
surviving  partners,  and  actions  against 
executors,  see  Richards  v.  Heather,  1 
B.  &  Aid.  29 ;  Given  v.  Albert,  1 
Watts  &  S.  833  ;  Osgood  v.  Spenser,  2 
Harris  &  G.  133 ;  Grace  v.  Shurter,  1 
Wend.  148 ;  Lang  v.  Keppell,  1  Binn. 
123  ;  Calder  v.  Rutherford,  1  Brod.  & 
B.  302,  7  Moore,  158.  In  Thorpe  v. 
Jackson,  2  Younge  &  C.  Exch.  553, 
it  was  held,  that  joint  contractors, 
whether  partners  or  not,  are  in  equity 
jointly  and  severally  liable  ;  and,  if  one 
die,  his  assets  are  liable,  but  other 
contractors  should  be  joined.  See 
also  Scholefield  v.  Heafield,  7  Sim. 
667. 


486 


THE    LAW    OF    PARTNERSHIP. 


[CH.   XIII. 


3.    Of  the  Settlement  of  the  JEstate  of  a  Deceased  Partner. 

The  estate  of  the  partnership  would  be  settled,  in  a  case  of 
dissolution  by  death,  entirely  on  equitable  principles; 
*  448  and  we  should  *  have  no  doubt  that  they  would  require 
that  the  claims  of  the  several  creditors  and  those  of  the 
joint  creditors  should  be  kept  entirely  distinct,  each  having  its 
separate  fund,  and  passing  over  to  the  other  only  in  case  of  a 
surplus.  Indeed,  as  we  have  already  intimated,  we  consider  the 
decided  tendency  of  common-law  adjudication  to  be  in  that  di- 
rection, (h)  But  the  question  seems  not  to  be  so  fully  settled  by 
authority  as  we  think  it  to  be  on  principle.  In  the  whole  mat- 
ter of  the  settlement  of  such  an  estate,  there  are  yet  questions 
which  cannot  be  considered  as  positively  determined.  Thus, 
after  some  conflict  and  uncertainty,  it  seems  now  to  be  settled 


(6)  Wilder  v.  Keeler,  3  Paige,  167  ; 
Morgan  v.  His  Creditors,  20  Martin 
(La.)  599 ;  M'CuIloh  v.  Dasliiell,  1  Harris 
&  G.  96  ;  Payne  v.  Matthews,  6  Paige, 
19  ;  Hall  v.  Hall,  2  McCord's  Ch.  302 ; 
Bowden  v.  Schatzell,  1  Bailey's  Eq. 
360 ;  Cammack  v.  Johnson,  1  Green 
Ch.  163 ;  Ex  parte  Moult,  1  Deacon  & 
Chitty,  44,  73,  1  Montagu,  292.  A  de- 
ceased partner's  estate,  after  payment 
of  his  separate  debts,  is  applied  in 
payment  of  such  partnership  debts  as 
remain  unsatisfied  after  applying  the 
whole  partnership  assets  in  liquida- 
tion thereof;  and,  if  his  personal  estate 
is  insufficient,  the  real  estate  of  the 
deceased  partner  is  to  be  taken.  Addis 
V.  Knight,  2  Meriv.  117,  119.  As  to 
the  power  of  survivors  to  make  a  new 
contract  to  keep  alive  a  debt  against 
the  estate  of  a  deceased  partner,  see 
Braithwaite  v.  Britain,  1  Keen,  221. 
See  ante,  p.  *347,  et  seq.,  and  notes. 
[By  partnership  articles,  D.  was  to  be 
a  partner  with  A.  and  B.  in  profits, 
but  not  in  the  capital  stock  ;  and  he  was 
not  required  to  find  any  capital.  D.'s 
partnership  was  to  continue  for  twelve 
years,  at  the  expiration  of  which  term 
his  interest  in  the  concern  was  to  cease. 
If  D.  died  during  such  term,  his  repre- 
sentatives were  to  receive  a  proportion- 


ate part  of  his  share  of  the  profits  of 
the  current  half-year,  for  the  period  up 
to  his  decease,  to  be  ascertained  accord- 
ing to  the  average  of  the  last  two  pre- 
ceding half-yearly  stock-takings.  D. 
died ;  after  wliich  the  business  was 
carried  on  by  A.  and  B.  until  A.'s 
death,  and  then  by  B.  alone.  A  cred- 
itor of  the  firm,  in  respect  of  a  debt 
contracted  while  the  firm  consisted  of 
A.,  B.,  and  I).,  claimed  to  have  the 
whole  of  B.'s  estate  applied  in  pay- 
ment of  all  the  creditors  of  A.,  B.,  and 
D.,  without  regard  to  whether  their 
del)ts  were  contracted  before  or  after 
the  death  of  D.,  or  before  or  after 
the  death  of  A.  There  were  in  exist- 
ence specific  assets  which  had  belonged 
to  the  firm  while  it  consisted  of  A.,  B., 
and  D.  Held,  that,  under  the  part- 
nership articles,  D.'s  executors  had  a 
right  to  have  the  debts  existing  at 
D.'s  death  paid  out  of  the  then  exist- 
ing assets ;  that  the  assets  then  on 
hand,  and  now  existing  in  specie,  must 
therefore  be  applied  in  payment  of  the 
creditors  of  the  original  firm  of  A.,  B., 
and  D.  ;  and  that,  therefore,  such  cred- 
itors could  not  take  B.'s  separate  as- 
sets until  his  separate  creditors  had 
been  paid  in  full.  Ex  parte  Dear, 
In  re  White,  1  Ch.  D.  514.] 


CH.  XIII.]  OF    A    CHANGE    IN    THE    PARTNERSHIP.  487 

in  England,  that,  on  the  death  of  a  partner,  a  creditor  of  the 
firm  may  proceed  at  once  in  equity  against  the  estate  of  the 
deceased,  whether  the  firm  or  the  surviving  partners  be  solvent 
or  otherwise ;  the  court  requiring,  however,  that  the  surviving 
partners  should  be  made  parties,  because  they  are  interested  in 
the  account.  (<?)  It  may  be  said,  however,  that  if  the  firm,  or 
the  surviving  partner,  is  solvent,  nothing  is  gained  by  this  :  the 
estate  which  pays  the  debt  charges  it  in  account  with  the  firm, 
or  against  the  surviving  partner  ;  and  there  seems  to  be  little 
more  reason  why  a  joint  creditor  should  have  this  power  after 
the  death  of  a  partner  than  during  his  life,  {d}  It  is  derived, 
however,  from  the  principle,  that  in  equity  all  the  contracts  of  a 
partnership  are  considered  to  be  joint  ^nd  several.  In  this  coun- 
try this  rule  has  been  a  good  deal  questioned ;  and,  although  some 
acknowledged  principles  would  lead  to  it,  it  may  perhaps  be 
doubted  whether  the  result  of  a  final  adjudication  of  equity  on 
this  point  will  not  protect  the  estate  of  the  deceased 
against  such  *  process,  unless  special  circumstances  lead  *  449 
to  the  conclusion  that  justice  to  the  creditor,  in  that 
particular  case,  requires  it. 

The  authorities  lead  also  very  strongly  to  the  rule,  that  where 
there  is  no  joint  fund,  and  no  surviving  partner  who  is  solvent, 
the  joint  creditor  shall  have  the  benefit  of  the  separate  estate  of 
a  deceased  partner,  pa7'i  passu,  with  the  separate  creditors  of 
that  partner,  (e)  We  see  no  more  justice  in  this  rule,  and  no 
more  reason  for  it,  than  for  saying  that  the  separate  creditor,  if 
there  be  no  separate  estate,  may  come  in  upon  the  joint  prop- 
erty equally  with  the  joint  creditors  ;  and  this  has  never  been 
permitted.     And  the  strong  disapproval  of  the  rule,  sometimes 

(c)    Wilkinson     v.     Henderson,     1  Troy  Iron  Co.  v.   Winslow,  11  Blatch. 

Mylne  &  K.  582;  Devaynes  v.  Noble,  (U.  S.  C.  Ct.)  513.     See  also  Paper  v. 

2  Russ.  &  M.  495;  Thorpe  v.  Jackson,  Cole,  55  N.  Y.  124;  Sherman  v.  Kreul, 

2  Younge  &  C.  553  ;  Sleech's  Case,  1  42  Wis.  33.] 

Meriv.  539 ;  Braithwaite  v.  Britain,  1  (d)  See  Ridgway  v.  Clare,  19  Beav. 

Keen,  219.     See  Kimball  v.  Whitney,  111. 

15   Ind.    280.     [No   suit  at  law    or  in  (e)   Sparhawk  v.  Russell,  10  Mete. 

equity  can  in  this  country  be  brought  305 ;   Emanuel   v.   Bird,   19   Ala.  596. 

against  the  representative  of  a  deceased  And  see  Smith  v.  Mallory's  Ex'r,  24 

partner,    or    to  charge  his  estate    for  Ala.  628;   Wilby  u.  Phinney,  15  Mass. 

partnership     debts,    if    the    surviving  116;  Busby  v.   Chenault,   13  B.  Mon. 

partners  are  solvent,  and  the  assets  of  554  ;  Bell  v.  Newman,  5  Serg.  &  R.  78. 
the  firm  are  suflBcient  to  pay  its  debts. 


488  THE    LAW    OF    PARTNERSHIP.  [CH.  XHI. 

met  with,(/)  connected  with  the  general  tendency  of  the  law 
at  this  day  to  complete  its  recognition  of  a  partnership  as  a  body 
by  itself,  with  its  own  means  appropriated  to  its  own  debts, 
lead  us  to  doubt  of  the  propriety  and  of  the  permanency  of  the 
rule. 

The  estate  of  a  deceased  partner  may  be  discharged  by  pay- 
ment of  the  debt,  involving,  however,  the  question  of  appropria- 
tion of  payment  or,  by  a  transfer  of  the  account,  involving  the 
question  of  novation,  much  in  the  same  way  in  which  a  retiring 
partner  may  be  discharged  ;  and  the  view  taken  of  these  ques- 
tions, when  considering  the  discharge  of  a  retiring  partner, 
leads  to  the  conclusion,  that  notice  of  a  dissolution  by  death  is 
not  necessary  to  prevent  the  estate  of  the  deceased  from  becom- 
ing liable  for  new  debts  of  any  kind. 

In  a  recent  case,  the  Supreme  Court  of  Massachusetts  consid- 
ered very  fully  the  question,  whether  the  surviving  partners  are 
bound  to  give  notice  of  the  death  of  a  partner,  and  a  dissolution 
by  his  death.  It  is  decided,  for  reasons  which  seem  unanswer- 
able, that  there  is  no  such  necessity,  to  avoid  a  liability  caused 
by  the  subsequent  misuse  of  the  copartnership  name  by  one  of 
the  firm.  The  court  say,  Bigelow,  C.  J.,  giving  the  opinion, 
that,  by  a  well-settled  rule,  no  notice  need  be  given  by  the 
representatives  of  the  deceased,  to  avoid  liability  on  future 
contracts ;  and  they  see  no  reason  for  imposing  a  duty  of 
giving  notice  of  the  dissolution  of  the  firm  on  surviving  part- 
ners, (g) 

if)  M'Culloh  V.  Dashiell,  1  Harris  loh    v.    Dashiell,    1    Harris   &  G.  96 ; 

&  G.  96;    [Irby  v.  Graham,  46  Miss.  Tucker  y.  Oxley,  5:Crancla  S.   C.  35. 

425.]     See  also   Pierce  v.  Jackson,  6  See   this   question   fully   discussed   in 

Mass.  242  ;  Eddie  v.  Davidson,  1  Doug.  Silk  v.  Prime,  2  Lead.  Cas.  in  Eq.  813, 

650;  Field  v.  Clark,  4  Ves.  396  ;  Fisk  Hare  &  Wallace's  notes, 
u.  Herrick,  6  Mass.  271 ;  Allen  u.  Wells,  (9)  Marlett   v.   Jackman,    8   Allen, 

22   Pick.  450 ;    Melville  v.  Brown,  15  287.     And  see  Webster  v.  Webster,  3 

Mass.  82 ;  Tappan  v.  Blaisdell,  5  N.  H.  Swanst.  490,  n. ;  VuUiaray  v.  Noble,  3 

190.     But  see  Lord  v.  Baldwin,  6  Pick.  Meriv.   614  ;  Washburn   v.   Goodman, 

848  ;  French  v.  Chase,  6  Greenl.  166  ;  17  Pick.  519.     An  exception  as  to  the 

Church  V.  Knox,  2  Conn.  514 ;   Barber  necessity    of  such  a  notice   has  been 

V.  Hartford  Bank,  9  Conn.  407  ;  Don-  made,    when   the   surviving    partners, 

ner  v.  StaufTer,  1  Penn.  St.  198.     That  or   one    of   them,    are    executors    of 

the  separate  property  of  each  member  the    deceased    partner  :    for    then,   in 

of  the  firm  is  liable  at  law  to  be  taken  order   to    exonerate    his    estate    from 

in  execution   by   any   creditor  of  the  future    liability,   it   is   said    that    due 

firm,  see  Allen  v.  Wells,  ubi  sup. ;  New-  notice  ought  to  be  given  of  his  death, 

man  u.  Bagley,  16  Pick.  570;  M'Cul-  to  the  creditors  of  the  firm ;  because,  in 


CH.  XIII.]  OF    A    CHANGE    IN    THE    PARTNERSHIP.  489 

*  The  surviving  partners,  if  they  hold  claims  or  a  bal-  *  450 
ance  against  the  deceased  partners,  are  treated  like  other 
creditors.  And  if  as  creditors  they  have  any  advantage, —  as, 
for  example,  by  being  specialty  creditors,  —  this  advantage  is 
preserved  to  them.  (A)  This  advantage  is  greater  in  England 
than  here.  There,  an  administrator  was  not  permitted  to  re- 
tain his  own  simple  contract  debts,  against  a  surviving  partner, 
with  whom  the  deceased  partner  had  covenanted  to  pay  certain 
debts,  and  had  not  paid  them. 

4.    When  the  Deceased  has  made  his  Partner  his  Executor. 

If  a  deceased  partner  has  made  his  partner  his  executor, 
certain  consequences  still  result  in  England  which  would  not 
take  place  here ;  as  the  rules  that  an  executor  should  have  all 
property  undisposed  of,  and  that  the  appointment  of  him  as 
executor  discharges  any  debt  due  from  him,  which  have  lost 
much  of  their  force  and  influence  there,  have  none  whatever 
here.  It  is  very  common  in  this  country  for  a  partner  to  ap- 
point a  copartner  his  executor :  this  adds  to  his  power  as  sur- 
viving partner  that  of  executor ;  but  the  combination  of  these 
two  characters  gives  him  no  new  rights  or  powers  in  either  of 
them.  It  has  been  said  that  the  duties  of  these  two  characters 
are  inconsistent,  and,  therefore,  the  practice  objectionable ;  but 
they  are  not  found  to  be  so  in  fact  in  this  country.  Doubtless, 
the  executor  would  be  watched  very  carefully,  to  guard  against 
his  using  his  executorship  as  a  means  of  securing  undue  per- 
sonal advantage  to  himself  as  a  partner.  The  watchfulness 
of  a  court  of  equity  on  this  point  is  well  illustrated  by  an 
English  case,  in  which  the  court  opened  accounts  and  ar- 
rangements between  executor  partners  and  legatees,  after 
they  had  been  confirmed  by  being  acted  upon  for  some  thirty 
years,  (i) 

the  absence  of  such  notice,  the  execu-  How.    (U.  S.)  560;  Downs  v.  Collins, 

tor  partner,  in  his  character  of  personal  6  Hare,  418. 

representative    of    the    deceased,    has  (h)  Musson  v.   May,  3    Ves.    &   B. 

power  to   bind   his    estate.     Vulliamy  194 ;    Kerr   v.    Hawthorne,   4   Yeates, 

V.  Noble,  3  Meriv.  714.     See  also,  on  170.     See  Newell  v.  Humphrey,  37  Vt. 

the  general  question,  Murray  v.  Mum-  265. 

ford,  6  Cow.  441;  Canfield  ;;.   Hard,  6  (/)   Wedderburn  v.  Wedderburn,  2 

Conn.   184  ;   Burwell  o.  Mandeville,  2  Keen,  722,  4  Mylne  &  C.  41. 


490  THE    LAW    OF   PARTNERSHIP.  [CH.  XIII. 

*  451  *  How  the  acts  of  a  person  who  is  both  executor  and 
surviving  partner  are  distinguished,  so  that  what  he 
does  in  one  capacity  shall  not  affect  rights  or  interests  in  his 
hands  in  another,  may  be  illustrated  by  the  rule,  that  payments 
by  a  firm,  after  the  death  of  a  partner,  even  under  its  old 
name,  where  one  of  the  firm  is  executor  of  the  deceased,  shall 
not  be  considered  payments  by  that  partner  as  executor  of  the 
deceased,  if  such  payments  would  have  the  effect  of  preventing 
the  operation  of  the  statute  of  limitations  as  against  debts  due 
from  his  estate,  (y) 

5.    When  a  Potver  of  Appointment  is  G-iven  by  the  Articles. 

We  have  already  remarked  that  the  articles  forming  the  part- 
nership, or  an  agreement  between  the  partners  subsequent  to 
the  articles,  may  provide  either  that  certain  representatives  of 
a  partner  shall,  at  his  death,  become  partners,  or  a  partner  in 
his  place,  or  that  the  partner  may  make  provision  to  this  effect 
in  his  will.  If  no  such  agreement  is  made  between  the  part- 
ners, no  one  of  them  has  any  power,  in  this  respect,  excepting 

(j)  Way  V.  Bassett,  5  Hare,  55.  In  also,  that  acts  done  by  one  of  the  sur- 
this  case,  A.  deposited  moneys  with  B.,  viving  partners,  who  was  executor  of 
C,  &  D.,  who  were  bankers  in  partner-  the  deceased  partner,  and  which  the 
ship;  and  received  from  them  notes,  in  surviving  partners  were  in  that  charac- 
whicli  they  promised  to  pay  him  the  ter  bound  to  do,  cannot  prima  facie  be 
amount  three  months  after  sight,  with  considered  to  have  been  done  in  the 
interest.  B.  died  in  March,  1837,  cliaracter  of  executor.  For  authority 
having  appointed  C.  and  another  his  that  the  acts  of  the  surviving  or  con- 
executors.  C.  and  D.  continued  the  tinuing  partners  cannot  keep  alive  a 
banking  business  in  the  same  name  debt  or  obligation,  or  otherwise  aug- 
until  1842 ;  and  interest  was  regularly  ment  or  prolong  any  liability  of  the 
paid  on  the  notes  by  the  firm  until  estate  of  the  deceased  partner,  see 
that  time,  the  payment  being  indorsed  Atkins  v.  Tredgold,  2  B.  &  C.  23 ; 
upon  the  notes,  and  signed  by  one  of  Slater  v.  Lawson,  1  B.  &  Ad.  396 ; 
the  partners  or  their  clerk.  In  De-  Ault  v.  Goodrich,  4  Russ.  431 ;  Scholey 
cember,  1843,  the  executors  of  A.  filed  v.  Walton,  12  M.  &  W.  510;  Barker  v. 
their  bill  against  the  executors  of  B.,  Buttress,  7  Beav.  134;  Ex  parte  Wood- 
and  the  devisees  under  his  will,  for  ward,  3  Mont.  &  A.  232.  A  surviving 
payment  of  the  amount  of  the  notes  partner,  being  the  executor  of  his  de- 
out  of  the  personal  or  real  estate  of  B.  ceased  partner,  is  not  entitled  to  an 
Held,  that  the  acts  of  the  surviving  allowance  for  carrying  on  the  business, 
partners  of  B.  had  not  the  effect  of  after  his  partner's  decease,  for  the  bene- 
taking  the  debt  upon  the  notes  out  of  fit  of  the  estate.  Burden  v.  Burden,  1 
the  operation  of  the  statute  of  limita-  Ves.  &  B.  170 ;  Stocken  v.  Dawson,  6 
tions,  as  against  the  real  or  personal  Beav.  371. 
estate   of  the   deceased   partner ;    and 


CH.  XIII.]  OF    A    CHANGE    IN    THE    PARTNERSHIP.  491 

over  his  own  estate.  He  may  leave  this  to  whom  he 
will,  and  on  what  condition  he  will.  *  And  if  he  says  *452 
therein  that  such  a  person,  whether  devisee  or  legatee, 
shall  become  a  partner  in  the  firm,  the  person  so  pointed  out 
must  submit  to  the  conditions,  and  offer  himself  as  partner. 
This  is  equally  true  whether  the  deceased  has  a  power  of  ap- 
pointment or  not ;  for  it  is  merely  an  application  of  the  rule, 
that  he  who  would  take  the  benefit  of  a  testamentary  provision 
must  comply  with  its  requirements.  And  doubtless,  if,  by  an. 
agreement,  a  partner  bound  his  estate  to  the  continuance  of  a 
partnership,  it  would  be  regarded  by  the  law  as  so  bound,  un- 
less the  provision  were  obviously  foolish  or  inequitable ;  and 
all  the  rights  of  the  representatives  would  be  subject  to  this 
obligation,  {k') 

Whether,  however,  this  continuance  be  provided  for  by  the 
articles,  irrespective  of  the  will  of  one  who  should  die,  or  by 
the  will  of  a  deceased  partner  under  the  authority  of  the  ar- 
ticles, we  have  already  stated  our  opinion  that  it  is  called  a 
continuance  of  the  partnership  inaccurately ;  it  being,  in  fact  and 
in  law,  only  a  provision  for  the  formation  of  a  new  partnership 
which  shall  stand  in  a  certain  relation  to  the  old  one. 

It  is  admitted  that  any  such  appointment  or  direction  by  will 
shall  be  construed  very  liberally  towards  the  appointee,  whether 
executor  or  not,  so  as  to  give  him  an  election  whether  he  will 
become  a  partner  or  not.  (I)  But  it  must  be  obvious  that  if 
there  be  no  room  for  this  construction,  —  that  is,  if  the  require- 
ment be  in  terms  the  most  peremptory  and  absolute,  —  it  cannot, 
of  itself,  make  the  appointee  a  partner.  He  does  not  become 
one  until  he  assumes  that  relation  by  his  own  act.  The  de- 
ceased may  have  bound  his  estate  effectually ;  but,  if  the  ap- 
pointee chooses  to  renounce  the  estate,  he  is  certainly  no 
partner.  And  this  proves  that  it  is  not  a  mere  continuance 
of  the  same  partnership  with  a  new  member.  So  it  is  said, 
that,  if  such  appointees,  executors,  or  others  are  silent,  even  if 
the  right  of  choice  be  given  to  the  executors,  their  consent  will 

(k)  Pemberton  v.    Oakes,    4   Russ.  569 ;  Wainwright  v.  Waterman,  1  Ves. 

154 ;  Ponton  v.  Dunn,   1  Russ.  &  M.  311 ;    Crawshay   v.    Maule,  1    Swanst. 

402  ;    Crawshay  v.  Maule,    1    Swanst.  512,  per  Lord  Eldon  ;  Kersliaw  r.  Mat- 

512.  thews,  2  Russ.  62. 

(/)  Pigott  V.  Bagley,  McClel.  &  Y. 


492  THE    LAW    OF    PARTNERSHIP.  '      [CH.  XIII. 

be  assumed,  and  they  will  be  regarded  as  partners,  (iii)  But, 
in  the  first  place,  their  consent  would  hardly  be  assumed 
*  453  from  their  mere  silence  ;  and  not  unless  *  they  acted  in 
some  way  to  show  that  they  were  partners,  or  unless  the 
being  partners  was  productive  of  some  direct  benefit  to  them, 
as  by  a  legacy  which  they  indicated  their  purpose  of  taking. 
And,  in  the  next  place,  the  very  presumption  of  their  consent 
shows  that  it  was  necessary,  and  was  really  that  which  made 
them  partners,  and  made  the  new  partnership.  It  is  even  held 
as  a  rule  in  equity,  that  such  appointee  has  not  only  the  right 
of  election,  but  a  right  to  inspect  the  books  and  accounts  of  the 
partnership,  that  he  may  know  how  to  exercise  this  right,  (w) 

Whether  an  appointee  becomes  partner  on  his  own  account, 
or  an  executor  or  trustee  becomes  partner  for  the  benefit  of 
the  representatives  of  the  deceased,  or  there  is  no  new  member, 
although  the  estate  of  the  deceased,  or  some  part  of  it,  remains 
in  the  partnership  and  in  the  business,  for  the  benefit  of  his 
representatives  or  appointees,  —  Ve  consider  that  the  former 
partnership  came  to  its  end  by  his  death,  and  that  the  firm 
now  going  on,  however  composed  as  to  persons  or  estate  or 
business,  is  a  new  one.  Nor  is  it  in  law  any  less  a  new  one 
because  it  stands  in  very  close  relations  with  the  former,  and 
may  be  considered  its  immediate  successor  or  substitute  or 
representative,  (o) 

Whatever  powers  of  this  kind  are  given  to  an  executor,  either 

{m)  Morris   v.  Harrison,   CoUes,  P.  widow,  or  personal  representative,  was 

C.  157.  entitled  to  a  reasonable  time  to  inspect 

(n)  By  partnership  articles,  it  was  and  examine  the  partnership  accounts, 

stipulated,  that  the  partnership  should  but  not  to  have  the  accounts   taken, 

continue  for  nineteen  years  ;  and  that,  before  they  elected  whether  they  would 

if  either  of  the  partners  sliould  die,  dur-  become  partners.     The  usual  case  of 

ing  the  term,  the  widow,  or  other  legal  election  is,  where  a  person  has  a  right, 

personal  representative  of  the  partner  independent    of    a    testator,    and   the 

so  dying,  should  be  let  into  the  partner-  testator  gives  such  person  some  other 

ship,  and  become  a  partner  therein,  in  right  or  benefit,  on  condition   of  the 

the  same  manner,  and  upon  the  same  former  being  relinquished,  as  the  dower 

terms  and  conditions.     Held,  that  tliis  of  a   widow ;  and,   in    such   case,   the 

was  not  an  absolute   or  imperative  ob-  party   is  entitled  to  know  the  precise 

ligation  on  the  widow  or  personal  rep-  value  of  the  benefit   intended,   before 

resentative  to  become  a  partner;  but  election.     Pigott  v.  Bagley,  1  McClel. 

only  an  option  so  to  do,  with  a  stipu-  &  Y.  569. 

lation    by    the    surviving    partner   to  (o)  See  the  authorities  cited  in  the 

admit    them.      Held,    also,    that    the  following  notes. 


CH.  XIII.]  OF    A    CHANGE    IN    THE    PARTNERSHIP.  493 

to  become  partner,  or,  being  partner,  to  carry  on  the  business 
for  the  benefit  of  the  representatives  of  the  deceased,  or  to 
leave  the  estate  of  the  deceased  in  the  partnership  and  in  the 
business,  on  any  terras  and  for  any  purpose,  these  powers  would 
probably  be  strictly  construed  ;  at  least,  they  would 
never  be  enlarged  by  implication.  Thus,  *it  is  clear  *  454 
that  the  deceased  may  limit  the  amount  or  proportion 
of  his  estate  which  shall  remain  in  the  partnership  or  go  into 
it,  at  his  own  pleasure  ;  and  the  executors  or  appointees  can  no 
more  enlarge  this  than  they  can  violate  any  other  of  his  direc- 
tions. Nor  will  such  a  disposition  or  limitation  in  any  way 
affect  the  rights  of  the  creditors  of  the  partnership.  But  it 
seems  to  be  regarded  in  equity  somewhat  as  a  proposition  made 
to  them,  to  which  they  may  assent  if  they  please.  They  have 
the  power  of  having  all  his  estate  brought  forth  and  made  an- 
swerable for  the  debts.  But  they  need  not  execute  this  power, 
unless  they  see  fit  to  do  so  ;  and  delay  and  silence  on  their  part 
will  be  considered  as  a  confirmation  of  the  provision  of  a  de- 
ceased partner.  ( |j) 

So,  the  creditors  of  the  new  partnership  have  no  claim  what- 
ever upon,  and  no  interest  in,  the  general  assets  of  the  deceased, 
or  any  part  of  them,  but  that  which  he  expressly  places  in  the 
new  partnership  ;  which  is  also  another  illustration  of  the  prin- 
ciple, that  this  continued  partnership,  so  called,  is  a  new  one. 
If  a  part  of  the  property  goes  into  the  new  partnership,  but  no 
person  is  added  to  it,  the  creditors  of  the  new  firm  have  only 
the  security  of  this  part ;  (5)  but  if  a  person  goes  with  it,  either 
as  executor,  or  especially  as  trustee,  they  have,  generally,  his 

(p)  Downs  V.  Collins,  6  Hare,  418;  eral  assets  beyond  that  fund  are  not 

£■3:  par/e  Garland,  10  Ves.  119.     On  the  liable.      The   Lord    Chancellor    says: 

questionof  silence  being  a  confirmation  "My  opinion  upon  this  case  is,  that  it 

of  the  provision,  see  Morris  1-.  Harrison,  is  impossible  to  hold  that  the  trade  is 

Colles,  p.  C.  157.  to  be   carried  on,  perhaps  for  a  cen- 

(9)  Burwell  v.  Mandeville,  2  How.  tury ;  and  at  the  end  of  that  time  the 
(U.  S. )  560 ;  Cutbush  v.  Cutbush,  1  Beav.  creditors,  dealing  with  that  trade,  are, 
184 ;  Williamson  v.  Naylor,  3  Younge  merely  because  it  is  directed  by  the 
&  C.  208;  Ex  parte  Garland,  10  Ves.  will  to  be  carried  on,  to  pursue  the 
110,  by  Lord  Eldon,  tliat  under  the  general  assets,  distributed  perhaps  to 
bankruptcy  of  an  executor  and  trustee  fifty  famihes."  See  also  Pitkin  v.  Pit- 
directed  )jy  the  will  to  carry  on  a  trade,  kin,  7  Conn.  307  ;  Ex  parte  Richardson, 
and  a  limited  sum  to  be  paid  to  him  by  3  Madd.  138,  157  ;  Thompson  v.  An- 
the  trustees  for  that  purpose,  the  gen-  drews,  1  Mylne  &  K.  116. 


494 


THE    LAW    OF    PARTNERSHIP. 


[CH. 


XIII. 


personal  liability  as  partner,  in  the  same  way  as  that  of  the 
other  partners ;  for  it  seems  to  be  laid  down  as  a  positive  rule, 
that  an  executor  who  carries  on  the  business  of  his  testator 
pledges  his  own  responsibility  to  the  creditors ;  and  this  al- 
though it  is  certain  that  he  continues  the  business  in  no  degree 

for  his  own  benefit,  but  for  that  of  the  infant  cliildren 
*  455    of  the  deceased,  (r)     In  this  country,  a  *  person  may 

be  appointed  by  equity  to  carry  on  a  business  for  the 
benefit  of  an  infant  partner ;  (s)  and,  doubtless,  an  English 
court  of  equity  has  this  power ;  and,  although  we  know  of  no 
case  in  which  it  has  been  exercised,  there  are  cases  in  which 
reference  is  made  to  this  power,  {f)  But  we  do  not  think  that 
a  person  so  appointed  by  the  court  would  be  held,  unless  a 
liberal  compensation  were  made  to  him,  subject  to  the  stringent 
liabilities  which,  according  to  the  authorities,  would  seem  to 
attach  to  an  executor  who  carries  on  the  business  in  this  way. 


(r)  Wightman  v.  Townroe,  1  Maiile 
&  S.  412,  per  Bayley,  J.:  "The  exec- 
utors in  this  case  are  mere  volunteers. 
At  law,  they  became  the  legal  propri- 
etors in  respect  of  every  thing  belong- 
ing to  tlie  trade;  and  consequently  are 
liable  for  the  legal  debts."  Lord 
Ellenborough,  C.  J.  :  "  The  fund  sub- 
sisting at  the  death  of  the  testator, 
under  a  due  administration  of  the  will, 
should  have  been  disposed  of  by  the 
executors,  and  converted  into  money, 
and  distributed  as  assets.  Instead  of 
this,  it  is  embarked  de  novo  in  the  trade 
in  the  purchase  of  other  barley,  and  a 
variety  of  other  contracts,  to  which  the 
infant  is  not  privy,  nor  bound  by  them, 
but  may  renounce  when  she  conies  of 
age  as  damiwsa  hccredilas.  If,  then,  the 
infant  has  such  an  option,  who  but  the 
executors  can  be  liable  ?  "  See  the 
remarks  of  Lord  Mansfield  in  Barker  v. 
Parker,  1  T.  R.  295.  See  also  Ex 
parte  Richardson,  1  Buck,  209  ;  Owen 
V.  Body,  5  Adol.  &  E.  28 ;  Alsop  v. 
Mather,  8  Conn.  587.  If  an  executor, 
without  any  authority  from  the  will, 
take  upon  himself  to  trade  with  the 
assets,  the  testator's  estate  will  not  be 
liable  in  case  of  his  bankruptcy  ;  the 
testator's  creditors  and  legatees  vvill 
have  a  right  to  prove  demands  for  such 


of  the  assets  as  have  been  wasted  by 
the  executor  in  the  trade,  in  proportion 
to  their  respective  interests ;  and  with 
respect  to  such  of  the  assets  as  can  be 
specifically  distinguished  to  be  a  part 
of  the  testator's  estate,  they  will  not 
pass  to  the  assignees ;  the  executor 
holding  them  alieno  jure,  they  will  not 
be  liable  to  his  bankruptcy.  Ex  parte 
Garland,  10  Ves.  110;  Toller  on  Exec- 
utors, 487  ;  Ex  parte  Richardson,  1 
Buck,  202. 

(s)  Thompson  v.  Brown,  4  Johns. 
Ch.  (319 ;  Powell  v.  North,  3  Ind.  392. 

{t)  In  Sayer  v.  Bennett,  cited  1  Mon- 
tagu on  Partnership,  Appendix,  20,  1 
Cox,  107,  Lord  Kenyon,  in  a  case 
where  there  was  an  application  for  the 
exercise  of  this  power  by  chancery  for 
the  benefit  of  a  lunatic,  observed  :  "  It 
is  said  tliat  equity  should  appoint 
some  person  to  carr}'  on  the  business 
for  the  benefit  of  the  lunatic,  as  they 
luoukl  have  done  for  an  infant;  but  I  say, 
God  forbid."  And  in  Barker  v.  Par- 
ker, 1  T.  R.  295,  Lord  Mansfield  said  : 
"  If  executors  carry  on  a  trade,  they 
must  do  it  as  individuals,  for  their  own 
advantage.  I  remember  many  in- 
stances of  trade  being  carried  on  under 
the  direction  of  the  court  of  chancery." 


CH.   Xlir.]  OF    A    CHANGE    IN    THE    PARTNERSHIP. 


495 


It  would  seem  that  administrators  are  not  chargeable  personally 
with  a  loss  to  the  assets  of  their  intestate,  which  were  in  good 
faith  and  for  good  reason  left  for  a  time  in  the  business,  un- 
less some  negligence  or  other  fault  imputable  to  them  can  be 
considered  as  a  cause  of  the  loss,  (m) 


(u)  In  Rowth  V.  Howell,  3  Ves.  565, 
it  was  held,  that  executors  were  not 
liable  for  a  loss  by  the  insolvency  of  a 
banker  whom  the  testator  had  trusted, 
and  with  whom  they  suffered  stock, 
deposited  by  the  testator,  to  remain, 
although  they  were  directed  to  pay 
debts,  and  lay  out  the  residue  in  mort- 
gages with  all  convenient  speed.  They 
had  not  been  guilty  of  laches.  In 
Thompson  v.  Brown,  4  Johns.  Ch.  628, 
the  distinction  which  exists  in  the  two 
classes  of  cases  is  very  clearly  stated 
by  Chancellor  Kent.  See  also  Knight 
V.  The  Earl  of  Plymouth,  3  Atk.  480, 
Dickens,  120 ;  Wilkinson  v.  Stafford, 
1  Ves.  Jr.  41 ;  Vez  v.  Emery,  5  Ves. 
144.     To  authorize  executors  to  carry 


on  a  trade,  or  to  permit  it  to  be  carried 
on  with  the  property  of  a  testator  held 
by  them  in  trust,  there  ought  to  be  the 
most  distinct  and  positive  authority 
and  direction  given  by  the  will  itself 
for  that  purpose.  Kirkman  v.  Booth, 
11  Beav.  273,  280.  By  partnership 
articles,  testator's  capital  was  to  re- 
main in  the  concern  for  eighteen  months 
after  his  death.  By  his  will,  he  con- 
veyed his  property  to  his  executors,  in 
trust  to  pay  the  rent,  issues,  and  prof- 
its, dividends,  interest,  and  income  of 
his  real  and  personal  estate  to  his  wife, 
for  life.  Held,  tliat  the  wife  was  en- 
titled to  the  profits  of  the  capital  in 
the  partnership  until  it  was  separated. 
Skirving  v.  Williams,  24  Beav.  275. 


496  THE    LAW    OF    PARTNERSHIP.  [CH.  XIV. 


CHAPTER   XIV. 

OF   DISSOLUTION    BY   DECREE. 

1.    Of  a  Decree  for  Misconduct  of  a  Partner. 

The  courts  of  common  law  have  no  power  whatever  of  de- 
creeing or  causing  a  dissolution  of  a  partnership,  (a)  In  some 
cases,  in  which  equity  would  make  such  a  decree,  as  where  a 
partnership  was  formed  through  fraud,  courts  of  law  might 
apply  the  principle,  that  a  contract  so  vitiated  never  had  force, 
and  on  this  ground  declare  it  null,  and  avoid  the  partnership. 
But  courts  of  equity  have  full  power  over  this  matter  ;  and  upon 
a  bill  filed  by  any  partner,  alleging  a  sufficient  cause,  and  upon 
proper  evidence,  if  the  facts  are  not  admitted,  the  court  de- 
crees a  dissolution  of  the  partnership.  (^)  A  decree  or  judg- 
ment for  winding  up  the  affairs  of  a  partnership  may  divide 
the  stock  and  property,  after  the  debts  are  paid,  among  the 
partners  ;  or  order  it  sold,  and  divide  the  proceeds  in  a  certain 
way,  which  is  the  more  common  case.  (66)  Whichever  is 
done,  the  decree  should,  it  is  said,  not  be  in  the  alternative, 
but  positive  and  definite,  (hbh^ 

The  decree  may  declare,  that  the  partnership  never  existed. 
If  fraud,  or  oppressive  or  w^rongful  or  illegal  purpose,  or 
extreme  and  certain  folly,  in  the  inception  and  formation  of 
the  contract,  be  alleged  and  proved,  the  court  would  declare 
that  the  original  formation  of  a  partnership  so  tainted  had  no 
validity  in  law,  and  that  the  partnership  never  ex- 
*  458    isted.  (c)     This  procedure  is,  *  however,  rare.     The  far 

(a)  Story  on  Part.  §  284  ;  1  Story  Ruepprecht,  38  Ala.  175;    Meaher  v. 

on  Eq.  Jur.  §  673 ;  Stone  ;;.  Fouse,  3  Cox,  37  Ala.  201. 

Cal.  294;  Nugent  v.  Locke,  4  id.  320;  (hh)  Watney  v    Wells,  Law  Rep.  2 

Wilson  V.  Lassen,  5  id.  116;  Barnstead  Ch.  App.  250. 
V.  Empire  Mining  Co.,  5  id.  299.  (bbh)  Harper  v.   Lamping,    33    Cal. 

(6)  See  cases  cited  in  the  following  641. 
notes.      And   see   Baxter  v.    West,    1  (c)   Lord   Eldon,   in    Tattershall   v. 

Drewry  &   Sm.  173;   and   Dumont  v.  Groote,  2  Bos.  &  P.  135,  said  :  "Courts 


CH.  XIV.] 


OF   DISSOLUTION   BY   DECREE. 


497 


more  common  way  is  to  decree  a  dissolution  of  the  partnership 
for  causes  occurring  after  its  formation. 

These  are  divisible  into  two  classes :  those  which  imply 
misconduct  on  the  part  of  one  or  more  partners,  and  those 
which  do  not.  Of  the  first  of  these,  it  is  always  said,  that 
any  misconduct  of  any  kind,  provided  it  be  such  in  its  char- 
acter and  intensity  as  to  expose  the  other  partners  to  impor- 
tant injury  of  any  kind,  will  be  considered  a  sufficient  ground 
for  dissolution,  (c?)  But  it  is  also  frequently  remarked,  that 
this  is  a  grave  exercise  of  power,  and  will  not  be  made 
for    slight    reasons,  (e)      Bad    temper,   *  overbearing    *  459 


of  equity  interfere  in  cases  where  fraud 
has  been  practised,  and  order  the  con- 
sideration to  be  returned ;  and  then 
they  treat  the  articles  as  a  nullity,  in 
consequence  of  the  fraud."  Howell  v. 
Harvey,  5  Ark.  278.  "The  jurisdic- 
tion of  a  court  of  equity,  in  cases  of 
copartnership  flowing  from  the  pecu- 
liar trusts  and  duties  growing  out  of 
that  connection,  is  of  the  most  exten- 
sive and  beneficial  character.  It  often 
declares  partnerships  utterly  void,  in 
cases  of  fraud,  imposition,  and  oppres- 
sion in  the  original  agreement."  And 
see  Ex  parte  Broome,  1  Rose,  69  ; 
Hamilton  v.  Stokes,  4  Price,  161,  Dan- 
iel, 20 ;  Oldaker  v.  Lavender,  6  Sim. 
239 ;  Green  v.  Barrett,  1  Sim.  45  ; 
Jones  r.  Yates,  9  B.  &  C.  532 ;  Colt  v. 
Wollaston,  2  P.  Wms.  154  ;  Fogg  & 
Vanderslice  v.  Johnston,  27  Ala.  482. 
[Fraud  of  one  partner  against  the  firm  is 
a  good  ground  for  dissolution  before 
the  exijiration  of  the  term.  Cottle  v. 
Leitch,  35  Cal.  434.] 

(d)  In  Howell  v.  Harvey,  5  Ark.  278, 
the  court  said :  "  Habitual  drunken- 
ness, great  extravagance,  or  unwar- 
rantable negligence  in  conducting  the 
business  of  the  partnership,  justifies  a 
dissolution  ;  but  then  it  must  be  a 
strons  and  clear  case  of  positive  or 
meditated  abuse,  to  authorize  such  a 
decree.  For  minor  misconduct  and 
grievances,  if  they  require  redress,  the 
court  will  interfere  by  way  of  injunc- 
tion to  prevent  the  mischief."  Baring 
V.  Dix,  1  Cox,  213 ;  Goodman  v.  Whit- 


comb,  1  Jac.  &  W.  574,  note ;  Waters 
V.  Taylor,  2  Ves.  &  B.  299  ;  Loscombe 
I'.  Russell,  4  Sim.  8 ;  Gratz  v.  Bayard, 
11  Serg.  &  R.  41,  48;  Littlewood  v. 
Caldwell,  11  Price,  97,  99;  Marshall 
V.  Colman,  2  Jac.  &  W.  266  ;  Chapman 
V.  Beach,  1  id.  594 ;  Norway  v.  Rowe, 
19  Ves.  148.  [But  misconduct  will  not 
justify  a  partner  in  treating  the  part- 
nership as  ended  without  a  decree  and 
proceeding  to  take  exclusive  control  of 
the  partnership  affairs.  Ambler  v. 
Whipple,  20  Wall.  (U.  S.)  546.] 

(e)  Acting  on  this  principle,  it  was 
held,  where  articles  of  partnership  pro- 
vided, that,  if  either  of  the  partners 
should  give  guaranties  without  consent, 
the  other  might  dissolve  on  giving  no- 
tice, and  one  of  the  partners,  in  the 
course  of  eight  years,  gave  a  guaranty 
for  52/.,  and  the  other  gave  notice  to 
dissolve,  that  this  alone  was  not,  in 
equity,  a  sufficient  ground  for  a  disso- 
lution. Anderson  v.  Anderson,  25 
Beav.  190.  And  in  Wray  v.  Hutchin- 
son, 2  Jilylne  &  K.  238,  tlie  Master  of 
the  Rolls  observed,  that,  upon  the  open- 
ing of  the  pleadings,  he  had  doubted 
whether  the  plaintiff  had  stated  a  case 
which  entitled  him  to  a  dissolution  of 
the  partnership;  for  althougli  a  i)artner- 
ship  would  be  dissolved  in  equity,  if  a 
defendant  had  substantially  failed  in 
the  performance  of  his  part  of  the 
agreement,  yet  it  was  not  the  office  of 
a  court  of  equity  to  enter  into  a  con- 
sideration of  mere  partnership  squab- 
bles.   And  see  Lord  Eldon,  in  (ioodinan 


32 


498 


THE    LAW    OF    PARTNERSHIP. 


[CH.  XIV. 


and  oppressive  conduct,  quarrelling,  indolence,  and  inatten- 
tion, intemperance,  or  bad  habits,  and  disgraceful  conduct, 
wild  speculation,  gross  extravagance,  absenting  himself  from 
his  business,  or  entering  into  other  business  engagements  in- 
consistent with  his  duty  to  his  partners,  or  any  conduct  which 
brings  disgrace  upon  the  firm  or  impairs  their  credit,  (/)  —  are 
all  causes  which  may  be  sufficient,  if  their  degree  be  sufficient ; 
and  otherwise  not.  For  one  instance  of  the  kind,  or  two,  or 
three,  the  court  may  not  interfere,  but  will  leave  the  parties  to 


V.  Wliitcomb,  1  Jac.  &  W.  592 ;  Henn 
V.  Walsli,  2  Edwards  CIi.  129.  But 
only  little  more  is  needed  ;  and  dissolu- 
tion will  be  granted,  where  dissension 
prevents  all  hope  of  advantage.  Bishop 
V.  Breckles,  1  Hoff.  Ch.  534.  [Seighort- 
ner  v.  Weissenborn,  20  N.  J.  Eq.  172.] 
A  decree  for  a  dissolution  will  be  war- 
ranted, if  it  is  impossible  that  the 
partnership  should  be  beneficially  con- 
tinued :  namelj',  if  the  principles  on 
which  the  scheme  is  based  are  found, 
on  examination,  to  be  erroneous  and 
impracticable,  Beaumont  v.  Meredith, 
3  Ves.  &  B.  180 ;  Clough  v.  Radcliffe, 
1  De  Gex  &  S.  164 ;  or  where  the 
partnership  is  formed  to  effect  a  par- 
ticular object,  which  is  found  to  be 
impracticable,  and  wholly  fails.  Nock- 
ells  V.  Crosby,  3  B.  &  C.  814,  5  Dow. 
&  R.  751 ;  [Seighortner  v.  Weissenborn, 
20  N.  J.  Eq.  172  ;]  or  where  the  circum- 
stances liave  so  changed  as  to  render  it 
impossible  to  carry  on  the  partnership 
without  injury  to  all  the  partners, 
Harrison  v.  Tennant,  21  Beav.  482 ;  or 
where  the  object  of  a  partnership  is 
destroyed,  as  a  steamboat,  Claiborne 
V.  Creditors,  18  La.  501 ;  or  if  one 
partner  excludes  or  claims  to  exclude 
the  other  from  his  proper  share  of 
control  in  the  business  ;  or  if,  though 
not  in  terms  excluding  him,  he  is  so 
conducting  himself  as  to  render  it  im- 
possible that  the  business  should  be 
conducted  on  the  stipulated  terms, 
Goodman  v.  Whitcomb,  1  Jac.  &  W. 
569  ;  Hale  v.  Hale,  4  Beav.  369  ;  Smith 
V.  Jeyes,  id.  503  ;  England  v.  Cowling, 
8  Beav.  129;  Chapman  v.  Beach,  1 
Jac.  &  W.  594;  Marshall  v.  Colman,  2 


id.  266 ;  Richards  v.  Davies,  2  Russ.  «& 
M.  347.  See  also  Kennedy  v.  Kennedy, 
3  Dana,  239  ;  Gowan  v.  Jeffries,  2 
Ashm.  296 ;  Maude  v.  Rodes,  4  Dana, 
144  ;  Story  v.  Moon,  8  id.  331 ;  Garret- 
son  V.  Weaver,  3  Edwards  Ch.  385. 
[In  determining  whether  the  court  will 
decree  a  dissolution,  it  will  consider  the 
state  of  the  partnership  business  and 
the  probable  effect  of  a  decree  thereon. 
Richards  ?'.  Baurman,  65  N.  C.  162. 
See  also  Popper  v.  Scheider,  7  Abb. 
(N.  Y.)  Pr.  N.  s.  56.]  And,  on  a  decree 
for  dissolution,  equity  will  make  such 
an  order  as  to  render  the  decree  effec- 
tive ;  namely,  by  ordering  a  defendant, 
in  England,  to  sign  a  notice  of  dis- 
solution in  "The  London  Gazette." 
Troughton  v.  Hunter,  18  Beav.  470. 

( /)  Norway  v.  Rowe,  19  Ves.  148  ; 
Waters  v.  Taylor,  2  Ves.  &  B.  304 ; 
Howell  V.  Harvey,  5  Ark.  278 ;  Master 
V.  Kirton,  3  Ves.  74  ;  De  Berenger  v. 
Hammell,  7  Jarm.  Conv.  26  ;  Gow  on 
Part.  (3d  edit.)  227  ;  Wilson  v.  Green- 
wood, 1  Swanst.  481  ;  Blakeney  v. 
Dufaur,  15  Beav.  40;  Hall  v.  Hall,  12 
id.  414,  and  note  to  419 ;  Williamson 
V.  Wilson,  1  Bland,  418  ;  Fogg  &  Van- 
derslice  v.  Johnston,  27  Ala.  432  ;  Dur- 
bin  V.  Barber,  14  Ohio,  311 ;  [Loomis 
V.  McKennie,  31  Iowa,  425].  Exclud- 
ing one  elected  trustee  in  an  unincor- 
porated company  may  be  good  ground 
for  a  decree  dissolving  the  partnership. 
Berry  v.  Cross,  3  Sandf.  Ch.  1.  [Or 
excluding  a  joint  stockholder  from  his 
right  to  participate  in  the  management 
of  the  partnership  concerns.  Werner 
V.  Leisen,  31  Wis.  169]. 


CH.  XIV.]  OP   DISSOLUTION   BY   DECREE.  499 

themselves,  and  hope  for  their  reform  and  reconciliation.  Nor 
will  the  decree  of  dissolution  be  pronounced  merely  because 
one  of  these,  or  similar  modes  of  misconduct,  goes  so  far  as  to 
expose  the  other  partners  to  some  inconvenience,  or  to  bring 
discomfort  upon  them.  And  if  the  mischief  complained  of  is 
specific,  and  a  habit  and  persisted  in,  the  court  may  see  that 
injunction  will  answer  as  well  as  dissolution  ;  and  this  is  to  be 
preferred,  because  it  is  a  less  violent  remedy.  (^) 

Such  is  the  general  language  of  courts  and  text-writers. 
But  *  behind  all  this  lies  the  general  question,  whether  *  460 
a  court  of  equity  would  insist  upon  binding  together,  in 
this  relation,  two  or  more  parties,  one  of  whom  distinctly 
desired  a  separation,  and  this  for  grounds  originating  in  any 
kind  of  misconduct  of  the  others.  No  application  for  dissolu- 
tion by  a  court  is,  of  course,  made  where  either  partner  may 
dissolve  it  at  his  pleasure  :  none,  therefore,  is  made,  unless 
there  is  a  valid  contract  of  partnership  to  last  for  a  time  cer- 
tain. And,  in  any  such  case,  we  cannot  but  think  the  practical 
rule  in  this  country  would  be  to  permit  the  parties  to  separate, 
provided  it  were  obvious  that  harmonious  and  profitable  co- 
operation was  not  to  be  expected  ;  and  especially  if  this  were 
made  impossible  by  the  fault  of  one  partner,  and  the  other 
desired  the  dissolution.  The  cases  cited  in  our  notes  will 
show  that  carelessness  and  waste  in  the  business  of  the  part- 
nership, the  non-entry  in  the  books  of  money  received,  the 
exclusion  of  the  partners  plaintiff  from  an  inspection  of  the 
books  and  accounts,  or  from  their  due  share  of  influence  and 
power  in  the  concerns  of  the  firm,  and  permission  of  a  partner 

(g)  Howell  v.  Harvey,  5  Ark.  279 ;  10 ;  Harrison  v.  Armitage,  4  Madd. 
Taylor  v.  Davis,  3  Beav.  388,  note  (e) ;  143  ;  Goodman  v.  Whitcomb,  1  Jac.  & 
Baring  i-.  Dix,  1  Cox,  218  ;  Hall  v.  Hall,  W.  589  ;  Marshall  v.  Colman,  2  id.  266; 
12  Beav.  414.  [In  the  matter  of  disso-  Eichards  v.  Davies,  2  Euss.  &  M.  347  ; 
lution,  courts  will  exercise  a  wide  dis-  Smith  v.  Jeyes,  4  Beav.  503 ;  Wall- 
cretion,  and  will  not  act  upon  slight  worth  v.  Holt,  4  Mylne  &  C.  635 ;  Fair- 
grounds ;  dissension  may  in  some  cases  thorne  v.  Weston,  3  Hare,  387  ;  Eich- 
be  a  suflScient  ground.  Slemmer's  ardson  v.  Hastings,  7  Beav.  325 ; 
Appeal,  58  Penn.  St.  168.]  But  see  note  Bailey  v.  Ford,  13  Sim.  495;  Carlen 
to  this  last  case,  id.  p.  *  419,  in  which  v.  Drury,  1  Ves.  &  B.  158.  Equity 
the  decision  in  this  case  was  reversed,  will  not  interfere  to  decree  the  specific 
on  the  ground  that  the  bill  did  not  execution  of  an  agreement  for  a  part- 
seek  a  dissolution  of  the  partnership,  nership,  as  it  might  be  dissolved  ira- 
See  also,  as  to  this,  Olivers.  Hamilton,  mediately  afterwards.  Henry  u.  Birch, 
2  Anst.  453  ;  Waters  v.  Taylor,  15  Ves.  9  Ves.  357. 


600  THE    LAW    OF    PARTNERSHIP.  [CH.  XIV. 

in  a  banking-house  to  a  customer  to  overdraw,  coupled  with 
the  taking  security  therefor  to  himself  personally,  —  have  all 
been  declared  sufficient  causes  for  dissolution.  (7i)  And  it  has 
been  said,  that  where  the  affairs  of  a  partnership  are  rightly 
before  the  court,  and  it  appears  that  these  causes  for  dissolu- 
tion exist,  and  in  a  degree  to  make  the  partnership  injurious 
to  innocent  persons,  the  court  will  decree  dissolution,  even 
although  that  relief  has  not  been  specifically  prayed  for.  (^) 

2.    Of  a  Decree  zvhere  Miseortduct  is  not  Charged. 

The  grounds  for  a  decree  of  dissolution,  when  fault  is  not 
imputed  to  any  partner,  are  also  numerous.  Some  of  these 
may  seem  to  belong  to  the  first  class,  or,  rather,  to  a  third 
class  intermediate  between  the  other  two,  because  they  are 
causes  which  spring  from  the  acts  of  a  partner,  although  they 
may  not  be  imputed,  at  least  directly,  to  his  fault  or  wrong- 
doing. 

Of  this  intermediate  class,  the  first  is  bankruptcy  or  insol- 
vency. This,  however,  is  of  such  magnitude  that  it 
*461  will  be  considered  in  *a  chapter  by  itself.  Here  we 
will  only  say,  that  the  reason  why  bankruptcy  of  the 
firm,  or  of  a  partner,  necessarily  produces  a  dissolution  of 
the  partnership,  is,  that  it  operates  at  once  an  absolute  trans- 
fer to  assignees  of  the  property  of  the  whole  firm,  or  of  the 
whole  interest  of  the  bankrupt  partner  in  the  property  of  the 
firm.  Having  no  longer  any  ownership,  either  in  the  stock  or 
in  the  profits,  all  foundation  for  the  relation  of  partner  is  taken 
away.  The  very  same  reason  applies,  and  with  the  same 
effect,  to  any  cause  or  act  which  takes  from  a  partner  all  this 
ownership  or  interest.  It  may  be  his  voluntary  and  absolute 
transfer  for  a  consideration,  or  his  transfer  by  way  of  mort- 
gage ;  but  then  it  produces  dissolution  only  when  the  mortgagee 
takes  possession.  Strictly  and  technically  speaking,  a  transfer 
by  way  of  pledge  would  have  this  effect  at  once,  because  pos- 
session in  the  pledgee  is  essential  to  the  nature  of  a  pledge. 

(h)  See  cases  cited  in  preceding  But  see  Hall  v.  Hall,  as  cited  on  p. 
notes.  *  459,  note  (5?). 

(i)  Loscorabe  v.  Russell,  4  Sim.  11. 


CH.  XIV.] 


OF  DISSOLUTION    BY   DECREE. 


501 


Or  it  may  be  a  levy  of  execution  upon  the  partner's  interest 
and    subsequent   sale,  (^j)     We    should  say,  however, 
that  an  attachment  on  mesne  process  *  would  not  have    *  462 
this  effect,  nor  any  further  process  until  actual  transfer, 
if,  in  the  mean  time,  the  partner  retains  possession.  (Jc) 

On  the  same  principle,  if  a  single  woman  who  is  a  partner 
marries,  we  have  already  said  that  her  marriage  operates,  at 
common  law,  an  immediate  dissolution,  because  it  vests  in  her 


(,/)  In  Griswold  v.  Waddington,  16 
Johns.  491,  Kent,  Ch.,  says  :  "  In 
speaking  of  the  dissolution  of  part- 
nerships, tlie  French  and  civil  law 
writers  say,  tliat  partnerships  are  dis- 
solved by  a  change  of  the  condition 
of  one  of  the  parties,  wliich  disables 
him  to  perform  his  part  of  the  duty  ; 
as  by  a  loss  of  liberty,  or  banishment, 
or  bankruptcy,  or  a  judicial  prohibition 
to  execute  his  business,  or  by  confis- 
cation of  his  goods.  The  English  law 
of  partnership  is  derived  from  the 
same  source ;  and,  as  the  cases  arise, 
the  same  principles  are  applied.  The 
principle  here  is,  that  when  one  of  the 
parties  becomes  disabled  to  act,  or 
when  the  business  of  the  association 
becomes  impracticable,  the  law,  as 
well  as  common  reason,  adjudges  the 
partnership  to  be  dissolved."  Fox  r. 
Hanbury,  Cowp.  445 ;  Skip  v.  Har- 
wood,  2  Swanst.  586 ;  Williamson  v. 
Wilson,  1  Bland,  418  ;  Gowan  v.  Jef- 
fries, 2  Ashm.  305 ;  Moody  v.  Payne, 
2  Johns.  Ch.  548  ;  Button  v.  Morrison, 
17  Ves.  194,  206.  Morton,  J.,  in  de- 
livering the  opinion  of  the  court  in 
Arnold  v.  Brown,  24  Pick.  93,  limits 
the  effect  as  follows  :  "  The  insolvency 
of  one  or  both  partners,  we  think, 
would  not  produce  this  effect.  The 
insolvency  of  one  might  furnish  to 
the  other  sufficient  ground  for  declar- 
ing a  dissolution.  But,  in  this  State, 
the  inability  to  pay  the  company  or 
the  private  debts  of  the  partners, 
would  not,  per  se,  operate  as  a  disso- 
lution. In  England,  bankruptcy,  and 
in  some  of  our  States  where  insolvent 
laws  exist,  legal  insolvency,  may  pro- 
duce a  dissolution.  Wherever  the  one 
or   the    other    operates    to    vest    the 


bankrupt's  or  insolvent's  property  in 
assignees  or  other  ministers  of  the 
law,  it  would  produce  that  effect. 
Probably  a  voluntary'  assignment  by 
a  partner  of  all  his  property  would  do 
the  same.  In  such  cases,  the  partner, 
being  divested  of  his  property,  and 
rendered  unable  to  perform  the  duties 
of  a  partner,  would,  of  course,  cease 
to  be  one ;  and  his  assignees  coming 
in  as  tenants  in  common,  and  not 
partners,  the  partnership  would  be 
dissolved."  On  this,  see  Crispe  v. 
Perritt,  Willes,  467,  1  Atk.  133  ; 
Hague  V.  Rolleston,  4  Burrow,  2174 ; 
Smith  V.  Stokes,  1  East,  363;  Smith 
V.  Oriell,  id.  368 ;  Ex  parte  Williams, 
11  Ves.  5;  Wilson  v.  Greenwood,  1 
Swanst.  482 ;  Harvey  v.  Crickett,  6 
Maule  &  S.  336;  Barker  v.  Goodair, 
11  Ves.  78  ;  Marquand  v.  New  York 
Manuf.  Co.,  17  Johns.  529 ;  Waters  v. 
Taylor,  2  Ves.  &  B.  299.  In  Haber- 
shon  V.  Blurton,  1  De  Gex  &  S.  121, 
it  is  expressly  decided  that  execution 
and  assignment  of  the  interest  of  one 
of  the  partners  in  a  firm  dissolves  the 
partnership.  And  see  Renton  v.  Chap- 
lain, 1  Stockt.  (N.  J.)  62.  So,  a  sale 
by  one  partner  of  all  his  interest  to 
his  copartner  works  a  dissolution  of 
the  partnership,  Rogers  v.  Nichols, 
20  Tex.  719 ;  or  sale  to  a  stranger  or 
partner,  Cochran  v.  Perry,  8  Watts 
&  S.  262 ;  Reece  v.  Hoyt,  4  Ind.  169 ; 
Marquand  v.  The  New  York  Manuf. 
Co.,  17  Johns.  525. 

(k)  On  questions  connected  with 
the  attachment  of  the  property  of  one 
member  of  a  partnership,  see  ante,  p. 
*  342,  et  seq. ;  Estabrook  v.  Messer- 
smith,  18  Wis.  545. 


602  THE    LAW    OP    PARTNERSHIP.  [CH.  XIV. 

husband  all  her  interest  and  property  in  the  firm.  Her  husband 
cannot  claim,  as  matter  of  right,  to  he  admitted  as  jyartner  ;  and, 
if  he  becomes  so  by  agreement,  it  is  a  new  partnership.  And 
even  if,  by  some  valid  contract,  the  marriage  leaves  her  property 
under  her  control,  she  loses  by  marriage  the  power  of  independ- 
ent personal  action  in  matters  of  business,  and  this  would  suffice 
to  operate  a  dissolution.  But  if  any  peculiar  agreements  or  trusts, 
or  other  circumstances,  prevented  this  marriage  from  operating 
a  dissolution  of  itself,  a  court  of  equity  would  deem  it  sufficient 
cause  for  a  decree  of  dissolution,  in  almost  any  sup})osable 
case.  (0  On  both  of  these  principles  combined,  a  partner 
who  passes  under  guardianship  for  any  reason  —  whether  im- 
proper conduct,  or  weakness  of  mind,  or  other  cause  —  has,  in 

the  first  place,  his  property  taken  out  of  his  hands,  and, 
*463    in  the  next  place,  is  deprived  of  the  power  *  of  entering 

into  valid  mercantile  transactions ;  and,  therefore,  he 
must  cease  to  be  a  partner.  The  guardian,  entering  into  pos- 
session, becomes  tenant  in  common  with  the  other  partners, 
and  has  a  right  to  an  account.  But  it  would  seem  that  such 
guardianship  dissolved  the  partnership  of  itself.  If  not,  it 
would  undoubtedly  be  deemed  good  cause  for  a  dissolution  by 
a  decree,  (m) 

So,  pecuniary  inability  to  fulfil  material  engagements  with 


(/)  Both  Watson  and  Gow,  in  their  was   filed   as   early   as    Hilary   Term, 

works  on  partnership,  say  this  question  1820,  the  marriage  having  taken  place 

has  never  been  directly  decided ;  but  towards   the   close    of    the    preceding 

in   Nerot    v.   Burnand,    4    Russ.    260,  year.       I   agree,   therefore,    with    the 

Lord    Lyndhurst    said  :    "  When   did  Vice-Chancellor,   in    saying    that   the 

the  partnership  terminate  ■?     It  was  a  partnership  was  dissolved  on  the  16th 

partnership  for  no  definite  period ;  and  of  September,  1819."     There  is,  how- 

either  party,  therefore,  might  at  any  ever,  some  room  for  doubting  if  this 

moment   have   put   an    end   to   it  by  case  holds  any  thing  more  than  that, 

notice.     Miss  Nerot  married  Mr.  Bur-  as  it  was  a  partnership  for  no  limited 

nand,  without  consulting  her  brother ;  period,  either  party  could  put  an  end 

or,   at  least,    without   his    assent.      If  to   it   by   notice.      See   ante,   p.   *  23, 

she  chose  so  to  change  her  situation  et  seq. 

as   to    make   Mr.   Nerot,   in    point   of  (m)  Domat,  b.  1,  tit.  8,  §  5,  arts.  12, 

fact,  —  if  the  partnership  went  on, —  13;  Cod.,  lib.  4.  tit.  37,  b.  7;  Pothier, 

a   partner    with   Burnand,   Mr.    Nerot  Pand.   lib.   17,  tit.  2,   n.   67;    2  Bell's 

had  a  right,  the  moment  he  received  Comm.,  b.  7,  ch.  2,  pp.  634,  635  (5th 

notice  of  that  step,  to  act  upon  it,  and  ed.);     Griswold    v.    Waddington,     16 

say,  '  Your  marriage  has  put  an   end  Johns.   438,   491  ;     Milne    v.    Bartlet, 

to  the  partnership.'     No   delay  took  3  Jur.  358. 
place    in    that   respect ;    for  the    bill 


CH.  XIV. 1 


OF    DISSOLUTION    BY    DECREE. 


603 


the  other  partners,  wliether  it  were  the  fault  or  the  misfortune 
of  the  partner,  would  be  deemed  a  sufficient  cause.  As,  if  the 
partnership  rested  either  expressly  or  by  implication,  and  sub- 
stantially, upon  the  agreement  of  one  of  the  partners  to  con- 
tribute at  any  certain  time,  or  under  certain  circumstances,  a 
certain  amount  to  the  funds  of  the  partnership,  or  to  pay  certain 
debts,  or  make  certain  purchases  for  the  firm,  and  he  fails  to 
perform  this  promise,  through  pecuniary  inability,  it  would  be 
a  sufficient  cause  for  dissolution,  (w)  So,  if  he  were  unable  to 
do  his  duty  to  the  firm,  by  disease,  not  in  its  nature  temporary, 
but  likely  to  continue  for  a  long  time,  if  it  be  not  incurable, — 
as  by  palsy,  for  example  ;  or  if  he  permanently  loses  health  or 
strength  in  any  way,  or  his  skill,  or  makes  it  apparent  that  he 
does  not  possess  the  skill  which  is  needed  for  the  proper  exe- 
cution of  the  work  he  undertakes  to  do,  —  any  cause  of  this  kind 
would  be  sufficient,  (o) 

*  Insanity,  of  course,  would  be  among  the  strongest    *  464 
grounds  for  decreeing  dissolution,  especially  as  the  in- 
sane partner  could  not  of  himself  agree  to  the   dissolution, 


(;;)  Turnipseed  i\  Goodwin,  9  Ala. 
372.  This  case  liolds  that,  a  partner- 
ship heing  formed  for  tlie  purpose  of 
buying  and  selling  lands,  each  partner 
to  furnish  an  equal  share  of  money,  if 
one  should  refuse  to  make  the  neces- 
sary advances,  it  would  be  good  cause 
for  putting  an  end  to  the  partnership  ; 
but,  as  long  as  the  partnership  sub- 
sisted, a  larger  advance  by  one  partner 
than  it  was  his  duty  to  make  would 
be  compensated  by  allowing  him  in- 
terest on  such  excess,  or  it  might 
furnish  a  cause  of  action  for  a  breach 
of  the  articles  of  copartnership.  See 
also,  on  this  point,  Boyd  v.  Mynatt, 
4  Ala.  79.  The  same  result  would 
arise  if  one  of  the  partners  had  lost 
his  capacity  to  act  sui  juris,  by  con- 
viction and  attainder  of  treason,  or  by 
absconding  for  debt  or  crime  or  fel- 
ony, or  any  state-prison  offence. 
Whitman  v.  Leonard,  3  Pick.  117. 
See  Hunt  v.  Clark,  6  De  Gex,  M.  &  G. 
232,  27  Eng.  L.  &  Eq.  561. 

(o)  Pothier  says,  that  if  a  partner- 
ship has  been  contracted  between  two 


persons,  founded  on  the  contribution 
of  capital  by  the  one,  and  of  personal 
labor  and  skill  by  the  other,  and  the 
latter  should  become  disabled  by  the 
palsy  to  afford  either  the  labor  or 
skill,  the  partnership  would  be  dis- 
solved, because  the  object  of  it  could 
not  be  fulfilled.  Traite  du  Con.  de 
Soc,  Nos.  142,  152;  2  Bell's  Comm, 
634,  035;  3  Kent's  Comm.  (9th  ed.) 
71;  Story  on  Part.  §§  291-294.  In 
Sayer  r.'Bennet,  1  Cox,  107,  109, 
Lord  Kenyon  said :  "  I  think,  indeed, 
it  may  be  laid  down  as  a  general  rule 
(without  considering  the  particular 
circumstances  of  the  case),  that  where 
partners  are  to  contribute  skill  and 
industrj',  as  well  as  capital,  if  one 
partner  becomes  unable  to  contribute 
that  skill,  a  court  of  equity  ought  to 
interfere  for  both  their  sakes."  Jones 
V.  Noy,  2  Mylne  &  K.  125,  129,  130 ; 
Wrexiiam  v.  Hudleston,  1  Swanst. 
514,  note  ;  Waters  v.  Taylor,  2  Ves. 
&  B.  299;  Wray  v.  Hutchinson,  2 
Mylne  &  K.  235,  238. 


50-i  THE    LAW    OF    PARTNERSHIP.  [CH.  XIV. 

however  desirable  for  himself.  And  here,  undoubtedly,  a  de- 
cree of  dissolution  would  be  granted  upon  the  petition  of  those 
having  charge  of  the  insane  person  and  his  property,  even,  per- 
haps, without  any  cause  additional  to  the  fact  of  insanity. (|?) 
One  qualification  belongs  to  this  cause,  as  it  does  to  most  of 
those  which  have  been  mentioned :  it  is  that  of  degree.  Of 
course,  delirium  from  fever,  or  from  a  blow  on  the  head,  lasting 
a  short  time  and  passing  entirely  away,  would  not  be  sufficient 
cause.  But,  while  there  can  be  no  specific  rule  as  to  the  meas- 
ure of  insanity  which  will  determine  its  sufficiency  as  a  cause 
for  the  dissolution  of  partnership,  equity  would  decide  such  a 
question  by  a  reference  to  the  universal  standard  which  deter- 
mines all  questions  of  this  kind  :  Is  the  insanity  such,  in  cause, 
character,  and  degree,  as  to  incapacitate  the  partner  from  a 
reasonable  performance  of  his  duty  now,  and  to  take  away  all 
reasonable  hope  of  his  so  performing  it  within  a  reasonable 
time  ?  (g) 

There  is  one  other  question,  which,  although  it  bears  some- 
what on  the  other  causes  enumerated,  is  far  more  important  in 
its  reference  to  insanity;  and  that  is,  whether  the  insanity  — 
supposing  it  to  be  certain,  complete,  and  incurable  —  of  itself 
terminates  the  partnership,  or  is  only  good  cause  for  a 
*  465    decree  of  *  dissolution.  (7-)     The  question  might  come 


(p)  A  leading  case  on  this  point  is  Wrexham  v.  Hudleston,  1  Swanst.  514, 

Saver   v.  Bennet,  I   Cox,  108.     Lord  note. 

Eldon  refers  to  this  case  in  deciding  ('/)  Pearce  r.  Chamberlain,   2  Ves. 

that   a   dissolution  of  partnership,  on  33 ;    Sayer   v.   Bennet,    1    Cox,    107  ; 

the  lunacy  of  a  partner,  is  to  be  ob-  Sadler  v.  Lee,  6  Beav.  324.     See  the 

tained  only  by  decree,  and  not  by  the  remarks    of    Langdale,    Ld.    Ch.,    in 

act  of  the  survivors,  nor  as  long   as  giving  judgment  in  this  last  case.    See 

they  carry  on  business  with  his  capital,  also    Crawshay   v.    Maule,    1    Swanst. 

He  says  :  "  It  was  supposed  that  I  had  514,  note. 

contradicted   Lord   Kenyon's    doctrine  (r)  This    is    the    precise    question 

in  Sayer  v.   Bennet.     Certainly  I  did  decided  in  Jones   v.  Noy,  2  Mylne  & 

not  contradict  that  doctrine ;    nor  did  K.    125.      The   Master   of    the    Rolls 

I  make  any  decree  which,  duly  con-  said:  "  It  is  clear,  upon  principle,  that 

sidered,  was  an  assent  to  it."     Waters  the  complete  incapacity  of  a  party  to 

V.   Taylor,  2  Ves.  &  B.  303.     See  also  an   agreement  to  perform  that  which 

Kirby   v.   Carr,  8  Younge  &  C.  184 ;  was  a  condition   of  the  agreement  is 

The  Cape  Sable  Co.'s   Case,  3  Bland,  a  ground  for  determining  the  contract. 

606-674;     Griswold     v.    Waddington,  The  insanity  of  a  partner  is  aground 

15  Johns.  57 ;   Leaf  v.  Coles,  12  Eng.  for  the  dissolution  of  the  partnership, 

L.  &  Eq.  117 ;  Sadler  v.  Lee,  6  Beav.  because   it   is    immediate    incapacity  ; 

324  ;  Jones  v.  Noy,  2  Mylne  &  K.  125  ;  but  it  may  not,  in  the  result,  prove  to 


CH.  XIV.]  OF   DISSOLUTION   BY   DECREE.  505 

up  in  this  form :  A  partner  is  taken  to-day  with  an  insanity, 
wliich  is  soon  found  to  be  hopeless  and  entire.  Next  week,  or 
month,  before  lawfully  appointed  guardians  have  obtained,  or 
could  have  obtained,  a  decree  of  dissolution,  his  partners,  be- 
cause they  are  deprived  of  his  sagacity  or  relieved  from  his 
control,  rush  into  mad  or  even  fraudulent  speculations,  and  not 
only  lose  all  the  property  of  the  firm,  but  bring  upon  it  an  insol- 
vency which  it  will  require  all  the  insane  man's  private  property 
to  pay.  He  is  not  liable  for  these  debts,  if  his  insariity  termi- 
nated the  partnership;  and,  we  should  say,  he  would  not  then 
be  liable  even,  without  notice,  (s)  on  the  same  grounds  on  which 
notice  is  not  needed  where  the  dissolution  is  by  death.  But,  if 
his  insanity  did  not  terminate  his  partnership,  he  and  his  prop- 
erty are  liable  to  all  innocent  parties  for  all  debts  contracted 
before  the  decree. 

This  question  has  been  somewhat  considered.  There  are  not 
wanting  strong  reasons  and  high  authority  for  the  conclusion, 
that  insanity,  certain,  complete,  and  hopeless,  of  itself  and 
at   once  dissolves   the  partnership.  (<)      But,  we   think,   the 

be   a  ground   of    dissolution,   for   the  even  to  the  filing  of  the  bill ;  still  less 

partner  may  recover  from  his  malady,  to  the  time   when  the  defendant  first 

When  a  partner,  therefore,  is  affected  became  incapable  of  attending  to  busi- 

with  insanity,  the  continuing  partner  ness. 

may,  if  he  think  fit,  make  it  a  ground  (s)  In  reference  to  the  effect  of  a 
of  dissolution  ;  but,  in  that  case,  I  con-  notice  of  dissolution  to  an  insane  part- 
sider  with  Lord  Kenyon,  that,  in  order  ner,  it  has  been  held,  that  such  a  notice 
to  make  it  a  ground  of  dissolution,  he  is  sufiicient  to  put  an  end  to  a  part- 
must  obtain  a  decree  of  the  court.  If  nership.  Mellersh  v.  Keen,  27  Beav. 
he  does  not  apply  to  the  court  fo^  a  236 ;  Robertson  v.  Lockie,  10  Jur. 
decree  of  dissolution,  it  is  to  be  con-  533;  Bagshaw  y.  Parker,  10  Beav.  532. 
sidered  that  he  is  willing  to  wait  to  [t)  C.  J.  Parker,  in  10  N.  H.  161, 
see  whether  the  incapacity  of  his  part-  says  :  "  It  has  been  held,  in  England, 
ner  may  not  prove  merely  temporary,  that  the  insanity  of  one  partner  does 
If  he  carry  on  the  partnership  business  not  operate  as  a  dissolution  of  the 
in  the  expectation  that  his  partner  partnership ;  but  that  object  must  be 
may  recover  from  his  insanity,  so  attained  through  a  court  of  equity, 
long  as  he  continues  the  business  with  But  the  soundness  of  this  principle 
that  expectation  or  hope  there  can  may,  perhaps,  be  doubted.  It  cer- 
be  no  dissolution."  See  also  Kirby  tainly  could  not  have  been  applied 
V.  Carr,  3  Younge  &  C.  184 ;  Besch  v.  here  prior  to  1832,  as  we  had  before 
Frolich,  1  Phillips  Ch.  172,  7  Jur.  73 ;  that  time  no  court  through  whose 
Sander  v.  Sander,  2  CoUyer,  276.  decree  in  equity  a  dissolution  could 
Besch  V.  Frolich  holds  that,  on  a  bill  have  been  effected.  Admitting  it  to 
to  dissolve  a  partnership  on  the  ground  be  correct  in  its  fullest  extent,  how- 
of  the  lunacy  of  a  partner,  the  court  ever,  it  would  not  affect  this  case 
will  not  make  its  decree  retrospective  (a  question  of  the  agency  of  a  wife 


506  THE    LAW    OF   PARTNERSHIP.  [CH.  XIV. 

*  446  decided  weight  of  *  authority,  in  England  and  in  this 
country,  opposes  this  conclusion,  and  holds  that  the  part- 
nership continues  until  it  is  dissolved  by  decree,  (m)  Still,  we 
think,  there  is  one  exception  wiiich  the  courts  would  allow.  If 
the  insanity  were  determined  by  due  inquest,  under  process  of 
law,  and  due  public  notice  were  given,  we  cannot  doubt  that 
this  would  be  held  to  operate  a  .dissolution  as  effectually  as 
death,  and  with  many  of  the  incidents  of  a  dissolution  by  death. 
It  is  true  that,  in  such  case,  in  this  country,  a  guardian  would 
probably  be  at  once  appointed  ;  and  this  appointment  would,  as 
we  have  seen,  effect  a  dissolution.  We  think,  however,  that  a 
legal  finding  and  declaration  of  insanity  would  have  this  effect. 
It  may  be  well,  also,  to  remark,  that,  in  a  case  of  insanity, 
when  the  appointment  of  guardians  would  cause  much  delay, 
we  have  no  doubt  a  court  of  equity  would  receive  a  petition 
from  any  proper  person  acting  as  the  next  friend  of  the  insane, 
and,  upon  cause  shown,  issue  summarily  a  decree  of  dissolu- 
tion. A  verdict  of  an  inquisition  of  lunacy  should  not,  how- 
ever, have  any  retrospective  influence  by  relation,  and  affect 
any  honest  transaction  which  took  place  previous  to  the 
verdict,  (v) 

during  the  senseless  state  of  her  hus-  the  court  held  that  an   inquisition  of 

band) ;  for  each  partner  has  an  niter-  lunacy  found  against  a  member  of  a 

est,  by  the  partnership  contract,   and  partnership    dissolves    ipso  facto    the 

the  interest  of  one  partner  would  not  partnership.     Turley,  J.,  in  delivering 

be  terminated  by  the  insanity  of  an-  the  opinion  of  the  court,  said :  "  Upon 

other.     In  making  a  sale  or  contract,  the  trial,  it  was  contended  for  Isler,  the 

he  does  not  act  as  agent,  but  in  his  administrator    of    Joseph    H.    Bryan, 

own  right ;  and  the  partnership  name  that  the  partnership  previously  exist- 

may   be    used    by  one,    without    any  ing  between  him  and  Henry  H.  Bryan 

supposition    that    another    acts    indi-  was    dissolved  by  the   commission   of 

vidually,    or    has   any   knowledge   or  lunacy  found  against  Joseph  H.  Bryan  : 

volition    in    relation    to    the    matter,  and  that,  therefore,  Henry  H.  Bryan 

But,  so  long  as  the  partnership  con-  had   no   power   or  authority   to    bind 

tinues,  the  act  of  one  binds  the  others ;  him  by   the  note  executed  as   before 

and  as  it  is,  in  its  effect,  the  act  of  all  stated,  and  so  it  was  held  by  tlie  circuit 

the   partners,    it   may    deserve     great  judge,    and,    as    we    think,    correctly; 

consideration,  whether  the  insanity  of  for,  both  upon  principle  and  authority, 

one,  in  the  absence  of  any  stipulation  the  inquisition  of  lunacy,  as  found,  did 

to  the  contrary,  does  not  operate  ipso  dissolve   the    i^artnership,    ipso  facto, 

/ac?o  as  a  dissolution  of  the  partnership  and    H.    H.    Bryan,    at    the    time    he 

itself."  executed   the   note,   could    only   bind 

(«)  See    cases    cited    in    preceding  himself  thereby."    In  Milne  v.  Bartlet, 

notes.  3  Jur.  358,  it  was  held,  that  a  commis- 

[v)  In  Isler  v.  Baker,  6  Humph.  85,  sion  of  lunacy  finding  the  fact  of  in- 


CH.  XIV.]  OF    DISSOLUTION   BY   DECREE.  507 

*  Beside  these  causes,  it  is  possible  that  the  continuance  *  467 
of  a  partnership  may  become  impracticable  for  any  hon- 
est purpose,  by  something  in  the  nature  or  the  condition  of  the 
business  for  which  it  was  formed.  As  if  to  carry  on  a  cotton 
manufactory,  and  the  l)uildings  are  burned  down,  and  the  part- 
ners have  no  means  to  build  others ;  or  to  carry  on  mining, 
and  it  can  be  shown  that  the  business  is  disastrous  and  waste- 
ful, and  that  only  reckless  and  improvident  persons  could  pursue 
it.  We  have  seen  that  such  circumstances  might,  at  once, 
dissolve  the  partnership.  If  they  had  not  this  effect,  equity 
would  certainly  give  the  proper  relief  to  any  partners  who 
would  otherwise  l^e  bound  by  their  contract  to  continue  in  a 
business  which  could  only  destroy  their  remaining  means,  or 
had  become  an  entirely  different  thing  from  that  which  they 
had  contemplated,  (w) 

We  doubt  whether  a  dissolution  can  be  said  to  be  made  by 
an  award  of  arbitrators  to  that  effect,  even  where  the  award  is 
wholly  unobjectionable.  Perhaps,  partners  would  seldom  re- 
fuse, except  on  grounds  which  would  justify  setting  aside  any 
other  award.  And,  if  they  did  so  refuse,  equity  would  prob- 
ably deem  such  an  award  as  a  cause  for  decree  of  dissolution, 
which  was  entitled  to  much  consideration.  But  still  it  must 
be  the  acceptance  of  the  award  by  the  parties,  and  carry- 
ing it  into  effect,  or  a  decree  carrying  it  into  effect,  which 
operates  the  dissolution,  and  not  the  award  itself.  We  have 
seen  that  equity,  as  well  as  law,  would  be  reluctant  to  en- 
force an  agreement  to  refer  this  or  any  other  question  to 
arbitrators  ;  and  for  the  reason  that  it  dislikes  to  oust  itself  of 
its  proper  jurisdiction.  "  This  court,"  said  Lord  Eldon,  "  is  as 
likely  to  decide  aright  as  any  arbitrators."  But  as  the  law 
holds  parties  to  any  award  made  upon  questions  actually  and 
properly  submitted,  and  open  to  no  objection  from  insufficiency 
of  power,  or  erroneous  exercise  of  power  on  the  part  of  the 

sanity  was  sufficient  evidence  to  jus-  (w)  Baring  v.    Dix,    1    Cox,  213; 

tify  a  decree  for  dissolution,  without  a  Claiborne   v.    Creditors,    18  La.   501 ; 

reference  to  the  master  for  an  inquirj\  Beaumont   v.   Meredith,   3  Ves.  &  B. 

As   to   the   retrospective    effect   of    a  180;    Clough  v.   Radcliffe,   1    De    Gex 

decree  of  dissolution  for  insanity,  see  &  S.  164;  Nockels  v.  Crosby,  3  B.  & 

Besch  V.  Frolich,  cited  ante,  p.  *  465,  C.  814,  5  Dow.  &  R.  751 ;  Harrison  v. 

note  (r).  Tennant,  21  Beav.  482. 


608 


THE   LAW   OP   PARTNERSHIP. 


[CH.  XIV. 


arbitrators,  so  would  equity ;  and,  therefore,  we  think  it  would 
compel  a  dissolution  so  awarded,  (a;) 


(.r)  The  leading  case  on  the  power 
of  arbitrators  to  dissolve  a  partnership 
when  all  matters  in  difference  are  re- 
ferred, is  Green  v.  Waring,  1  W.  Bl. 
475.  See  also  Street  v.  Rigby,  6  Ves. 
815;  Heath  v.  Sansom,  4  B.  &  Ad. 
172  ;  Maley  v.  Newman,  5  Dow.  &  R. 
317  ;  Byers  v.  Van  Deusen,  5  Wend. 


268;  Rolle  Arbitr.  b.  2 ;  3  Vin.  Abr. 
42.  If  an  arbitrator  be  appointed  to 
arbitrate  a  certain  measure  contem- 
plated between  two  parties  as  a  dis- 
solution of  partnership,  he  is  not 
necessarily  bound  to  direct  that  the 
partnership  shall  be  dissolved.  Sim- 
mons V.  Swaine,  1  Taunt.  549. 


CH.  XV.]  OF   BANKRUPTCY.  609 


CHAPTER   XV. 


OF    BANKRUPTCY    AND   INSOLVENCY. 

An  act  to  establish  a  uniform  system  of  Bankruptcy  through- 
out the  United  States  was  passed  by  Congress,  and  approved 
March  2,  1867  ;  and  there  have  been  some  later  acts  in  amend- 
ment of  the  first.  The  36th  section  of  that  act  relates  to  the 
Bankruptcy  of  Partnerships,  and  applies  to  corporations  and 
partnerships  the  provision  of  the  Act.  We  shall  treat,  in  this 
chapter,  of  the  questions  which  have  arisen  in  England  and 
this  country,  under  the  application,  to  partners  and  partnerships, 
of  the  laws  of  bankruptcy  and  insolvency. 

SECTION    I. 

WHEN    AND    HOW    A    BANKRUPTCY   DISSOLVES    A    PARTNERSHIP. 

*  It  is  a  well-established  rule  of  law  and  of  equity,    *  469 
that  Bankruptcy  or  Insolvency,  meaning  hereby  legal 
and  technical  bankruptcy  or  insolvency,  whether  of  one  part- 
ner or  of  the  firm  per  se,  operates  a  dissolution  of  the  part- 
nership, (a) 

(a)  Fox   V.   Hanbury,    Cowp.  445;  a    creditor.      Re    Krueger,   2    Lowell 

Ex  parte  Smith,  5  Ves.  295;  Wilson  v.  Dec.  (U.  S.  Dist.  Ct.)  66;  Re  Disideri 

Greenwood,  1  Swanst.  471 ;  Crawshay  &  Co.,  L.  E,.  11  Eq.  242 ;  Re  Rowland, 

V.  Collins,  15  Ves.  217  ;  Marquand  v.  L.  R.  1  Ch.  421  ;  Campbell  v.  Hastings, 

New  York  Manuf.  Co.,  17  Johns.  525  ;  29  Ark.  512  ;   Carmicliael  v.  Greer,  55 

Griswold  v.   Waddington,   16  id.  436,  Ga.   116.     An  insolvent  member  of  a 

491 ;  Williamson  v.  Wilson,  1  Bland,  dissolved  firm,  who  had  given  a  bond 

418;  Gowan  y.  Jeffries,  2  Ashm.  296;  with  a  solvent   surety   to   his    former 

Smith   V.  De  Silva,    Cowp.    471;    Ex  copartners  to  pay  the  debts  of  the  firm, 

parte  Ruffin,  6  Ves.  126;  Crawshay  i'.  cannot  petition  his  late  copartners  (the 

Maule,  1  Swanst.  507,  note;    [Wilkins  latter   being  solvent)  into  bankruptcy, 

i;.   Davis,    15   N.    B.  460,    Lowell,  J. ;  Re  Bennett  &   Ames,  2  Lowell  Dec. 

Halsey  v.  Norton,  45  Miss.   703.     One  (U.  S.  Dist.  Ct.)  400.     A  person  who 

who  permits  himself  to  be  held  out  as  is   partner   in  two    firms  m.ay   be  ad- 

a  partner  may  be   made  a  bankrupt,  judged  bankrupt  with  each  firm,  /w  re 

as  a  member  of  the  .firm,  at  the  suit  of  Jewett,  15  N.  B.  R.  126.     A  petition 


610  THE    LAW    OF    PARTNERSHIP.  [CH.  XV. 

A  question  exists,  however,  as  to  the  time  when  a  dissolution 
from  this  cause  takes  place.  In  England,  it  seems  now  well 
settled,  that  the  dissolution  does  not  take  place  until  it  is  for- 
mally declared  by  competent  authority  ;  but  then  it  goes  back  in 
its  effect,  by  relation,  to  the  time  when  an  act  of  bankruptcy 
was  committed.  (5)  We  should  say,  that  the  dissolution  took 
place  as  soon  as  the  assets  were  vested  in  the  assignee,  with 
perhaps  a  retrospective  effect,  carrying  back  the  dis- 
*  470  solution  to  the  *  time  of  the  filing  of  the  petition 
of  bankruptcy,  or  possibly  only  to  the  issuing  of  the 
warrant,  (c) 

That  the  cause  why  bankruptcy  operates  dissolution,  is  its 
taking  all  interest  and  property  in  the  partnership  stock  out  of 
the  bankrupt's  hands,  seems  to  be  clear.  Whatever  has  this 
effect  causes  a  dissolution.  Thus,  if  there  be  a  prayer  for  an 
account  and  a  receiver,  the  appointment  of  a  receiver  operates 
a  dissolution,  if  he  takes  all  the  property  into  his  own  hands 
and  possession ;  so  that,  after  such  appointment,  the  power  of 
giving  preferences  among  the  creditors  is  gone.  (^cT)  But  if 
he  is  appointed  rather  as  a  manager  or  overseer,  leaving  the 

of  one  member  of  a  firm  to  have  the  a  dissolution.     But,  in  this  State,  the 

firm  declared  bankrupt  is  no  bar,  before  inability   to  pay  the  company  or  the 

adjudication,  to  a  suit  by  one  of  the  private   debts  of  the  partners   would 

partners  on  a  claim  due  him  individu-  not  per  se  operate  as  a  dissolution."    In 

ally.     Booth  i-.  Meyer,  Sup.  Ct.  Penn.  England,  bankruptcy,  and  in  some  of 

October,  1876, 14  N.  B.  K.  575.    When  our  States  where  insolvent  laws  exist, 

all  the  members  of  one  firm  are  partners  legal  insolvency,  may  produce  a  disso- 

in  another  firm,  they  cannot  prove  its  lution.      Wherever    the    one    or    the 

debt  against  the  latter.     I?i  re  Savage,  other  operates  to  vest  the  bankrupt's 

16  N.  B.  R.    368,  U.    S.  Dist.  Ct.  N.  or  insolvent's  property  in  assignees  or 

D.  N.  Y.]  other   ministers  of  the  law,  it  would 

(b)  Fox  V.  Hanbury,  Cowp.  445;  produce  that  eSect.  Probably  a  vol- 
Hague  V.  Rolleston,  4  Burr.  2174 ;  Ex  untary  assignment  by  a  partner,  of  all 
parte  Smith,  5  Ves.  295;  Harvey  v.  his  property,  would  do  the  same.  In 
Crickett,  5  Maule  &  S.  336  ;  Dutton  v.  Pennsylvania,  it  is  held,  that  simple 
Morrison,  17  Ves.  194  ;  Barker  v.  Good-  insolvency,  without  an  assignment  or 
air,  11  id.  78;  Thomason  v.  Frere,  10  any  judicial  process,  does  not  work  a 
East,  418 ;  Siegel  v.  Chidsey,  28  Penn.  dissolution  of  the  partnership,  nor  di- 

287  ;  Smith  v.   Stokes,  1  East,  364.        vest  the  partners  of  their  dominion  over 

(c)  Morton,  J.,  in  Arnold  v.  Brown,  the  partnership  property.  Siegel  v. 
24  Pick.  93,  held  that  "  the  insolvency     Chidsey,  28  Penn.  287. 

of  one  or  both  partners  we  think  would  (d)  Egberts  v.  Wood,  3  Paige,  517. 
not  produce  this  elTect.  The  insol-  The  receiver  is  entitled  to  the  posses- 
vency  of  one  might  furnish  to  the  sion  of  the  books  of  the  firm.  Sue- 
other  sufficient   ground   for  declaring  cession  of  Andrew,  16  La.  Ann.  197. 


CH.  XV.]  OF    BANKRUPTCY.  511 

property  where  it  stood  before,  we  should  doubt  whether  it 
would  have  the  effect  of  a  dissolution.  How  far  it  would  con- 
trol or  restrain  the  power  of  disposing  of  the  effects  would 
probably  depend  upon  the  terms  of  the  decree.  Moreover,  it 
was  distinctly  lield^  where  there  were  no  statutes  of  insolvency, 
properly  so  called,  that  actual  insolvency,  or  inability  and 
refusal  to  pay  debts,  does  not  operate  a  dissolution  ;  and  the 
reason  assigned  is,  that  it  does  not  of  itself  transfer  the  prop- 
erty of  the  insolvent  to  assignees.  And,  even  in  England, 
absconding  is  held  not  to  operate  a  dissolution,  although 
a  very  strong  act  of  bankruptcy,  on  which  a  sequestration 
may  be  founded,  which  shall  go  back  by  relation  to  the 
absconding,  (e) 

*  Formal  and  complete  Ijankruptcy  acts  upon  a  part-  *  471 
nership  in  many  respects  like  death.  (/)  If  it  be  the 
bankruptcy  of  the  firm,  it  is  like  the  death  of  all  the  partners. 
If  the  bankruptcy  of  one  partner,  it  is  like  his  death.  And  we 
should  expect  this  result  upon  a  mercantile  partnership,  be- 
cause bankruptcy  is  the  death  of  the  bankrupt  as  a  mer- 
chant. If  discharged,  he  may  begin  again,  free  from  his  old 
debts,  and  without  his  old  means,  and  he  begins  as  a  new 
man. 

Some  of  the  consequences  which  illustrate  the  analogy  be- 
tween bankruptcy  and  death  are  these  :  The  bankrupt  loses  all 
possession  of  his  property,  and  all  power  over  it,  and  all  inter- 
est in  it.  There  is  always  a  legal  possibility  that  the  assets 
may  pay  his  debts  and  leave  a  surplus ;  and  when  this  happens 
in  fact,  the  interest  and  right  of  the  party  revive,  because  he  is 

(e)  Morton,  J.,  in  Arnold  v.  Brown,  Bankruptcy,  §  17 ;  Fox  v.  Hanbury, 
24  Pick.  94,  said:  "In  England,  the  Cowp.  445;  Crispe  v.  Perritt,  Willes, 
absconding  would  be  an  act  of  bank-  467,  1  Atk.  133;  Hague  v.  Rolleston,  4 
ruptcy;  and  the  bankruptc3%  when  Burr.  2174;  Smith  v.  Stokes,  1  East, 
determined  by  regular  adjudication,  363;  Smith  v.  Oriell,  id.  368;  Ex  parte 
would  create  a  dissolution.  But  the  Williams,  11  Ves.  5;  Wilson  i;.  Green- 
absconding  is  never  relied  upon  as  a  wood,  1  Swanst.  482 ;  Harvey  v. 
dissolution.  And  held,  in  accordance  Crickett,  5  Maule  &  S.  336  ;  barker  v. 
with  the  above,  that  the  absconding  of  Goodair,  11  Ves.  78  ;  Dutton  v.  Mor- 
one  of  the  partners  of  a  firm  will  not  rison,  17  id.  193;  Marquand  v.  N. 
produce  a  dissolution  in  this  country  ;  York  Manuf  Co.,  17  Johns.  529. 
overruling  Whitman  v.  Leonard,  3  ( /')  Lord  Eldon  in  Ex  jiarte  Wil- 
Pick.  179,  on  this  point.  And  see  Ex  Hams,  11  Ves.  5.  See  Rotliwell  v. 
parte   Smith,   5  Ves.  295;   Hilliard  on  Dewees,  2  Black  (U.  S.  S.  C),  613. 


512 


THE    LAW    OP    PARTNERSHIP. 


[CH.   XV. 


no  longer  a  bankrupt ;  but,  while  he  is  one,  his  property  is 
taken  wholly  from  his  hands.  (^) 


SECTION    II. 

OF  THE  EFFECT  OF  THE  BANKRUPTCY  OF  A  PARTNER  UPON  SOLVENT 

PARTNERS. 


His  property,  rights,  and  interests  pass  from  the  bankrupt  to 
his  assignees.  They  do  not  become  partners  in  his  stead,  be- 
cause the  dilectus  personaj'um,  and  other  principles  of  the  law 
of  partnership,  prevent  this.  But  they  become  tenants  in 
common  with  the  partners,  and  have  the  rights  and  obligations 

of  tenants  in  common,  with  some  qualifications,  and, 
*  472    perhaps,  some  additions,  which  arise  *  from  the  peculiar 

origin  of  the  tenancy,  (/i)  Thus,  the  assignees  may 
claim  an  account,  and  require  a  prompt  and  complete  settle- 
ment of  the  concern,  (i)     They  cannot  take  the  property  and 


(g)  Barstow  v.  Adams,  2  Day,  70; 
Kitchen  v.  Bartsch,  7  East,  53  ;  Cohen 
V.  Gibbs,  1  Hill  (S.  C),  206;  Stouffer  w. 
Coleman,  1  Yeates,  399.  The  assign- 
ment of  an  insolvent  debtor  has  the 
same  effect.  Cooper  v.  Henderson,  6 
Binn.  189  ;  Shirley  v.  Long,  6  Rand, 
735;  Bank  v.  Horn,  17  How.  157. 

(/i)  Fox  V.  Hanbury,  Cowp.  449; 
West  V.  Skip,  1  Ves.  239;  Smith  v. 
Stokes,  1  East,  363  ;  Smith  v.  Oriell, 
id.  368;  [Wilkins  v.  Davis,  15  N.  B. 
R.  66.]  In  Barker  v.  Goodair,  11  Ves. 
85,  Lord  Eldon  says :  "  When  one 
partner  becomes  a  bankrupt,  his  inter- 
est in  the  partnership  propertj'  is 
vested  in  his  assignees  ;  and,  accord- 
ing to  the  doctrine  of  this  court,  per- 
haps with  equities  in  tliem,  vastly 
beyond  what  tenants  in  common  have, 
where  no  bankruptcy  has  occurred." 
And  Chancellor  Kent,  in  Murray  v. 
Murray,  5  Johns.  Ch.  78 :  "  The  sol- 
vent partner,  upon  the  dissolution  of 
the  partnership  by  bankruptcy,  being 
a  tenant  in  common,  may  retain  and 
distribute  the  funds  in  his  possession  ; 
and  niaj',  as  was  held   in   Fox  v.  Han- 


bury, sell  those  partnership  effects 
for  a  valuable  consideration,  and  with- 
out fraud.  They  cannot  be  called  out 
of  his  possession  by  his  co-tenants,  the 
assignees,  unless  under  the  direction  of 
this  court,  on  a  bill  filed  by  them  for 
contribution ;  or,  perhaps,  where  an 
account  of  the  joint  fund  is  directed  to 
be  taken  in  bankruptcy.  But,  on  the 
other  hand,  there  is  no  foundation,  in 
law  or  equity,  for  the  solvent  partner  to 
call  to  account  either  the  partnership 
debtors  who  have  bondjide  settled  with 
the  assignees,  or  the  assignees  them- 
selves, for  the  funds  in  their  posses- 
sion. They  hold  those  funds  by  an 
equal  title  in  law  with  him,  as  tenants 
in  common  ;  and  by  a  superior  equitable 
title,  as  trustees,  charged  with  the 
payment  of  both  the  joint  and  sepa- 
rate debts."  Anon.,  12  Mod.  446; 
Wilson  V.  Greenwood,  1  Swanst.  482  ; 
Marquand  v.  N.  Y.  Man.  Co.,  17  Johns. 
525.  See  Richardson  v.  Tobey,  3 
Allen,  81. 

(/)  Hilliard  on  Bankr.  and  Ins.  60; 
Crawshay  v.  Collins,  15  Ves.  218. 


CH.  XV.]  OF   BANKRUPTCY.  513 

business  into  their  own  hands,  and  settle  it  themselves,  because 
the  solvent  partners,  at  least  in  equity,  hold,  in  somewhat  the 
same  way  that  surviving  partners  do,  all  the  effects  and  prop- 
erty, and  for  the  same  purpose,  —  that  of  winding  up  the  concern. 
For  this  they  have  the  same  power  and  duty,  and  are  under  the 
same  obligations,  and  may  be  reached  by  the  same  process, 
and  compelled  to  discharge  their  duty  as  surviving  partners. 
And  the  assignees  have  the  same  rights  and  remedies  as  the 
representatives  of  a  deceased  partner,  (y)     It  has,  however, , 
been  held,  that  the  assignees  become  at  once  tenants,  in  com- 
mon with  the  solvent  partners,  their  representatives  or 
assigns :    they  can   neither   bring  trover  against  *  the    *  473 
partners  for  the  partnership  effects,  nor  can  the  solvent 
partners  get  their  effects  out  of  the  hands  of  the  assignees  when 
they  have  taken  possession  ;  for  it  is  said,  that,  at  law,  they  are 
equally  entitled  to  the  possession,  (k)     Whether  the  partner- 
ship be  determinable  at  will,  or  established  for  a  time  certain, 
it  is  equally  and  immediately  dissolved.     And  even  if  there 
were  a  provision  in  the  articles,  that,  in  case  of  bankruptcy  of 
one  partner,  the  other  partner  should  take  all  his  share  and 
interest,  at  a  certain  valuation,  and  continue  the  business,  and 
this  provision  were  carried  into  full  effect,  there  is,  neverthe- 
less, a  dissolution  of  the  partnership.  (J)     For  the  loss  of  his 
property  and  interest  takes  out  the  bankrupt  partner,  and  the 
loss  of  this  partner  dissolves  the  partnership.     There  is  much 
doubt,  however,  whether  a  provision  of  this  kind  is  not  avoided 
by  bankruptcy,  because  it  gives  to  the  bankrupt  a  power  over 
the  disposition  of  his  property  which  all  the  principles  of  the 

(j)  Crawshay    v.    Collins,   15   Ves.  insolvency  of  one  of  the  partners,  the 

218 ;    Brown   v.    De  Tastet,  Jac.   284.  solvent  partner  ought  to  be  appointed 

In  Hubbard  v.  Guild,  1  Uuer,  G62,  it  receiver,    when  his   capacity  and   in- 

was  held,  that  a  solvent  partner  is  not  tegrity   are    unquestioned.      The    ap- 

entitled  by  law  to  the  sole  administra-  pointraent  was  made  accordingly.    See 

tion  of  the  assets  of  the  partnership,  also  Freeland  v.  Stansfield,  13  Eng.  L. 

which    is    dissolved    by    the   separate  &  Eq.  336. 

insolvency  of  one  or  more  of  the  part-  (k)  Murray  v.  Murray,  5  Johns.  Ch. 

ners.     The  court  added,  that  they  saw  70;    Smith   v.    Stokes,    1    East,    363; 

no    reason    why   the    solvent   partner  Salomons  v.  Nissen,  2  T.  R.  674 ;  Fox 

should   not  himself  be  appointed  the  v.    Hanbury,    Cowp.    445;    Smith   v. 

receiver,  if  he  would  give  the  neces-  Oriell,   1  East,  3G8 ;    Binford  v.  Dom- 

sary  security.     It  seemed  to  them  that  melt,  4  Ves.  756. 

in  all  cases  where  the  dissolution  of  a  (/)  Comyn  on  Cont.  (4th  Am.  ed.) 

partnership  is  occasioned  solely  by  the  528. 

33 


514  THE    LAW    OF    PARTNERSHIP.  [CH.  XV. 

bankrupt  laws  deny  to  him  ;  but  the  question  can  hardly  be 
considered  as  settled,  (m) 

So,  too,  no  notice  or  knowledge  of  the  bankruptcy  or  of  the 
dissolution  is  requisite,  any  more  than  in  the  case  of  dissolution 
by  death,  to  prevent  the  partner  or  his  assets  from  being 
bound  for  new  contracts  or  debts,  and  to  prevent  the  solvent 
partners  from  acting  for  him,  except  to  liquidate  and 
*474  realize  the  balance  due  *  to  him.  The  rule  arises,  in 
part,  from  the  notoriousness  of  the  fact  of  legal  bank- 
ruptcy, and,  in  part,  from  the  taking  from  him,  by  the  law, 
of  all  his  means  of  satisfying  a  liability  ;  but  in  part,  also,  as  we 
think,  from  bankruptcy  being  a  quasi  death,  (n) 

If  the  solvent  partners,  instead  of  winding  up  the  concern, 
continue  the  business,  without  stay  or  interruption,  they  do  so 
at  their  own  peril,  and  upon  precisely  the  same  terms  and 
responsibility  which  have  already  been  stated  in  reference  to 
surviving  partners,  (o) 

And  it  may  be  stated,  as  another  instance  of  the  analogy  be- 
tween tbe  actual  death  of  a  partner  and  that  bankruptcy  which 
is  a  commercial  death,  that  the  latter  suspends,  or,  rather, 
annuls,  any  attachment  or  execution  of  his  property  or  his 
interest  in  the  firm,  (p)     We  should  say,  however,  that  the 

(m)  See  Feathers tonhaugh  v.  Fen-  the  owner  of  tlie  property  may,  on 
wick,  17  Ves.  298;  Rigden  v.  Pierce,  6  alienation,  qualify  the  interest  of  his 
Madd.  353  ;  Cook  v.  CoUingridge,  Jac.  alienee  by  a  condition  to  take  effect 
607-620.  In  Cookson  v.  Cookson,  8  on  bankruptcy ;  but  cannot,  by  con- 
Sim.  543,  the  case  of  Cook  v.  Colling-  tract  or  otherwise,  qualify  his  own 
ridge  is  criticised.  The  following  interest  by  a  like  condition,  determining 
are  some  of  the  principal  authorities  or  controlling  it  in  the  event  of  his 
applicable  to  the  main  point :  Lockyer  own  bankruptcy,  to  the  disappointment 
V.  Savage,  '2  Strange,  947 ;  Hunter  v.  or  delay  of  his  creditors  ;  the  jus 
Galliers,  2  T.  E.  133  ;  Ex  parte  Hill,  disponendi,  which  for  the  first  purpose 
Cooke's  B.  L,  228,  1  Cox,  300;  Ex  is  absolute,  being,  in  the  latter  in- 
parte  Bennet,  Cooke's  B.  L.  229;  In  re  stance,  subject  to  the  disposition  pre- 
Murphy,  1  Schoales  &  L.  44  ;  Ex  parte  viously  prescribed  by  law.  Note  to  1 
Henecy,  cited  id. ;  In  re  Meaghan,  id.  Swanst.  481. 

179  ;  Dommett  y.  Bedford,  6  T.  R.  684,  (n)   VuUiamy    v.    Noble,    3   Meriv. 

3  Ves.  149  ;  Ex  parte  Cook,  8  id.  353  ;  614 ;  Lacy   v.  Woolcot,  2  Dow.  &  R. 

Ex  parte  Hinton,  14  id.  598  ;   Ex  parte  458 ;    Thomason   v.    Frere,    10    East, 

Oxley,  1  Ball  &  B.  257;  Higinbotham  418;  Franklin   v.   Brownlow,   14  Ves. 

V.  Holme,  19  Ves.  88  ;  Ex  parte   Vere,  550-557. 

id.  93,  1  Rose,  281;  Ex  parte  Young,  (o)  Crawshayw.  Collins,  15  Ves.  218; 

Buck,'    179,   3  Madd.    124;    Ex  parte  Brown  v.  De  Tastet,  Jac.  392;   West 

Hodgson,     19    Ves.     206.      And    see  v.  Skip,  1  Ves.  239,  456. 

Brandon  v.  Robinson,  18  id.  429.     The  (p)  Barker  v.  Goodair,  11  Ves.  78; 

general  distinction   seems   to   be   that  Dutton  v.  Morrison,  17  id.  193 ;  In  re 


CH.  XV.] 


OF    BANKRUPTCY. 


515 


American  rule  of  bankruptcy  would  be  applied  to  this  case,  if 
it  were  a  foreign  bankruptcy.  That  is,  if  there  were  a  foreign 
firm,  which  went  into  bankruptcy  abroad,  and  a  creditor  of  one 
of  the  partners,  in  this  State,  attached  or  was  levying  upon  his 
interest  in  property,  within  this  State,  belonging  to  the  firm, 
the  foreign  bankruptcy  would  not  suspend  this  attachment  or 
levy.  But,  if  the  foreign  assignee  had  taken  possession  of  tlie 
property,  his  possession  would  have  completed  his  title,  and 
would  prevent  the  attachment  or  levy.  And,  in  this  respect, 
our  States  are  foreign  to  each  other.  (5-) 

*  All  actions  for  recovery  of  debts  due  to  the  firm  may    *  475 
be  brought  in  the  name  of  the  solvent  partners  and  the 
assignees  of  the  bankrupt  partners  ;  (r)  and  all  actions  against 
the  firm  should  be  brought  against  all  the  partners  by  name,  (s) 
including  the  bankrupt,  (^f)  unless  he  has  been  discharged,  (w) 


Wait,  1  Jac.  &  W.  605.  The  interest 
of  eacli  partner  being  his  share  of  the 
surplus,  subject  to  all  the  partnership 
accounts,  that  interest  only  is  liable  to 
the  execution  of  a  creditor  ;  and,  by  the 
bankruptcy  of  one,  his  interest  is  di- 
vested, and  vests  in  the  assignees,  by 
relation  to  the  act  of  bankruptcy. 
Brickwood  v.  Miller,  3  Meriv.  279 ; 
Ex  parte  Farlow,  1  Rose,  421;  Cald- 
well V.  Gregory,  1  Price,  119-130;  Ex 
parte  Peake,  1  Madd.  358  ;  Ex  parte 
Ruffin,  6  Ves.  126  ;  Ex  parte  Rowland- 
son,  1  Rose,  419  ;  Campbell  v.  MuUett, 

2  Swanst.  551-575 ;  Egberts  v.  Wood, 

3  Paige,  517.  See  Willis  v.  Freeman, 
35  Vt.  44.  The  subject  of  the  attach- 
ment of  a  partner's  interest  is  dis- 
cussed in  Day  v.  McQuillan,  13  Minn. 
205. 

(q)  The  authorities  on  these  points 
are  very  numerous,  and  at  one  time 
■were  very  conflicting.  The  later  author- 
ities generally  support  the  text,  which 
is  the  American,  in  opposition  to  the 
English,  doctrine-  We  furnish  a  num- 
ber of  the  authorities,  both  early  and 
recent.  Proctor  v.  Moore,  1  Mass.  198  ; 
Baker  v.  Wheaton,  5  id.  509 ;  Watson 
V.  Bourne,  10  id.  337  ;  Ogden  v.  Saun- 
ders, 12  Wheat.  213;  Prentiss  v.  Sav- 
age, 13  Mass.  20 ;  Tappan  v.  Poor,  15 
id.  419,  422  ;  Blake  v.  Williams,  6  Pick. 
286,  306;  Agnew  v.  Piatt,  15  id.  417; 


Betts  V.  Bagley,  12  id.  572,  579 ;  Savage 
V.  Marsh,  10  Mete.  594 ;  Fiske  v.  Fos- 
ter, id.  597 ;  Springer  v.  Foster,  2  Story, 
383  ;  Shaw  v.  Bobbins,  12  Wheat.  369, 
note;  Milne  v.  Moreton,.6  Binn.  353 ; 
Harrison  v.  Sterry,  5  Cranch,  289,  302 ; 
The  Watchman,  Ware,  232,  237  ;  Dawes 
V.  Head,  3  Pick.  128  ;  Richards  v. 
Dutch,  8  Mass.  506  ;  Burk  v.  McClain, 
1  Harris  &  McH.  236  ;  AVallace  v. 
Patterson,  2  id.  463  ;  Ward  v.  Morris, 
4  id.  3.30;  Smith  v.  Smith,  2  Johns. 
235 ;  Bird  v.  Caritat,  id.  342.  For  a 
late  English  case,  see  Nicholson  v. 
Ricketts,  2  Ellis  &  E.  (105  Eng.  Com. 
L.)  497. 

(?)  Thomason  v.  Frere,  10  East,  418 ; 
Murray  v.  Murray,  5  Johns.  Ch.  70 ; 
Hacker  v.  Shepherd,  2  Chitty,  652 ; 
Graham  v.  Robertson,  2  T.  R.  282.  An 
action  does  not  abate  by  the  bank- 
ruptcy of  the  plaintiff.  The  assignees 
can  continue  the  action  in  his  name. 
Waugh  V.  Austen,  3  T.  R.  437. 

(.s)  Bristow  V.  James,  7  T.  R.  257; 
Byers  v.  Dobie,  1  H.  Bl.  236;  Ditch- 
burn  V.  Spracklin,  5  Esp.  31  ;  Dodge 
V.  Dicas,  3  B.  &  Aid.  611;  Rice  v. 
Shute,  5  Burr.  2611  ;  Vernon  v.  Jef- 
ferys,  2  Strange,  1146  But  see,  under 
a  peculiar  state  of  facts,  Colwell  v. 
Lawrence,  38  Barb.  G13. 

(t)  1  Chit.  PI.  (10th  Am.  ed.)  53. 

(«)  Tuttle  V.  Cooper,  10  IMck.  291. 


516  THE   LAW   OP   PARTNERSHIP.  [CH.  XV. 

If  he  lias  been  discharged,  and  is  still  made  defendant,  it  wonld 
seem  that  he  may  have  judgment  against  the  plaintiff;  and  the 
plaintiff  may  have  judgment  against  the  other  partners,  (w) 
In  suits  in  equity,  different  rules  prevail  from  those  which 
govern  suits  at  law.  The  general  principle  there  may  be  said 
to  be,  that  the  parties  actually  interested  must  always  be 
joined,  whether  as  plaintiffs  or  defendants.  («') 

If  one  partner  be  bankrupt,  his  discharge  does  not  discharge 
the  other  partners,  nor  affect  their  indebtedness,  excepting  as 
to  the  sum  which  the  creditor  takes  by  way  of  dividend  ;  which 
is,  of  course,  deducted  from  the  debt  due  to  him.     If  all  the 

partners,  or  the  firm  as  such,  become  bankrupt,  it  is 
*  476    still  true  that  the  discharge  of  *  one  or  more  affects 

only  those  discharged,  (a;)  If  other  partners  are  not 
discharged,  each  of  them  may  be  sued  for  the  whole  of  the 
balance  of  the  debt  which  remains  unpaid,  (i/)  The  bank- 
ruptcy itself  operates  a  discharge  of  an  execution  against  the 
partnership,  because  it  supersedes  all  remedies  which  any  cred- 
itor resorts  to,  in  favor  of  all  the  creditors,  for  whose  equal 
benefit  it  takes  possession  of  all  the  property,  (z) 

(v)  "Where  a  defence  can  be  made  petition,  there  were  partnership  assets 

by   one   or    more   of    the   defendants,  as  well  as  partnership  debts.     Cromp- 

either  by  plea  or  by  proof  on  the  trial,  ton  v.  Conkling,  15  N.  B.  R.  417,  U. 

which  admits  the  making  of  the  origi-  S.  Dist.  Ct.     But  see  Wilkins  v.  Davis, 

nal  joint  contract,  but   shows   matter  id.  60 ;  In  re  Jewett,  id.  126,  139.] 

of  personal   exemption   or   discharge,  (it;)  Mechanics' Bank  w.  Seton,  1  Pet. 

whether   such   exemption  arises   from  299 ;  Story  v.  Livingstone,  13  id.  359 ; 

an  incapacity  to  contract  (as  in  case  Hussey  f .  Dole,  24  Me.  20 ;  McConnell 

of  coverture  or  infancy),  or  by  matter  v.    McConnell,  11    Vt.  290;   Noyes   v. 

of  subsequent  discharge  (as  in  case  of  Sawyer,  3  id.  IGO  ;  Crocker  u.  Iliggins, 

bankruptcy),but  which  leaves  the  other  7    Conn.    342;    Hawley   v.    Cramer,  4 

contracting  parties   liable    to  the  per-  Cow.  717  ;  Oliver  v.  Palmer,  11  Gill  & 

formance  of   the  contract,  such  party  J.  426  ;  Park  v.  Ballentine,  6  Blackf. 

may  have  a  separate  judgment  against  223  ;  West  v.  Randall,  2  Mass.  181. 

the  plaintiff,  and  the  plaintiff  may  have  (x)  A  partner  who,  after  getting  his 

a   valid    judgment   against   the   other  certificate,  has  taken  up  the  notes  of 

contracting  parties."     Per  Shaw,  C.  J.,  the  firm,  is  permitted  to  prove  against 

in  Tuttle  v.  Cooper,  10  Pick.  291.     [A  the  joint  estate.      Atkins   v.    Atkins, 

discharge   in   bankruptcy   granted    to  Buck,  479. 

one  member  of  a  partnership,  after  he  (y)  Ex  parte  Jiohou,  Buck,  13  ;  Heath 

alone  had  been  adjudged  bankrupt,  in  v.  Hall,  4  Taunt.  326  ;  Sleech's  Case,  1 

a   proceeding   affecting   him   alone,  to  Meriv.  570 ;  Browne  v.  Carr,  7  Bing. 

which  his  copartner  was  not  a  party,  508. 

is  not  a  bar  to  an  action,  against  him  (z)  Barker  v.  Goodair,  11  Ves.  78; 

and   his   copartners,  by  a  partnership  Dutton  v.  Morrison,  17  id.  193;  In  re 

creditor,    when     the    creditor     shows  Wait,  1  Jac.  &  W.  605. 
afiirmatively,  that,  at  the  time  of  the 


CH.  XV.]  OF   BANKRUPTCY.  517 

There  are  many  cases  in  England  turning  upon  the  right  of 
the  solvent  partner  to  pay  debts,  or  otherwise  dispose  of  the 
common  property,  after  an  act  of  bankruptcy  by  a  partner,  but 
before  a  declared  bankruptcy.  There,  as  soon  as  the  decree  of 
bankruptcy  is  made,  it  goes  back  by  relation,  as  we  have  before 
remarked,  and  makes  the  bankruptcy  effectual  from  the  first 
act  of  bankruptcy.  And,  with  us,  all  transfers  or  payments 
before  the  bankruptcy,  made  in  contemplation  of  it,  or  within 
a  certain  period  before  it,  are  avoided  as  against  the  general - 
creditors,  (ci)  We  apprehend  this  rule,  on  principle,  must 
apply  here  to  the  acts  of  the  solvent  partner.  In  general, 
these  acts  cannot  affect  the  creditors  of  the  firm,  because  the 
solvent  partner  is  bound  in  solido  to  pay  them.  What  he  does, 
however,  may  waste  his  means,  so  that  he  ceases  to  be  solvent, 
or  it  may  indirectly  affect  the  several  debtors,  by  lessening  a 
surplus  of  his  interest  in  the  joint  fund  to  which  they  might 
look.  But,  to  any  questions  of  this  kind,  there  is  but  one 
principle  applicable  in  practice.  It  is,  that  the  solvent  partner 
has  possession  of,  and  full  power  over,  all  the  effects  of  the 
partnership ;  after  the  bankruptcy  is  declared,  that  partnership 
is  dissolved  ;  and  now  this  solvent  partner  holds  and  disposes 
of  the  effects,  as  trustee,  for  all  interested.  (6)  And 
if,  in  the  exercise  of  his  undoubted  *  power,  either  be-  *  477 
fore  or  after  the  declaration  of  bankruptcy,  he  commits 
a  fraud,  actual  or  constructive,  all  those  whom  it  would  injure 
may  avoid  it,  or  have  their  remedy  against  him  for  the  damages 
it  causes,  (c) 

A  rule  has  been  laid  down  in  England,  and  referred  to  a 
special  provision  in  what  is  there  called  Sir  Samuel  Romilly's 
act,  which  rests  also  on  general  principles  and  sound  reason, 

(a)  Everett  v.  Stone,  3  Story,  446;  v.  Carroll,  1  Stark.  88;  In  re  Wait,  1 

Hassels  i-.  Simpson,  Doug.  92;  McKen-  Jac.  &  W.  605.     See  W^estcott  v.  Ty- 

zie  i\  Garrison,  lOHicli.234;  Atkinson  son,  .38  Penn.  889,  on  the  question  of 

V.  Farmers'  Bank,  Crabbe,  529  ;    Fid-  one  of  the  insolvent  partners  assisting 

geon  V.  Sharp,  1  Marsh.  198.  a  third  party  in  the  purchase  of  the 

(6)  Fox   V.   Hanbury,    Cowp.    445  ;  creditors'  claim. 
Harvey  v.  Crickett,  5  Maule  &  S.  336  ;  (c)  Ramsbottom  v.  Duck,  1  Mont,  on 

Parker    v.   Muggridge,    2   Story,    346 ;  Part.  135,  appendix  ;  Biggs  v.  Fellows, 

Woodbridge   v.    Swann,   4   B.    &   Ad.  8  B.  &  C.  402.     See  Ransom  v.  Van 

633;  7?i  re  Robinson,  1  Mont.  &  A.  18;  Deventer,    41    Barb.    307;    Walsh    v. 

Smith  V.  Orieil,  1  East,  368  ;  De  Tastet  Kelly,  42  id.  98. 


518  THE    LAW    OF    PARTNERSHIP.  [CH.  XV. 

and  has,  we  consider,  been  adopted  in  the  jurisprndence  of  this 
country.  It  is  this :  Each  partner  is  liable  for  all  the  debts  of 
the  iirm ;  but  each  partner  is  liable,  as  a  principal  debtor,  for 
his  own  share,  and  as  a  surety  for  the  other  partners  for 
the  remainder.  Hence,  a  solvent  partner  who  pays  all  the 
debts  of  the  concern  may  prove,  against  assignees  of  the  insol- 
vent partner,  that  proportion  of  what  the  solvent  partner  has 
paid  which  the  insolvent  would  have  paid  if  also  solvent.  (fZ) 
Thus,  if  a  firm  consist  of  three  persons,  and  owes  large  debts, 
two  of  the  three  become  insolvent,  and  the  third  pays  all  the 
joint  debts.  He  has  paid  one-third  as  his  own  debt,  and  two- 
thirds  as  the  debts  of  the  other  partners,  one-third  each.  But 
it  seems  that  the  solvent  partner  cannot  consider  the  other  two 
as  sureties  for  each  other  to  him.  If,  therefore,  one  of  the  two 
has  a  large  separate  estate,  and  the  other  little  or  nothing,  all 
he  can  do  is  to  prove  his  third  against  the  one,  and  the  other 
third  against  the  other,  although  he  may  get  no  dividend  on 
this  latter  third.  This,  at  least,  would  seem  to  be  the  pre- 
vailing doctrine  in  the  decided  cases,  (g)  But  Lord 
*478  *  Eldon  expressed  a  different  opinion,  and  remarked, 
that  he  thought  the  equity  which  made  them  sureties  to 
each  other  for  each  other  continued  after  the  bankruptcy.  (/) 
And  this  rule  seems  to  have  been  applied  in  one  case.  (^) 

(d)  Watson  v.  Sheath,  4  Madd.  477  ;  separate  debt ;  and  that  the  joint  cred- 
Butcher  i-.  Forman,  6  Hill,  585,  per  itors  might  come  in  with  the  separate 
Nelson,  C.  J.  creditors  for  the  deficiency.     See  also 

(e)  Ex  parte  Yonge,  3  Ves.  &  B.  85,  Ex  parte  Reid,  2  Rose,  84. 

called  Ex  parte  Young  in  2  Rose,  40 ;  (f)  Ex  parte  Hunter,  Buck,  552; 
Ex  parte  Ogilby,  3  Ves.  &  B.  133,  called  Ex  parte  Smith,  id.  492. 
Ex  parte  Ogilvy  in  2  Rose,  177  ;  Wood  {g)  Ex  parte  Plowden,  3  Mont.  &  A. 
V.  Dodgson,2  Maule  .&  S.  195;  Ex  parte  402,  2  Deac.  456.  A.,  B.,  &  C.  being 
Watson,  Buck,  449.  In  Ex  parte  Tay-  partners,  A.  and  B.  borrowed  10,000i. 
lor,  2  Rose,  175,  a  solvent  partner  was  for  the  firm  on  mortgages  of  their  sep- 
holden  entitled  to  prove  against  the  arate  estates.  The  firm  became  bank- 
estate  of  a  bankrupt  copartner  the  rupt ;  C.  was  wholly  insolvent ;  and 
amount  of  the  balance  due  to  him  A.'s  mortgaged  estate  pays  more  than 
upon  the  partnership  account,  first  his  share  of  the  debt.  Held,  A.'s  es- 
satisfying  the  partnership  debts,  or  tate  has  a  claim  to  contribution  from 
indemnifying  the  bankrupt  against  B.'s  for  the  difference  between  what 
them.  And  in  Ex  parte  King,  17  Ves.  B.'s  estate  sells  for  and  half  the  debt 
115,  under  a  joint  commission,  the  sep-  of  10,000/.  Sir  John  Cross  observed  : 
arate  estate  of  one  was  determined  to  "  The  rights  of  the  parties  are  not 
have  a  lien  on  the  other's  share  of  a  altered  by  bankruptcy.  The  facts, 
surplus  of  the  joint  estate,  in  respect  therefore,  are  simply  these :  two  co- 
of  a  debt  proved  upon  bills  drawn  by  debtors  give  mortgages  as  security  on 
the  one  in  the  name  of  the  firm  for  a  their  several  estates.     As  one  failed  to 


CH.  XV.]  OF   BANKRUPTCY.  519 

Tlie  assignees  and  the  creditors  may  lose  their  claim  against 
a  retiring  partner  for  debts  due  from  the  partnership,  by  the 
assignees  making  themselves  responsible.  Thus,  if  after  the 
retirement,  and  an  agreement  between  the  partners  that  the  re- 
maining partner  shall  continue  the  business  and  pay  all  the 
debts,  and  a  part  of  that  business  was  to  act  for  the  assignees 
in  settlement  of  a  bankrupt  estate  ;  and  the  assignees,  knowing 
the  retirement  and  agreement,  continued  to  employ  the  re- 
maining partner  alone,  and  he  became  insolvent,  and  it  turned, 
out  that  the  partnership  owed  a  large  balance  to  the  estate 
or  to  the  assignees,  —  the  creditors  have  no  power  to  hold  the 
retiring  partner,  because  the  assignees  have  discharged  him  by 
their  acts ;  but  they  will  hold  the  assignees  as  personally  re- 
sponsible, (/i)  The  court  has  gone  so  far  as  to  permit  a  retiring 
partner  to  prove  his  claim  against  the  bankrupt  partner,  although 
the  debts  of  the  firm  were  not  paid,  when  the  joint  creditors 
have  discharged  the  retiring  partner,  by  directly  or  indirectly 
accepting  the  remaining  partner  as  their  only  creditor,  as 
by  sanctioning  by  their  conduct  and  acquiespence  an 
*  arrangement  to  that  effect  between  the  partners.  (^')  *  479 
Such  a  case  must  be  rare,  however. 

This  distinction  seems  also  to  be  taken.  If  one  is  defrauded 
into  advancing  money  to  become  a  partner,  and  the  fraudulent 
party  becomes  bankrupt,  the  defrauded  party  may  prove  against 
his  estate  for  the  amount  he  so  advanced,  unless  he  had  held 
himself  out  as  a  partner.     By  so  doing,  even  for  a  very  short 

make  good  the  sum  secured,  the  other  appointment  of  the  agent.     In  re  Litch- 

has  made  up  the  difference,  whereas  field,  1  Atk.  87. 

the  amount  should  be  charged  equally  (i)  Ex  parte  Grazebrook,  In  re  Nay- 
on  the  two  estates.  I  am  of  opinion  lor,  2  Deac.  &  Ch.  186.  In  this  case, 
that,  as  the  assignees  have  2,771/.  in  A.,  being  a  dormant  partner  with  B., 
their  hands,  the  separate  creditors  of  dissolves  the  partnership,  and  B.  is 
Jellicorse  are  entitled  to  that  sum,  after  declared  indebted  to  A.  on  balance, 
which  his  estate  will  have  paid  1,000/.  A.  sues  B.  for  balance,  and  receives 
more  than  Kempson's  ;  therefore  the  cognoi-v'<  for  debt  and  costs.  B.  becomes 
whole  2,771/.,  subject  to  the  claim  for  bankrupt.  Held,  that  A.  is  entitled 
159/.,  should  be  paid  over  to  the  sepa-  to  prove  his  debts  against  the  estate, 
rate  estate  of  Jellicorse."  although  some  partnership  debts  are 
(A)  If  an  assignee  under  a  commis-  unpaid.  See  also  Parker  v.  Ramsbot- 
sion  of  bankruptcy  employs  an  agent  tom,  3  B.  &  C.  257.  And  see  contra,  in 
to  receive  money,  and  he  embezzles  it,  case  of  ostensible  partners,  Ex  parte 
the  assignee  will  be  liable  to  make  it  Ellis,  2  Glyn  &  J.  312 ;  Ex  parte  Car- 
good  to  the  creditors,  unless  he  con-  ter,  id.  233.  And  see  Ex  parte  Moore, 
suited  the  body  of  the  creditors  in  the  id.  166. 


5  20 


THE    LAW    OF    PARTNERSHIP. 


[CH.   XV. 


time,  he  had  incurred  the  liabilities  of  a  partner,  and  cannot 
prove  in  competition  with  joint  creditors,  (y)  If  a  retiring 
partner  has  a  covenant  of  the  remaining  partner  to  pay  all  the 
debts,  but  the  remaining  partner  becomes  bankrupt,  leaving 
tliem  or  any  of  them  unpaid,  and  the  retiring  partner  is 
held  to  pay  them,  and  does  pay  them,  —  for  the  amount  he  so 
pays  he  may  prove  against  the  several  estate  of  the  bankrupt 

partner.  (A;) 
*  480       *  We  have  already  referred  to  the  case,  not  unfrequently 

occurring,  where  there  are  two  firms,  with  some  persons 
who  are  partners  in  both.  We  have  seen  that  no  suit  at  law 
can  be  maintained  between  them ;  but  a  suit  in  equity  may  be. 
And  whether  one  firm  can  prove  against  the  other  firm  seems 
to  be  determined  by  the  question,  whether  the  one  firm  is  liable 
for  the  joint  debts  of  the  other.  That  is,  if  the  solvent  firm 
must  pay  the  debts  of  a  bankrupt  firm,  it  cannot  prove  against 


(j)  In  Ex  parte  Broome,  1  Rose,  69, 
A.,  induced  by  the  fraudulent  repre- 
sentations of  B.  as  to  the  profits  of  his 
business,  gives  him  a  certain  sum  of 
money  for  a  share  of  it.  On  the  dis- 
covery of  the  fraud,  A.  files  a  bill  in 
equity  for  an  account,  to  have  the 
partnership  declared  void,  and  for  a 
receiver.  The  receiver  was  ordered. 
B.  becomes  bankrupt.  Petition  by  A. 
to  be  admitted  to  prove  his  commission 
refused,  with  liberty  to  make  a  claim. 
Held,  that  although  A.,  as  against  B., 
might  have  an  equity  to  say  he  never 
was  a  partner,  it  would  be  difficult  to  say 
so  as  against  third  persons.  Lord  El- 
don  expressed  himself  at  first  inclined 
to  grant  the  praj'er  of  the  petition,  pro- 
vided the  petitioner  would  abandon  the 
suit  in  equity  and  the  receiver,  but 
took  time  to  consider;  and  afterwards 
(observing  that  although  the  petitioner 
might  have  an  equity  to  be  considered 
as  never  having  been  a  partner,  yet 
that  it  was  extremely  diificult  to  say 
that,  as  to  third  persons,  lie  was  not  a 
partner),  made  an  order  that  the  peti- 
tioner should  be  at  liberty  to  enter  a 
claim  only  for  the  amount  of  his  de- 
mand, but  not  to  prove  with  the  sepa- 
rate creditors. 


(k)  "Wood  V.  Dodgson,  2  Rose,  47. 
In  this  case,  a  partner  continuing  the 
business  took  an  assignment  of  all  the 
stock,  &c.,  and  covenanted  to  indemnify 
the  retiring  partner  from  the  debts 
then  owing  from  the  partnership.  The 
continuing  partner  became  bankrupt, 
and  obtained  his  certificate ;  and  sub- 
sequently an  action  was  commenced 
against  the  retiring  partner,  upon  an 
acceptance  of  the  partnership.  Held, 
that  no  action  would  lie  against  the 
bankrupt  upon  the  covenant,  since, 
under  49  Geo.  3,  ch.  121,  §  8,  the  retir- 
ing partner  might,  on  his  liability,  have 
resorted  to  and  proved  his  debt  under 
the  commission,  and  was  therefore 
barred  by  the  certificate.  See  also  Ex 
jmrte  Young,  2  Rose,  40  ;  Ex  parte 
Hesham,  1  id.  146.  So,  one  partner 
may  agree  to  give  a  retiring  partner  a 
sum  for  the  concern,  though  they  knew 
the  partnership  to  be  insolvent  (pro- 
vided no  fraud  was  intended),  and  the 
estate  will  be  liable.  Ex  parte  Peake, 
In  re  Lightoller,  a  bankrupt,  1  Madd. 
346-354.  See  also  Perring  v.  Hare,  2 
Car.  &  P.  401 ;  Whiting  r.  Furanet,  1 
Conn.  60. 


CH.  XV.]  OF   BANKRUPTCY.  521 

the  estate  of  tliat  firm  in  competition  with  the  creditors  whom 
the  solvent  firm  must  itself  satisfy.  (Z) 

It  has  been  held  that  an  agreement  between  one  partner  and 
a  third  person,  that  the  latter  shall  share  in  the  profits  of  the 
former,  as  profits,  renders  him  liable  as  a  partner  to  the  cred- 
itors of  the  firm,  although,  as  regards  the  other  members  of 
the  firm,  he  is  not  their  copartner.  (ll~) 

SECTION   m. 

HOW    THE    FUNDS    ARE    APPROPRIATED    TO    THE    DEBTS. 

We  have  seen  that  the  great  majority  of  interesting  questions 
concerning  partnership  fall  within  the  jurisdiction  of  equity. 
This  is  still  more  the  case  with  questions  of  bankruptcy,  which 
go  into  equity  almost  exclusively.  We  might  expect  that 
questions  which  connect  partnership  with  bankruptcy  would 
be,  more  than  most  others,  determined  on  equitable  principles. 
Hence  the  rule  is  distinctly  established  in  equity,  that,  in  bank- 
ruptcy of  a  partnership,  the  joint  property  forms  a  fund  appro- 
priated to  the  joint  creditors,  and  the  several  property  of  each 
creditor  a  several  fund  appropriated  to  the  several  creditors  of 
each  partner.  And  the  joint  creditors  cannot  go  to  the  several 
property  until  the  several  creditors  are  paid  in  full,  and  there  is  a 
surplus  over,  by  which  the  joint  creditors  may  benefit.  On  the 
other  hand,  the  several  creditors  cannot  look  to  the  joint  fund 
until  all  the  joint  debts  are  paid,  and  there  is  a  surplus  ;  and 
then  the  several  creditors  of  a  partner  may  resort  to  that  part- 
ner's interest  in  that  surplus.  (/?i)     It  has,  however,  been  held 

(I)  Ex  parte   Adams,    1  Rose,  305.  creditors  of  the  firm  and  creditors  of 

See  also  Cooke's  Bankr.   Laws,  538 ;  the    individual    partners,    Reeves    v. 

Ex  parte   Hesham,   1   Rose,   146  ;    Ex  Ayres,  38  111.  418  ;   Lewis  v.  Conrad, 

;ja7te  Cook,  Mont.  228  ;  Cases  of  Shake-  11  Iowa,  153;  Levally  v.  Ellis,  13  id. 

shaft.  Stirrup  &  Salisbury,  6  Ves.  128,  544  ;    Jones   v.    Jones,    id.    276.      [A 

743,  747 ;  Ex  parte  Hargreaves,  1  Cox,  person    who   lends    the   entire   capital 

440;  Ex  parte  St.  Barbe,  11  Ves.  413  ;  to  an  individual  partner,  for  the  pur- 

Ex  parte  St.  Johns,  Cooke's  B.  L.  510;  pose  of  commencing  business,  has  an 

Ex  parte  Castell,  Ex  parte  Stroud,  2  equity  equal  to  that  of  the  creditors 

Glyn  &  J.  124,  127 ;  Ex  parte  Sillitoe,  of   the   firm.      Reeves    v.   Ayres,    ubi 

1  id.  874 ;  Ex  parte  Williams,  3  Mont.,  supra.^ 

Deac.    &    De    G.   483;    McCormick's  [m)  In    re   Smith,    16   Johns.    102; 

Appeal,  55  Penn.  St.  2-52.  Fox  v.  Hanbury,  Cowp.  445 ;  Moody 

(//)  Fitch    V.   Harrington,  18  Gray,  v.  Payne,  2  Johns.  Ch.  548;  Eddies. 

468.      See,   on   the   relative   rights   of  Davidson,  Doug.  650 ;  Smith  ''.  Stokes, 


522 


THE   LAW    OF    PARTNERSHIP. 


[CH.  XV. 


that,  if  one  partner  pays  more  than  his  share  of  the  partner- 
ship debts,  he  has  in  equity  a  claim  on  the  partnership 
property,  superior  to  the  claims  of  the  separate  creditors  of 
the  copartners,  {mm') 

It  has  been  held  that  the  separate  creditors  of  a  person  who 
is  a  member  of  two  partnerships  have  a  preference  as  to  his 
interest  in  property  in  one  of  the  firms,  as  against  creditors 

of  the  other  firm,  (mmm') 
*  481  *  So  far  as  the  inability  of  the  several  creditors  to  look 
to  the  joint  fund  until  the  payment  of  the  debts  leaves  a 
surplus,  the  law  also  is  quite  settled.  But  it  is  not  settled 
that  the  partnership  creditors  may  not  at  law  look  to  the  sev- 
eral funds  at  once,  in  common  with  the  several  creditors.  So 
far  as  the  present  weight  of  authority  goes,  it  might  seem  that 
the  joint  creditors  have  this  power.  But  of  late  the  law,  as 
we  have  said,  seems  distinctly  tending  to  adopt  this  rule  of 
equity,  or  rather  this  half  of  the  equitable  rule.  («)     We  have 


1  East,  367  ;  Wilson  v.  Gibbs,  2  Johns. 
282;  Taylor  v.  Fields,  4  Ves.  396; 
Chapman  v.  Koops,  3  Bos.  &  P.  289 ; 
Parker  v.  Pistor,  id.  288;  Croft  v. 
Pyke,  3  P.  Wms.  182 ;  Ex  parte  Ruff, 
6  Ves.  126  ;  Ex  parte  Williams,  11  Ves. 
5  ;  West  v.  Skip,  1  Ves.  Sen.  239,  242 ; 
Taylor  v.  Fields,  4  Ves.  896 ;  see  note 
to  Young  V.  Keighly,  16  id.  559 ; 
Button  V.  Morrison,  17  id.  198-205 ; 
Watson  V.  Taylor,  2  Ves.  &  B.  299 ; 
King  V.  Sanderson,  1  Wightw.  50;  The 
King  V.  Rock,  2  Price's  Exch.  198 ; 
Barker  i--.  Goodair,  11  Ves.  78-85 ; 
Church  V.  Knox,  2  Day,  514  ;  Peirce 
V.  Jackson,  6  Mass.  242 ;  Wilson  v. 
Conine,  2  Johns.  280:  Knox  v.  Sim- 
mons, 4  Yeates,  477 ;  Wallace  v.  Pat- 
terson, 2  Har.  &  McH.  463 ;  Harrison 
V.  Sterry,  5  Cranch,  289 ;  McCoombe 
V.  Dunch,  2  Dall.  73 ;  Sanderson  v. 
Stockdale,  11  Md.  563;  Linford  v. 
Linford,  4  Dutch.  118 ;  Dunham  v. 
Hanna,  18  Ind.  270  ;  Tenney  v.  John- 
son, 48  N.  H.  144  ;  Nixon  v.  Nash,  12 
Ohio,  647.  See  Backus  v.  Murphy, 
89  Penn.  397 ;  Cope's  Appeal,  id. 
284  ;  Houseal  &  Smitli's  Appeal,  45 
id.  484 ;  Crawford  v.  Baum,  12  Rich. 
Law  (S.  C),  75;    Willis  ;;.  Freeman, 


35  Vt.  44  ;  Lewis  v.  Conrad,  11  Iowa, 
481 ;  and  see  ante,  p.  *  247.,  [The  debt 
of  a  firm,  which  has  advanced  money 
to  an  individual  member  beyond  his 
share  of  the  capital,  is  a  separate  debt 
of  the  firm  as  against  the  partner  re- 
ceiving the  same ;  and  the  assignee 
of  the  firm  may  prove  the  debt  against 
the  separate  debtor  partner,  and  be 
paid  after  the  other  separate  copart- 
nership creditors  are  paid,  but  not 
before.  In  re  McLean,  15  N.  B.  R. 
333,  U.  S.  Dist.  Ct.  Del.  Exemptions  are 
not  to  be  allowed  out  of  the  partnership 
estate.  In  re  Croft,  Ch.  Leg.  News, 
March  16,  1878.] 

(mm )  Crooker  v.  Crooker,  52  Me.  267. 

(mmm)  Weaver  v.  Weaver,  46  N.  H. 
188. 

(n)  Separate  creditors  cannot,  in 
bankruptcy,  take  a  dividend  ratably 
with  the  joint  creditors  :  each  estate 
is  applicable  to  its  own  debts.  The 
usual  directions  are  to  apply  the  funds 
respectively  ;  the  joint  to  the  joint 
debts,  the  separate  to  the  separate 
debts,  the  surplus  of  each  to  the 
creditors  remaining  on  the  other.  Ex 
parte  Elton,  8  Ves.  38 ;  [Rainey  v. 
Nunse,   54   111.   29.]      In   a   very   late 


CH.  XV.] 


OF   BANKRUPTCY. 


523 


touched  upon  this  subject  before,  and  now  *  will  only  *  482 
add,  that  in  our  judgment  the  other  half  without  this  half 
would  be  inequitable.  We  see  no  good  reason  for  giving  the 
joint  creditors  this  advantage  ;  none,  that  is,  for  confining  the 
several  creditors  to  the  several  fund,  which  does  not  equally 
require  that  the  joint  creditors  should  be  confiined  to  the  joint 
fund.  This  whole  rule  in  equity  has  not  been  established  with- 
out conflict  and  fluctuation  ;  and  is  not  free  now  from  doubt, 
in  some  minds,  as  to  its  justice,  reasonableness,  and  expediency. 
We  share  these  doubts  in  no  degree  whatever.  It  seems  to  us 
a  simple  rule,  eminently  practical,  and  founded  upon  principles 
of  justice  and  of  policy  so  certain  and  obvious  that  they  upon 
whom  the  rule  presses  heavily  are  seldom  disposed  to  question 
its  general  propriety.  And  we  cannot  but  think  that,  as  a  rule 
of  equity,  it  is  impregnable,  and  that  it  will  be  recognized  as  a 
rule  of  law.  (o) 


case,  Terry  v.  Butler,  43  Barb.  S.  C. 
395,  the  court,  in  reversing  a  judg- 
ment, on  appeal,  observed  :  "  But 
there  is  another  branch  of  the  case, 
in  respect  to  which  a  serious  difficulty 
exists,  which  does  not  seem  to  have 
been  adverted  to  before  the  referees, 
and  which  requires  a  reversal  of  the 
judgment.  The  order  appointing  the 
plaintiff  receiver  was  founded  on  a 
demand  owing  by  Putnam  &  Butler 
as  copartners.  The  property  in  the 
hands  of  the  assignees,  and  which  they 
are  directed  by  the  judgment  herein 
to  transfer  to  the  plaintiff,  is  the  sep- 
arate property  of  Butler.  The  judg- 
ment, also,  directs  the  plaintiif,  as 
receiver,  to  apply  the  avails  of  said 
separate  property  to  the  payment  of 
the  said  copartnership  demand.  In 
this  respect,  I  think  it  is  erroneous. 
In  equity,  the  separate  estate  is  not 
liable  for  partnership  demands,  until 
the  partnership  effects  are  exhausted 
and  the  separate  debts  are  paid.  In 
the  case  at  bar,  it  appears  sufficiently, 
perhaps,  that  the  remedy  at  law 
against  the  partnership  property  has 
been  exhausted  by  the  proceedings 
had  in  the  legal  action  against  Put- 
nam &  Butler,  set  forth  in  the  com- 
plaint and  admitted  on  the  trial.     But 


there  is  no  evidence  that  the  separate 
debts  of  Butler  have  been  paid.  As 
the  judgment  makes  no  provision  for 
the  payment  of  the  separate  debts, 
but,  in  effect,  postpones  them  until  the 
plaintiff's  claim  against  the  firm  is 
satisfied  out  of  the  separate  estate, 
instead  of  directing  payment  of  the 
plaintiff's  demand  out  of  the  surplus, 
if  any  remains,  after  payment  of  the 
separate  debts,  it  is,  therefore,  erro- 
neous and  must  be  set  aside,  and  a 
new  trial  must  be  had."  See  also 
the  authorities  cited  in  the  next  pre- 
ceding and  succeeding  notes.  And 
see  Moline  Co.  v.  Webster,  26  111.  233 ; 
Pahlman  v.  Graves,  id.  405;  Weyer 
V.  Thornburgh,  15  Ind.  124  ;  Jackson 
V.  Clymer,  43  Penn.  79  ;  Black's  Ap- 
peal, 44  id.  503 ;  Heckman  v.  Messin- 
ger,  49  id.  465 ;  Northern  Bank  of 
Kentucky  v.  Keizer,  2  Duvall,  169 ; 
Whitehead  v.  Chadwell,  id.  432. 

(o)  The  cases  on  these  questions 
are  very  numerous.  These  questions 
have  been  considered,  and  the  leading 
cases  cited,  ante,  p.  *347,  et  seq.,  and 
notes.  They  are  also  considered  quite 
fully  in  Murray  v.  Murray,  5  Jolms. 
Cli.  60  ;  Bell  v.  Newman,  5  Serg.  &  R. 
78;  Allen  v.  Wells,  22  Pick.  450, 
where  many  of  the  conflicting  cases 


624 


THE    LAW    OF    PARTNERSHIP. 


[CH.   XV. 


This  rule  can  apply  only  where  there  are  matters  to  which  it 
can  apply  ;  as  where  there  are  joint  debts  and  joint  funds,  and 
also  several  debts  and  several  funds.  It  is,  therefore,  not 
properly  an  exception  to  the  rale  where  there  is  no  joint  estate 
or  no  living  solvent  partner,  or  where  there  are  no  separate 
debts.     These  cases,  which  are  sometimes  called  exceptions  to 

the  rule,  should  rather  be  thought  to  fall  without  the 
*  483    rule.  (/?)     There  is,  however,  *  one  technical  exception 

recognized  in  England,  —  when  a  creditor  of  the  partner- 
ship is  a  petitioner  for  a  separate  commission  against  a  bankrupt 
partner,  —  which  rests  there  on  tlie  teclinical  reason,  that  a  com- 
mission of  banlcruptcy  is  at  once  an  action  and  an  execution. 
This  rule  has  not  been  recognized  in  practice  in  this  country, 
so  far  as  we  know ;  nor  does  it  seem  to  us  to  be  supported  by 
any  substantial  reasons  or  principles  derivable  from  the  law  of 
bankruptcy  in  relation  to  partnership.  Qq^ 


are  examined.  In  Jarvis  v.  Brooks, 
3  Fost.  136,  Perley,  J.,  in  delivering 
the  opinion  of  the  court,  says  :  "  The 
right  of  tlie  partnership  creditors  to  a 
preference  in  the  application  of  the 
partnership  funds  having  been  admit- 
ted in  this  State,  the  question  raised 
in  this  case  is,  whether  the  corre- 
sponding and  correlative  rule,  giving 
a  preference  to  the  individual  creditor 
over  his  debtor's  separate  estate,  is 
also  to  be  considered  as  having  been 
adopted  as  a  branch  and  member  of 
the  same  equitable  doctrine.  If  the 
preference  is  admitted  in  favor  of  the 
joint  creditor,  but  denied  to  the  sep- 
arate creditor,  the  principle  of  equality 
and  reciprocity,  upon  which  the  in- 
terference of  equity  with  the  legal 
rule  has  been  vindicated  in  England, 
wholly  fails.  We  have  admitted  the 
equitable  rule,  which  takes  away  the 
separate  creditor's  legal  riglit  to  sat- 
isfy his  debt  upon  an  undivided  moiety 
of  the  partnership  property.  Prin- 
ciple, consistency,  and  equal  justice  to 
the  separate  creditors,  would  seem  to 
require  that  we  should  also  adopt  the 
other  branch  of  the  same  equitable 
doctrine,  and  there  is  no  greater  diffi- 
culty in  administering  one  branch  of 
the  doctrine  than  the  other  ;  both  may 


be  directly  asserted  at  law  with  equal 
convenience."  See  Sniffer  v.  Sass,  14 
Rich.  (S.  C.)  Law,  20. 

{p)  Ex  parte  Sadler,  15  Ves.  52; 
Ex  parte.  Machell,  2  Ves.  &  B.  216  ; 
Ex  parte  Abel,  4  Ves.  837;  Ex  parte 
Clay,  6  id.  813;  Ex  parte  Chandler, 
9  id.  35 ;  Ex  parte  Hall,  id.  849  ;  Ex 
parte  Elton,  3  id.  238  and  note  (Sum- 
ner's ed.) ;  Ex  parte  Hubbard,  13  id. 
424.  The  principle  that  there  should 
be  no  joint  estate  has  been  carried 
to  such  an  extremely  rigorous  extent, 
that,  in  one  case  where  the  joint 
property  was  but  5/.,  and  in  another 
only  1/.  lis.  and  6c?.,  the  joint  creditors 
were  refused  permission  to  take  divi- 
dends under  the  separate  estate,  so 
fine  has  the  distinction  been  drawn. 
Ex  parte  Peake,  2  Rose,  54  ;  In  re  Lee, 
id.  note. 

{q)  Ex  parte  Crisp,  1  Atk.  133 ; 
Ex  parte  Hall,  9  Ves.  349 ;  Ex  parte 
Ackerman,  14  id.  604 ;  Ex  parte  De 
Tastet,  1  Rose,  10,  17  Ves.  247.  And 
see  Murrill  v.  Neill,  8  How.  S.  C. 
414-427  ;  M'Culloh  v.  Dashiell,  1 
Harris  &  G.  99;  Ex  parte  Taitt,  16 
Ves.  193 ;  Ex  parte  Dewdney,  15  id. 
499  ;  Ex  parte  Chandler,  9  id.  35  ; 
Ex  parte  Crisp,  Cooke's  B.  L.  17 
Willes,  467. 


CH.  XV.]  OP   BANKRUPTCY.  525 

If  a  partner  becomes  bankrupt,  his  assignees  take  only  his 
interest  in  tlie  joint  property,  (r)  But  it  seems  that,  if  a  firm 
is  bankrupt,  all  the  property  of  the  firm,  and  also  all  the  sev- 
eral property  of  the  partners,  goes  to  the  assignees,  (s)  Prac- 
tically, and  in  this  country,  this  can  be  the  case  only  where  the 
partners  are  also  insolvent,  or  suppose  themselves  insolvent, 
or  in  danger  of  becoming  so  ;  that  is,  have  not  enough  to  pay 
all  the  debts  of  the  firm,  and  all  their  several  debts  also.  For 
as  the  solvent  partners  would  all  be  held,  finally,  for  the  debts 
of  the  firm,  they  would  pay  them  without  its  insolvency.  In- 
deed, while  the  insolvency  of  a  partner  when  the  firm  is  solvent 
is  no  uncommon  circumstance,  the  legal  insolvency  of  a  firm 
of  which  the  partners  are  solvent  and  able  to  pay  all  the  joint 
as  well  as  several  debts  is  unknown  in  practice.  It  has  been 
held,  that  an  assignment  of  a  firm  for  the  benefit  of  creditors 
would  be  regarded  as  a  fraudulent  conveyance,  unless  it  in- 
cluded all  the  individual  estate  of  the  partners  as  well  as  the 
partnership  property,  (ss) 

In  England,  by  statute,  joint  creditors  are  entitled  to  prove 
under  a  separate  commission  for  the  purpose  of  voting 
in  the  choice  of  *  assignees,  and  assenting  to,  or  dissent-  *  484 
ing  from,  the  certificate.  (^)  But  there  is  no  provision 
enabling  separate  creditors  to  prove  for  this  purpose  under  a 
joint  commission.  The  law  as  to  them,  therefore,  stands  as  it 
was  before,  which  prevents  them  from  voting  in  the  choice  of 
assignees  under  a  joint  commission,  (m)     When   there  is  no 

(?•)  Parker  v.  Muggridge,  2  Story,  (ss)   Citizens'   Ins.    Co.    v.    Wallis, 

334.     And  subject  to  tlie  same  equities  23  Md.  182. 

which  affect  the  bankrupt  or  insolvent.  (t)  Before  the  statute  they  were  not 

Jewson  V.  Moulson,   2  Atk.  420;   Ja-  so  entitled  (^x  /}«rte  Simpson,  2  Rose, 

cobson  V.   Williams,    1  P.  Wms.  -382 ;  338 ;  Ex  parte  Taitt,  16  Ves.  193,  note 

Bosvil  V.   Brander,   id.    458,    and   Mr.  [Sumner's  ed.]  ;   Ex  parte  Wilson,  18 

Cox's  note;   Burdon  r.  Dean,  2    Ves.  id.  439),  unless  there  were  no  separate 

Jr.  607  ;  Mumford  i'.  Murray,  1  Paige,  creditors  to  vote.     Ex  parte  Jones,  18 

620;    Smith    v.    Kane,   2   Paige,  303;  Ves.  283;   Ex  parte   Taylor,  id.  284; 

Van  Epps  v.  Van  Deusen,  4  id.  64.   See  Ex  parte  Laycock,  1  Rose,  32. 
Lothrop  V.  Wightman,  41  Penn.  297.  (w)  Ex  parte   Parr,    18    Ves.  65,   1 

(s)  Judd  V   Gibbs,  cited  Hiiliard  on  Rose,  76 ;   Ex  parte   Hamer,    id.  321 ; 

Bankr.  114;  Ex  parte  Cook,  2  F.  Wms.  Ex  parte  Jepson,  19  Ves.  224.     Upon 


500;  Ex  parte  Bandier,  1  Atk.  98 
Hague  V.  Rolleston,  4  Burr.  2174 
Harrison   v.    Sterry,   5    Cranch,   239 


some  occasions,  if  the  interest  of  the 
separate  creditors  requires  it,  an  order 
will  be  made,  that  an  inspector  shall 


Wharton  v.  Fisher,  2  Serg.  &  It.  178.        be  appointed  for  the  separate  estates, 


526  THE    LAW    OF    PARTNERSHIP.  [CH.  XV. 

statutory  enactment  in  this  country,  making  other  provisions, 
we  should  consider  the  law  to  be  as  it  was  in  England  before 
the  passage  of  the  statute,  (mm) 

SECTION    IV. 

AVHAT    DEBTS    OR    FUNDS    ARE    JOINT,    AND    WHAT    ARE    SEVERAL. 

It  is  important  to  determine  what  creditors  belong  to  the  one 
class  or  the  other,  and  what  funds  belong  to  the  one  or  the 
other,  that  they  may  be  duly  appropriated. 

The  question,  whether  a  party  is  a  joint  creditor  or  a  several 
creditor,  resolves  itself  into  two.  One  question  is,  Was  the  debt, 
as  originally  contracted,  the  debt  of  the  partnership,  or  the 
debt  of  some  one  partner  ?  (w)  This  must  depend  altogether 
upon  the  considerations  which  have  already  been  presented,  as 
to  the  liability  of  partners  and  of  partnerships.  They  deter- 
mine whether  a  certain  debt,  claimed  to  be  that  of  a  firm,  was 
contracted  by  the  firm,  or  by  one  person,  partner  or  other, 
having  authority  to  bind  the  firm  in  that  way  to  that  debt.  Or 
whether  a  debt,  claimed  to  be  the  several  debt  of  a  part- 
*  485  ner,  and,  as  such,  entitled  to  priority  upon  *  the  several 
fund,  was  contracted  by  him  alone,  or  by  him  for  the 
firm,  so  as  to  make  it  legally  the  debt  of  the  firm.  In  other 
words,  these  questions  depend  almost  wholly  upon  the  consid- 
erations which  determine  the  authority  of  one  who  acts  for  a 
firm,  or  the  liability  of  the  members  of  the  firm.     And  it  does 

as  a  check  upon  the  proceedings  of  the  of  A.,   named   in   a   schedule.      Held, 

assignees.     Ex  parte  Batson,    1    Glyn  that  a  separate  creditor  of  A.,  named 

&  J.  269.  in  the  schedule,  did  not,  by  the  arti- 

(««)  [The  weight  of  authority  favors  cles,  become  a  joint  creditor  of  A.  and 

the   rule   that   a   partnership   creditor  B.     This  was  on  the  ground  of  want 

may  prove  his  claim  against  the  estate  of  assent  on  the  part  of  the  creditors, 

of  an  individual  partner,  and,  of  course,  Lord  Eldon  observed:  "But  I  agree 

that  such  provable  claim  will  be  barred  to  the  proposition,  that  a  very  little 

by   the   discharge.     In   re   Jewett,    15  will  do  to  make  out  an  assent  to  the 

N.  B.  R.  126.]  agreement.      If   any   of  the   creditors 

(v)  A.,  as  a  trader,  being  indebted  named  in  the  schedule  think  they  can 

to  several   persons,  enters    into   part-  make  out  such  a  case,  they  may  apply, 

nership  with  B.,  and  brings  his  stock  on  that  ground,  to  prove   their  debts 

in  trade  into  the  partnership.     By  the  against   the  joint   estate."      Ex  parte 

partnership  articles,  it  was  agreed  that  Williams,  Buck,  13. 
the  joint  trade  should  pay  the  creditors 


CH.  XV.]  OF   BANKRUPTCY.  527 

not  seem  necessary  to  add  here  any  thing  to  what  has  been 
ah'eady  said  on  these  subjects,  (^iv') 

But  the  second  of  the  two  questions  referred  to  is  more  diffi- 
cult. It  is  whether  a  debt,  which  was  originally  a  joint  debt, 
has  become  a  several  debt,  or  whether  a  debt  originally  sev- 
eral has  become  joint.  A  part  of  this  difficulty  springs  from 
the  principle,  that  a  firm  is  so  far  distinct  from  the  members 
who  compose  it  that  a  creditor  of  the  firm  may  have  the  part- 
nership and  also  the  several  security  of  the  partners,  or  some 
of  them,  as  sureties  for  the  debt  ;  and  a  creditor  of  one  or 
more  partners  may  have  the  liability  of  the  firm  as  security  for 
his  debt.  Hence,  if  a  debt  was  originally  of  one  kind,  and  the 
creditor  can  show  indebtedness  of  the  other  kind  for  the  same 
cause,  the  question  may  arise,  whether  the  new  indebtedness  is 
in  discharge  and  extinguishment  of  the  old,  or  only  by  way  of 
collateral  security  to  the  old.  (2;)  For  if  after  a  dissolution  the 
payee  of  a  note  of  a  firm  gives  it  up,  and  takes  the  several  notes 
of  the  partners  for  their  several  shares,  he  has  no  rights  as  a 
partnership  creditor.  Qxx} 

If  the  one  indebtedness  discharges  the  other,  there  must  be, 
first,  a  consent  of  the  creditor,  and  a  consideration  of  some 
kind  for  the  new  indebtedness,  and  a  consideration  of  some 
kind  for  the  discharge  of  the  old.  (j/)    Thus,  if  a  part- 
ner makes  a  purchase,  *  on  his  own  account,  and  pays    *  486 

(w)  See  cases  cited  in  following  note,  1   id.   565;   Ex  parte  Kendall,  17  Ves. 

for  such  further  consideration  of  these  514-527 ;  Cowell  v.  Sikes,  2  Russ.  191 ; 

points  as  may  be  thought  necessary.  Wilkinson  v.  Henderson,  1  Mylne  &  K. 

(x)  Ex  parte  Whitmore,  3  Mont.  &  582-588  ;    Braitliwaite    i-.    Britain,     1 

A.  627.      This  case  is  a  leading  and  Keen,    206-220 ;    Hart    v.    Alexander, 

illustrative    case;     but,    as    questions  2  M.  &  W.  484;  Lyth  r.  Ault  &  Wood, 

arising  under  this  branch  of  the  law  7   Exch.   669  ;    Harris    v.   Farwell,   15 

are   largely   governed   by  the   special  Eng.  L.  &  Eq.  70,  15  Beav.  31 ;    Yar- 

facts  in  tlie  case,  we  give  the  principal  nell  v.  Anderson,  14  Mo.  619 ;  Smith  v. 

authorities.     Ex  parte  Nolte,  2  Glyn  &  Rogers,  17  Johns.  340. 
J.  295 ;  Thompson  v.  Percival,  5  B.  &  [xx)  Crooker  v.  Crooker,  52  Me.  267. 

Ad.  925;  Evans  v.  Drummond,  4  Esp.  (y)  But   there    must   be   an    extin- 

89;  Read  y.  White,  5  id.  122;  Bedford  guishment   of    the   original    indebted- 

V.  Deakin,  2  Stark.  178,  2  B.  &  Aid.  ness.      Cuxon  v.   Chadley,  3  B.  &  C. 

210 ;  Lodge  v.  Dicas,  3  B.  &  Aid.  611 ;  591 ;  Butterfield  v.  Hartshorn,  7  N.  H. 

David  V.  Ellice,  5  B.  &  C.  196;  Kirwan  345  ;    Warren  v.  Batcholder,  15  N.  H. 

V.  Kirwan,  4  Tyrw.  491,  2  Cromp.  &  129;  Wharton  v.  Walker,  4  B.  &  C. 

M.  617  ;  Winter  v.  Innes,  4  Mylne  &  C.  163  ;  Owen  v.  Bowen,  4  Car.  &  P.  93; 

101;  Vulliamy  v.  Noble,  3  Meriv.  619;  Gibson  v.  Minet,  1  id.  247;   McKinney 

Sleech's   Case  in  Devaynes   v.  Noble,  v.  Alvis,  14  111.  34. 


528  THE    LAW    OF    PARTNERSHIP.  [CH.  XV. 

for  it  by  the  note  of  the  firm,  which  is  all  the  creditor 
has,  his  possession  of  this  note  does  not  necessarily  prove  his 
discharge  of  the  several  partner.  If  he  gives  up  the  note  of 
the  partner,  that  would  prove  it ;  but  if  there  was  only  a  simple 
debt  of  that  partner,  as  for  a  purchase,  the  note  of  the  firm 
would  not  be  a  payment  of  this  debt.  In  Maine  and  Massa- 
chusetts, there  would  be  a  presumption  of  payment,  to  be 
overcome  only  by  proof  of  a  different  intention  between  the  par- 
ties. (2)  In  other  States,  and  in  the  federal  courts,  the  general 
presumption,  that  a  negotiable  note  is  not  payment,  would 
apply,  and  could  be  rebutted  only  by  proof  that  it  was  other- 
wise intended,  (a)  That  is,  we  should  say  in  such  a  case  the 
creditor  might  consider  the  old  debt  as  still  existing,  and  claim 
as  several  creditor,  if  that  would  be  for  his  advantage,  giving 
up  the  company's  note.  If  the  intention  of  discharging  the  old 
debt  by  the  new  was  made  out  by  proof,  or  by  presumption,  the 
question  would  still  occur  as  to  the  consideration  ;  and  we 
should  say,  that  the  getting  all  the  partners,  instead  of  a  part, 
would  be  a  consideration  enough  for  the  discharge  by  the 
creditor  of  the  old  debt ;  and,  at  the  same  time,  if  no  especial 
consideration  to  the  firm  were  proved,  we  should  say  that  the 
discharge  of  the  several  indebtedness  of  the  one  partner  would 
be  a  sufficient  giving  up  of  value  by  the  creditor  to  make  a 
consideration  on  which  the  firm  would  be  held.  (/>) 


(z)  Butts  V.  Dean,  2  Mete.  76;  Wat-  8  Cowen,  77  ;  Booth  v.  Smith,  3  Wend, 
kins  V.  Hill,  8  Pick.  522;  Reed  v.  Up-  66;  Bill  v.  Porter,  9  Conn.  23;  David- 
ton,  10  id.  525 ;  Maneely  v.  McGee,  son  v.  Bridgeport,  8  Conn.  472 ;  Elliott 
6  Mass.  143;  Wood  v.  Bodwell,  12  v.  Sleeper,  2  N.  H.  525;  Frisbie  v. 
Pick.  268 ;  Ilsley  v.  Jewett,  2  Mete.  Larned,  21  Wend.  450 ;  Cole  v.  Sack- 
168  ;  Varner  v.  Nobleborough,  2  ett,  1  Hill,  516  ;  Waydell  v.  Luer,  5  id. 
Greenl.  121  and  note  (a)  ;  Deseadillas  448.  For  the  English  law  upon  this 
V.  Harris,  8  id.  298;  Newall  v.  Hussey,  point,  see  Crowe  v.  Clay,  9  Exch.  604, 
18  Me.  249  ;  Bangor  i;.  Warren,  34  id.  25  Eng.  L.  &  Eq.  454;  Maxwell  v. 
324;  Fowler  v.  Ludwig,  id.  455;  Shum-  Deare,  8  Moore,  P.  C.  363,  26  Eng.  L. 
way   V.    Reed,   id.   560 ;    Comstock   v.  &  Eq.  56. 

Smith,  23  id.  302;  Gooding  y.  Morgan,  (6)  Ex  parte   Williams,  Buck,    16; 

37  id.  419.  Ex  parte  Seddon,  2  Cox,  49;  Ex  parte 

(«)  Peter  v.  Beverly,  10  Pet.  567;  Lobb,  7  Ves.  592;    Scaife  v.  Jackson, 

Sheehy  v.  Mandeville,  6  Cranch,  253  ;  5  Dow.   &  R.  290,  3  B.  &  C.  421 ;   Ex 

Wallace  v.  Agry,  4  Mason,  336 ;  Smith  parte  Kedie,  2  Deac.  &  Ch.  321 ;   Ex 

V.  Smith,  7  Fost.  244 ;  Van  Ostrand  v.  parte  Jackson,   1   Ves.  Jr.   131.      And 

Reed,  1  Wend.  424  ;  Burdick  v.  Green,  see  cases  in  previous  notes. 
15  Johns.  247 ;    Hughes   v.    Wheeler, 


CH.  XV.]  OF   BANKRUPTCY.  529 

If  the  debt  was  originally  joint,  and  had  apparently 
become  *  several  instead  of  joint,  we  apprehend  that  a  *487 
distinct  consent  of  the  creditor  to  this  arrangement, — 
by  which  he  gives  up  all,  and  retains  only  one,  —  and  a  distinct 
consideration  for  his  consent,  must  be  proved.  And  this,  of 
course,  may  be  any  benefit  to  him,  actual  or  prospective  ;  or  any 
loss  or  injury  to  the  firm,  suffered  at  the  instance  of  the  creditor. 
A  consideration  to  the  several  partner  must,  })erhaps,  also  be 
proved  ;  for,  although  he  was  held  before,  he  had  before,  on 
payment,  a  right  to  charge  his  payment  to  the  firm,  which  he 
has  not  now.  (c) 

In  general,  it  would  seem  from  the  cases  that,  while  a  dis- 
tinct intention,  or  consent  and  agreement,  of  all  the  partners 
must  be  proved,  in  order  to  give  validity  to  an  arrangement  by 
which  a  new  indebtedness  has  discharged  an  old  one,  or  a  joint 
debt  been  extinguished  by  conversion  into  a  several  debt,  or 
ince  versd, —  if  such  consent  and  agreement  be  proved,  the 
court  apply  quite  liberally  the  principle  of  novation,  and  con- 
sider the  discharge  of  the  one  debt  a  sufficient  consideration  to 
sustain  the  assumption  of  the  new  debt.  ((^) 

Whether  or  no  such  consent  and  discharge  have  taken  place, 

(c)  Lyth  V.  Ault  &  Wood,  7  Exch.  son  v.  Percival,  5  B.  &  Ad.  925;  Hart 
669.  Parke,  B. :  "The  plaintiff  agrees  f.  Alexander,  2  M.  &  W.  484;  Kirwan 
to  take  the  security  of  one  partner,  v.  Kirwan,  2  Cromp.  &  M.  617,  4 
instead  of  that  of  both.  She  is  at  lib-  Tyrw.  491.  Tiie  authority  of  David 
erty  to  enter  into  that  arrangement ;  v.  EUice,  5  B.  «&  C.  196,  7  Dow.  &  R. 
for  the  court  cannot  inquire  into  the  690,  and  Lodge  v.  Dicas,  3  B.  &  Aid. 
value  of  the  consideration.  If  there  611,  is  considered  as  greatly  shaken 
be  any  consideration  whatever,  it  will  by  the  later  authorities.  See  Hart  v. 
support  an  agreement.  Now,  although  Alexander,  2  M.  &  W.  493;  Sheehy 
10/.  would  be  no  satisfaction  for  a  debt  r.  Mandeville,  6  Cranch,  264  ;  Harris  v. 
of  100/.,  yet  an  article  of  much  less  Lindsay,  4  Wash.  C.  C.  271.  But  see 
value  than  10/.  may  be  given  and  re-  Wildes  v.  Fessenden,  4  Mete.  12,  re- 
ceived in  satisfaction  of  such  a  debt,  viewing  the  authorities.  Robb  v. 
It  may,  at  first,  appear  paradoxical ;  Mudge,  14  (iray,  534 ;  Wild  v.  Dean, 
but  the  sole  responsibility  of  one  of  3  Allen,  579 ;  Ex  parte  Appleby,  2 
many  partners  may  be  of  greater  value  Deac.  482  ;  Ex  parte  Liddiard,  4  Deac. 
than  that  of  all,  for  you  may  tiiereby  &  Ch.  603 ;  Ex  parte  Kedie,  2  id.  312  ; 
obtain  tiie  security  of  his  real  and  per-  Ex  parte  Lane,  De  Gex,  300;  Ex  parte 
sonal  estate."  Pollock,  C.  B. :  "  The  Bradbury,  4  Deac.  202. 
exchange  may  be  of  great  advantage  (cl)  Lyth  v.  Ault,  7  Exch.  069, 
to  the  creditor;  for  it  may  be  much  .s»pra,  note  (c) ;  and  the  opinion  of  Al- 
more  desirable  to  have  the  sole  secu-  derson,  B.,  p.  674.  And  see  Andrew 
rity  of  a  rich  old  man,  than  the  joint  v.  Boughey,  Dyer,  75  a,-  Tiiompson  v. 
security  of  the  old  man,  and  of  a  young  Percival,  5  B.  &  Ad.  925;  Mills  v. 
man  without  any  property."     Thomp-  Boyd,  6  Jur.  943  and  cases  there  cited. 

34 


630 


THE    LAW    OF    PARTxVERSHIP. 


[CH.  XV. 


must  depend  upon  considerations  quite  analogous  to  those 
*488  which  *  have  been  presented  in  the  inquiry  when  a  re- 
tired partner  was  discharged  from  the  Hability  of  the 
firm,  by  change  of  charge,  or  credit,  or  account.  The  cases  are 
rather  numerous  on  this  point ;  but  it  is  not  easy  to  draw  from 
them  any  general  principles  other  tlian  those  which  have  been 
already  stated,  (e) 

If  there  be  an  old  indebtedness,  and  a  new  one  for  tlie  same 
cause,  and  it  is  not  proved  or  presumed  that  the  new  has  paid 
the  old,  then  both  co-exist ;  and,  generally,  in  such  case  the  old 
is  the  principal  delit,  and  the  new  is  collateral  to  and  security 
for  the  old.  The  cases  show  that  the  question  whether  the  old 
debt  is  extinguished  is  sometimes  one  of  much  difficulty  in 
practice.  But,  if  it  be  not  extinguished,  then  it  is  certain  that 
the  creditor  may  give  up  the  new  debt,  and  found  his  claim  only 
on  the  old.  (/)  In  this  country,  it  is  a  universal  principle, 
recognized  in  all  our  systems  of  insolvency  and  in  the  national 
bankrupt  law,  that  a  creditor  having  a  debt  with  security  may 


(e)  Wild  V.  Dean,  5  Allen,  579.  In 
this  case,  Bigelow,  C.  J.,  fully  con- 
siders the  conflicting  authorities,  and 
holds  that  a  partnership  debt  is  not 
provable  against  the  private  estate  of 
one  of  the  partners,  who  has  received 
an  assignment  of  all  the  partnership 
proi)ert3',  and  executed  a  bond  to  his 
retiring  partner  to  assume  and  pay  the 
partnership  debts,  witiiout  evidence  of 
an  express  or  implied  assent  by  him  to 
pay  the  same  to  the  creditor  as  his 
private  debt ;  and  that  notice  by  the 
creditor  of  his  election  to  treat  it  as  a 
private  debt  is  not  sufficient.  Kobb  v. 
Mudge,  14  Gray,  534 ;  Ex  parte  Whit- 
more,  3  Mont.  &  A.  627;  Evans  v. 
Drummond,  4  Esp.  89;  Read  v.  White, 
5  id.  122 ;  Bedford  v.  Deakin,  2  Stark. 
178,  2  B.  &  Aid.  210 ;  Lodge  v.  Dicas, 
3  id.  Gil  ;  Thompson  v.  Percival,  5  id. 
925  ;  Hart  v.  Alexander,  2  xM.  &  W. 
484. 

(f)  Ex  parte  Roxby,  1  Mont,  on 
Part.  198.  The  petitioner,  a  joint  cred- 
itor, took  a  draft  of  the  solvent  part- 
ners upon  a  third  person.  The  peti- 
tioner applied   to  prove.      The  proof 


was  refused,  unless  upon  delivering  up 
the  draft.      Petition  to  prove.      Lord 
Chancellor  :  "  The  question  is,  whether 
the  bill  was  given  as  a  collateral  secu- 
rity, or  in  discharge  of  the  debt ;  as  to 
which  an  affidavit  must  be  made."    Ex 
parte    Hodgkinson,     1     Coojjer,    101 ; 
Ex  parte  Kendall,  17  Ves.  527.     Lord 
Eldon  :  "  In  many  cases,  the  representa- 
tive may  be  entitled  to  say  to  a  cred- 
itor, wlio  chooses  to  make  the  demand, 
that  justice  requires  the  surviving  part- 
ners to  pay  the  debt :   tiiey  are  to  be 
considered  the  principals ;  he  is  merely 
a   surety ;    and   therefore   a   court    of 
equity  would  not  permit  them  to  call 
upon   him  for  payment,    except  upon 
an  equitable  arrangement  and  modifi- 
cation  requiring   them  to   assign  the 
dividend."     Ex  pai-te  Seddon,  2  Cox, 
49  •■  Ex  parte   Lobb,    7    Ves.    592;    Ex 
parte   Hay,   15  id.  4 ;   Ex  parte  Slater 
0  id.  146;  Evans  v.  Drummond,  1  B.  tS 
C.    113;    Reed  v.  White,  5  Esp.  122 
Thompson  v.  Percival,  5  B.  &  Ad.  925 
Ex  parte  Whitmore,  3  Mont.  &  A.  627 
Oakeley   v.   Pasheller,   10  Bligh,  548, 
4  Clark  &  Fin.  207. 


CH.  XV.] 


OF   BANKRUPTCY. 


531 


give  up  his  security,  and  prove  his  whole  debt;  or  may  obtain 

what  he  can  from  his  security,  and  prove  for  the  balance.  (^) 

AVe  do  not  know  that  this  principle  has  been  applied 

*  to  the  case  of  a  creditor  of  a  partner,  holding  the  lia-    *  489 

bility  of  the  firm  as  collateral  security  ;  and  there  might 

be  some  difficulty  in  this  application  of  it.    The  simplest  result 

would  be,  that  the  creditor  should  prove  against  the  firm,  and, 

deducting  his  dividend,  then  prove  for  the  balance  against  the 

partner ;  but  a  difficulty  in  the  way  of  such  procedure  leads  to 

a  doubt  whether  it  would  be  permitted.  (A) 

We  have  supposed  the  indebtedness  to  be  such  that  the  lia- 
bility of  the  firm  and  that  of  the  partner  cannot  be  called 
concurrent.     Perhaps  they  would  be  so  deemed;  and  if  they 


(g)  Richardson  v.  Wytnan,  4  Gray, 
553.  The  question  was  before  the 
court  in  this  case,  where  the  respon- 
dent held  a  joint  and  several  note  of 
three  persons,  tenants  in  common,  and 
held  also  a  mortgage  security.  The 
petitioners  claimed  that  the  security 
should  first  be  made  available,  and  the 
respondent  be  permitted  then  to  prove 
against  the  insolvent  estate  of  one  of 
the  debtors.  The  court  said:  "The 
property  of  the  insolvent  debtor,  wliich 
is  pledged  for  tlie  payment  of  the  debt, 
should  either  be  applied  to  its  extin- 
guishment, or  surrendered  to  the  as- 
signees and  made  part  of  the  estate  to 
be  distributed  among  the  general  cred- 
itors ;  and  whatever  other  property  the 
creditor  holds  as  security'  ought  also  to 
be  appropriated  to  the  payment  of  ti)e 
debt.  This  is  an  equitable  rule,  which 
will  do  justice  to  all  parties.  It  has 
the  sanction,  in  its  spirit,  of  the  courts 
of  chancery  in  England,  and  has  been 
recognized  and  enforced  in  our  own." 
Lanckton  v.  Wolcott,  6  Mete.  305; 
Amory  i-.  Francis,  16  Mass.  308;  In  re 
Grant,  o  Law  Rep.  303 ;  Ex  parte 
Baker,  8  id.  461  ;  Eastman  v.  Foster, 
8  Mete.  19.  For  English  cases,  see 
Ex  parte  Goodman,  3  Madd.  373 ;  Ex 
parte  Parr,  1  Rose,  76,  18  Ves.  65 ; 
Ex  parte  Bennet,  2  Atk.  527  ;  Ex  parte 
Wildman,  1  id.  100 ;  Ex  parte  l)e  Tas- 
tet,  1  Rose,  323 ;  Ex  parte  Iledderley, 
2  Mont.,  Deac.  &  DeG.  487 ;  Ex  parte 
Shepherd,  id.  204;    Ex  parte  Prescott, 


4  Deac.  &  Ch.  23 ;  Ex  parte  Dickson, 
2  Mont.  &  A.  99  ;  Ex  parte  Ruiford, 
1  Glyn  &  J.  41  ;  Ward  v.  Dalton,  7  C. 
B.  643;  Ex  parte  Bloxham,  6  Ves.  449, 
600 ;  Ex  parte  Barclay,  1  Glyn  &  J. 
272  ;  Ex  parte  Smith,  3^  Bro.  C.  C.  46. 

(/()  Agawam  Bank  v.  Morris,  4 
Cush.  99.  A  partnership  note  having 
been  indorsed  by  tiie  paj'ee  to  a  third 
person,  and  by  him  indorsed  to  and 
discounted  at  a  bank  of  which  lie  was 
president,  and  one  of  the  promisors 
having  afterwards  become  insolvent, 
the  bank  proved  the  note  as  a  claim 
against  his  estate.  The  solvent  prom- 
isor afterwards,  at  the  request  of  the 
second  indorser,  and  for  the  purpose 
of  securing  him  and  the  bank,  but 
without  the  knowledge  of  the  bank, 
gave  him  security  applicable  to  the 
note  in  question,  and  also  to  another 
note  held  by  the  bank ;  such  indorser 
promising  to  account  to  the  promisor 
for  the  surplus  of  the  security,  if  any. 
It  was  held,  that  the  security  was  not 
given  to  the  bank,  but  was  a  personal 
one  to  the  second  indorsee,  and  to 
indeninifj'^  him  as  such ;  and  tiiat  a 
subsequent  order  of  the  commissioner, 
on  the  motion  of  the  assignee,  directing 
the  note  to  be  struck  out  of  the  list  of 
claims  proved,  and  disallowing  the 
same,  on  the  ground  that  the  bank 
held  collateral  security  therefor  which 
had  not  been  surrendered  or  applied, 
was  erroneous.  See  also  Barclay  v. 
Phelps,  4  Mete.  397. 


532 


THE   LAW   OF   PARTNERSHIP. 


[CH.  XV. 


were,  in  fact  or  by  construction,  such  that  the  creditor  need 
not  consider  tlie  one  as  principal,  and  be  limited  in  his 
*  490  claim  in  the  other,  as  he  *  would  be  in  a  case  of  strict 
guaranty,  —  then  it  seems  to  be  settled,  although  not 
without  some  doubt  and  objection  of  great  weight,  that  the 
creditor  can  only  elect  to  proceed  against  one,  (i)  and  abandon 
his  claim  against  the  otlier  party.  In  fewer  words,  if  a  creditor 
can  elect,  he  must  elect.  Tbis  rule  would  seem  to  have  been 
settled  only  on  authority  in  England,  —  for  the  supposed  analogy 
to  a  rule  of  law  is  surely  insufficient  for  it,  —  and  we  doubt 
whether  it  has  been  yet  established  by  practice  in  this  country  ; 
nor  are  we  confident  that  it  will  be.  Lord  Eldon  appears  to 
think  that,  aside  from  authority,  if  a  creditor  gets  the  security 
of  a  partner,  and  also  the  security  of  a  firm  for  the  same  debt, 
by  a  valid  contract,  there  is  no  reason  why  he  may  not  prove 
against  both,  in  the  same  way  as  if  they  were  different  and 
distinct  persons.  (/) 


{i)  Ex  parte  Bevan,  9  Ves.  222. 
Lord  Eldon :  "  It  is  not  necessary  to 
decide  the  otlier  question  as  to  the 
joint  and  several  proof.  If  it  was,  I 
am  not  perfectly  satisfied  with  the 
authority  that  has  been  stated.  Tiie 
reasoning  gf)es  upon  this  :  that  a  joint 
and  separate  action  could  not  be 
brought  at  law.  But  surely  the  dis- 
tinction is  this  :  that,  where  a  joint  and 
separate  bond  is  given,  and  another 
security,  several  from  each,  there,  as 
two  actions  might  be  brought,  the  rule 
in  bankruptcy  should  be  different.  I 
think  I  have  heard,  that,  in  the  case 
cited  in  Pearce  v.  Williams,  the  only 
separate  creditor  was  he  who  took  out 
the  con)mission ;  and  it  appears,  by  the 
book,  that  the  joint  creditors  prayed 
that  he  might  deliver  over  to  them  the 
effects;  which  was  refused;  and  it  was 
said  tliat  he  should  have  the  effects 
applied  to  his  separate  bond  :  and,  if 
that  is  the  case,  the  rule  is  quite  right ; 
for  he  would  have  a  right  to  take  the 
separate  effects,  if  not  to  the  detriment 
of  other  separate  creditors."  And  in 
the  same  case,  10  Ves.  107,  Lord  Eldon 
again  says :  "  The  principle  seems  ob- 
vious ;  yet  in  bankruptcy,  for  some 
reason  not  very  intelligible,  it  has  been 
said  the  creditor  should  not  have  the 


benefit  of  the  caution  which  he  has 
used.  I  never  could  see  why  a  cred- 
itor, having  both  a  joint  and  a  several 
security,  should  not  go  against  both 
estates.  But  it  is  settled  that  he  must 
elect." 

ij)  The  case  alluded  to  by  Lord 
Eldon,  as  quoted  in  the  previous  note, 
is  £x  parte  Rowlandson,  3  P.  Wms. 
405.  "  The  Lord  Chancellor  (Talbot) 
at  first  inclined  to  think  that  the  peti- 
tioner, being  a  joint  and  a  separate 
creditor,  ought  to  be  at  liberty  to  come 
in  tinder  each  of  the  commissioners, 
provided  he  received  but  a  single  satis- 
faction ;  but  the  next  day  his  lordship 
helil,  that  as  at  law,  when  A.  and  B. 
are  bound  jointly  and  severally  to 
J.  S.,  if  J.  S.  sues  A.  and  B.  severally, 
he  cannot  sue  them  jointly ;  and,  on 
the  contrary,  if  he  sues  them  jointly, 
lie  cannot  sue  them  severally,  but  the 
one  action  may  be  pleaded  in  abate- 
ment of  the  other.  (But,  as  to  this, 
see  Lechmere  i'.  Fletcher,  I  Cromp.  & 
M.  636.)  So,  by  the  same  reason,  the 
petitioner  in  the  present  case  ought  to 
be  put  to  his  election  under  which  of 
the  two  commissions  he  would  come ; 
and  that  he  should  not  be  permitted  to 
come  under  both,  for  then  he  would 
have   received  more  than  his  share." 


CH.  XV.]  OF    BANKRUPTCY.  533 

*  It  is  also  important  to  determine  what  constitutes  *  491 
the  fund  appropriated  to  one  class  of  creditors,  and  what 
that  of  the  other  class  ;  or,  to  ascertain  what  is  joint  property 
and  what  is  several  property.  Questions  of  fact,  or  even  of 
law,  as  to  the  ownership  of  certain  goods  or  effects  or  lands, 
are  usually  to  be  determined  by  the  general  principles  of  the 
law  of  contracts,  or  the  law  of  property.  But  those  which  are 
peculiar  to  the  law  of  partnership,  or  arise  out  of  its  relations, 
are  also  of  much  importance. 

It  seems  to  be  held  that  if  a  partner  takes  property  from  the 
firm,  even  in  good  faith,  and  bankruptcy  ensues,  and  the  ques- 
tion arises,  which  class  of  creditors  has  the  benefit  of  this  prop- 
erty, it  will  be  held  to  satisfy  any  balance  due  from  that  partner 
to  the  firm,  and  thus  to  increase  the  fund  of  the  joint  creditors, 
and  the  several  creditors  have  only  the  surplus.  As  a  general 
principle,  this  may  rest  upon  sufficient  reasons  ;  for  a  partner 
should  not  be  permitted  to  withdraw  his  share  from  the  capital 
stock,  and  in  this  way  assist  his  several  creditors  at  the  ex- 
pense of  the  joint  creditors.  But  the  principle,  or  the  rule, 
should  not  be  extended  to  cases  in  which  chattels  were  appro- 
priated long  ago  to  one  partner,  or  bought  by  him  with  money 
taken  from  the  firm,  when  the  goods  or  money  were  duly 
charged  to  and  allowed  by  him.  If  the  rule  were  applied  to 
such  cases,  a  partner  could  have   no  several  property,  or  it 

And,   notwitlistanding    tlie   doubts   of  parte  Ladbroke,  2  G\yr\  &  J.  81 ;   Ex 

Lord  Eldon  and  other  high  autliorities,  parte    Bate,    3    Deac.    358 ;    Ex   parte 

tlie  rule  is  now  firmly  established  in  Smith,    1    id.    385;    Ex   parte   Hill,    3 

England,  that,  where  there  is  a  joint  Mont.   &  A.  175 ;   Ex  parte  Clarke,  1 

and   several   creditor,    he   must   make  DeGex,  153;  Ex  parte  \^^ooi,\A.  \Zi; 

his  election  whether  he  will  come  in  Ex  parte  Banks,  2  Jones  &  La  T.  212. 

upon  the  joint  or  the  separate  estate ;  Ex  parte   Lane,  1  De   Gex,   300 ;    Ex 

that  is,  which  he  will  come  in  upon,  in  parte  Arborim,  id.  359;  Ex  parte  Hay, 

preference;    for,    whichever   he    may  15  Ves.  4  ;  £'x/>arte  Adam,  1  Ves.  &  B. 

elect,  he  will  be  entitled  to  come  in  493,  2  Rose,  36 ;  £'.r /wrte  Bigg,  id.  37 ; 

upon  the  surplus  of  the  other,  if  there  Ex  parte   Gray,   4   Deac.  &    Ch.   778. 

should  be  any.     Ex  parte  Blankenha-  But  where  the  contract  is  for  double 

gen,    Cooke's    B.   L.    257 ;    Ex   parte  security  against  distinct  firms,  though 

Butlin,  id.  ;    Ex  parte  Banks,   1  Atk.  consisting  of  the  same  individuals,  the 

lOG ;  Ex  parte.  Bond,  id.  98 ;  Ex  parte  creditor,   if  ignorant  of  their  connec- 

Smith,  1  P.  Wms.  237 ;   Ex  parte  JIas-  tion,   may    prove    against   both.      Ex 

son,  1  Rose,  159;  Ex  parte  Liddel,  2  id.  parte  Bevan,  10  Ves.  109,  note  to  Sum- 

34;  ^r /«(rte  Bank  of  England,  id.  82;  ner's   ed.     And   see   Ex  parte   Adam, 

Ex  parte  Husband,  2   Glyn   &  J.  4.  5  1  Ves.  &  B.  493,  2  Rose,  36 ;   Ex  parte 

Madd.  419 ;  /s.r/)«(te  Moult,  Mont.  337;  Bigg,    id.    37;     Ex    parte    La    Foret, 

Ex  parte  Chevalier.  1  Mont.  &  A.  345;  Cooke's  B.  L.  251;   Ex  parte  Walker, 

Ex  parte  Hinton,  1  De  Gex,  550 ;  Ex  1  Rose,  441. 


634  THE   LAW    OF   PAETNERSHIP.  [CH.  XV. 

would  be  so  mixed  up  with  that  which  would  be  restored 
*  492    to  the  joint  fund  that  no  line  of  separation  *  could  be 

found.  Indeed,  it  seems  to  be  limited  to  those  cases  in 
which  certain  specific  property  has  been  taken  out,  which  has 
been  identified,  and  may  be  specifically  restored.  Even  here, 
however,  the  rule  must  be  qualified,  or  rather  another  rule 
substituted,  which  may  be  drawn  from  the  true  princii)les  of 
the  case,  (/c) 

It  cannot  be  doubted  that  partners  may  agree  in  their  original 
articles  as  to  what  property  shall  belong  to  one  or  another  in 
case  of  dissolution  ;  or  that  they  may  so  agree  subsequently  to 
the  formation  of  the  partnership;  or  that  they  may  so  agree  in 
reference  to  the  present  and  immediate  several  ownership  of 
articles  of  joint  property,  at  any  time  or  in  any  way  they  please  ; 
with  this  limitation  only,  that  the  agreement  must  be  made  in 
good  faith,  and  therefore  must  not  be  made  in  contemplation 
of  bankruptcy.  The  same  power  and  right  exist  in  relation  to 
choses  in  action  ;  any  division  or  appropriation  of  these,  by 
indorsement  of  negotiable  paper,  or  assignment  of  debt,  or  other- 
wise, must  be  lawful  and  effectual,  with  only  the  same  limita- 
tion. (/)  And  if  a  partner  owns  in  this  way,  or  in  any  other  way, 
land  or  personalty,  his  right  and  interest  cannot  be  affected  by 
permitting  the  partnership  to  use  or  employ  his  property,  upon 
any  terms  satisfactory  to  them,  always  within  the  limitation  that 
the  whole  transaction  was  in  perfect  good  faitli.  And  tbe  con- 
verse of  all  this  must  be  equally  true  ;  that  is,  partners  may 
transfer  to  the  firm,  either  realty  or  personalty,  choses  in  pos- 
session or  choses  in  action,  and  the  use  or  employment  by  a 
partner  of  the  thing  so  owned  by  the  firm  cannot  affect  the 

(/.■)  In  Ex  parte  Smith,  1  Gill  &  J.  (/)  Ex  parte  Lodge,  1  Ves.  Jr.  166  ; 

74,  it  was  held,  that  if  one  partner  be  Ex  parte  Harris,  '2  Ves.  &  B.  213  ;   Ex 

intrusted  with  the  entire  management  /wirte  Yonge,  3  id.  34 ;  £J.r  ;wrte  Reeve, 

of    the   partnersliip   concern,    and   lie  9  Ves.  589 ;  Ex  parte  Smitli,  6  Madd. 

withdraw  moneys  for  his  separate  use,  2,  s.  c,  semhie,  1  Glyn  &  J.  74.     See 

wiiich    he   duly  and  openly  enters  in  also  notes  3  and  4  to  Hankay  v.  Gar- 

the  partnership  books,   this   is   not   a  ratt,   1  Ves.  Jr.  241   (Sumner's  ed.  )  ; 

fraud   which  will  entitle  tlie  joint  es-  Anderson  v.  Maltby,  4  Bro.  C.  C.  428, 

tate   to    prove   against   the   separate;  2  Ves.  Jr.  244 ;  Parker  y.  Ramsbottom, 

otherwise,   if   by   the    entries'^  in    the  3  B.  &  C.  2-57;  Ex  parte  Carpenter,  1 

books  he  disguises  the  transaction,  or  Mont.  &  McA.   1 ;  Ex  parte  Peake,  1 

wholly    omits    and    conceals    it.      Ex  Madd.  346 ;  Lingen  ?'.  Simpson,  1  Sim. 

/jflrte  Lodge,  1  Ves.  Jr.  166 ;  M'Cauley  &   Stuart,    600;    Ex  parte   Turner,   4 

r.    M'Farlane,   2    Desaus.     Ch.    239 ;  Deac.  &  Ch.  169,  177. 
Ex  parte  Gust,  1  Cooke's  B.  L.  548. 


CH.  XV.]  OP   BANKRUPTCY.  535 

interest  or  diminish  the  rights  of  the  firm,  —  always,  we  re- 
peat, within  the  limitation  of  the  entire  honesty  of  this 
transfer  *  and  this  use,  and  its  complete  independence    *  493 
of  all  bankruptcy,  or  expectation  of  bankruptcy,  (w) 

If,  after  such  appropriations  have  taken  place,  bankruptcy 
ensues,  it  will  raise  the  question  of  their  effect.  We  think  the 
true  answer  must  be,  that  the  question  of  their  original  validity 
comes  first.  To  determine  this,  we  must  inquire  whether  any 
thing  of  fraud,  actual  or  constructive,  entered  into  the  transac- 
tion ;  was  bankruptcy  contemplated  ;  or  was  it  so  near  that  it 
ought  to  have  been  contemplated  ;  (w)  or  are  there  any  other 
circumstances  to  indicate  that  the  transaction  was  something 
else  than  an  honest  transfer  of  property,  by  those  who  had  a 
right  to  transfer,  to  those  who  had  a  right  to  receive  it.  If 
the  original  transaction  was  wholly  free  from  any  taint  of  this 
kind,  we  cannot  see  any  sound  principle  in  the  law  of  partner- 
ship, or  in  the  law  of  bankruptcy,  which  should  interfere  with 
the  consequences  of  the  transfer.  And  therefore  the  property 
would  remain  within  the  joint  fund,  or  in  the  several  fund, 
accordingly  as  it  had  been  placed  by  the  transfer  in  one  or  in 
the  other.  We  should  express  the  general  rule  thus :  If  the 
firm  and  all  the  partners  are  bankrupt,  no  separate  estate  of  a 

(m)  Ex  parte  Ruffin,  6  Ves.  119;  forraably  to  the  usual  phraseology  of 
Ex  parte  Freeman,  Buck,  471 ;  Ex  bankrupt  and  insolvent  laws,  tliat  a 
parte  Peake,  1  Madd.  346,  589 ;  Ex  conveyance,  in  order  to  constitute 
parte  Fry,  1  Glyn  &  J.  96  ;  Campbell  preference,  must  be  in  actual  contera- 
V.  Mullett,  2  Swanst.  575;  Ex  parte  plation  of  legal  bankruptcy  or  insol- 
Willianis,  11  Ves.  3 ;  Ex  parte  Row-  vency.  Thus,  in  England,  it  is  said, 
landson,  1  Rose,  416  ;  Ex  parte  Fell,  that  the  law  does  not  avoid  a  convey- 
10  Ves.  347  ;  Ex  parte  Hare,  2  Mont,  ance,  made  under  circumstances  in 
&  A.  478;  Ex  parte  Hunter,  2  Rose,  which  the  party  may  "hope  that  his 
382;  Ex  parte  Jackson,  1  Ves.  131  ;  affairs  would  rally  and  come  round 
Ex  parte  Burn,  1  Jac.  &  W.  378 ;  Ex  again."  Green  v.  Bradfield,  1  Car.  & 
parte  Jones,  4  Maule  &  S.  450 ;  K.  454,  per  Tindal,  C.  J.  It  must  be 
Ex  parte  Yallop,  15  Ves.  60;  Ex  parte  an  act  tiiat  not  only  in  effect  contra- 
Houghton,  17  id.  252  ;  Horn  v.  Baker,  venes  the  bankrupt  laws,  but  it  must 
9  East,  215 ;  Ex  parte  Parry,  5  Ves.  be  done  with  intent  to  contravene 
575;  Ex  parte  Watkins,  1  Mont.  &  them,  and  in  contemplation  of  bank- 
McA.  57.  [But  all  the  partners  of  an  ruptcy.  Hilliard  on  Baidcr.  329  ; 
insolvent  partnership  cannot  assign  Fidgeon  i;.  Sharp,  1  JIarsh.  198,  per 
the  property  of  the  firm  to  pay  the  Gibbs,  C.  J.;  Phanix  r.  Ingraham,  5 
debts  of  one  individual  partner.  Wil-  Johns.  412.  And  see  Pearsall  v.  Me- 
son V.  Robertson,  21  N.  Y.  587;  Keith  Cartney,  28  Ala.  110;  Cole  v.  Albers, 
V.  Fink,  47  111.  272.  See  also  Nat.  1  Gill,  412  ;  Jones  v.  Howland,  8  Mete. 
Bank  v.  Sprague,  20  N.  J.  Eq.  13.]  377. 

(n)  It   is   the  prevailing  rule,  con- 


536 


THE   LAW    OF   PARTNERSHIP. 


[CH.  XV. 


partner  can  claim  against  tlie  joint  estate,  nor  the  joint  estate 
against  any  separate  estate,  until  all  the  creditors  to  whom  the 
fund  is  primarily  appropriated  are  paid  in  full  with  inter- 
est, (o)  But  if  any  property  appears  in  either  of  these 
*  494  *  estates,  which  has  been  fraudulently  abstracted  from 
any  other,  it  must  be  restored  ;  and  this  fraud  may  be 
constructive  only,  and  any  act  would  be  so  which  violated  the 
articles  or  agreement  of  the  partners,  or  abstracted  or  appro- 
priated property  or  funds  by  the  act  of  one  partner  only,  without 
the  authority,  consent,  or  knowledge  of  the  others,  (p) 
Whether  partnership  assets  are  subject  to  the  exemption  or 
homestead  rights  of  a  partner  is  not  certain  on  authority. 
We  should  say,  on  general  principles  they  are  not.  But  it 
might  depend  somewhat  on  the  language  of  the  statutes  cre- 
ating those  rights.  (|^/>) 

The  English  "  statute  of  reputed  ownership,"  as  it  is  com- 
monly called,  contains  provisions  which  bear  upon  this  ques- 
tion, {q')      It   enacts  that    goods  which    at   the  time    of  the 


(o)  Per  Lord  Loughborough,  Ex 
parte  Elton,  3  Ves.  242 ;  Twiss  v. 
Massey,  1  Atk.  67  ;  Ex  parte  Cook,  2 
P.  VVms.  500;  Ex  parte  Abell,  4  Ves. 
837  ;  Ex  parte  Clay,  6  id.  833  ;  Bolton 
V.  Puller,  1  Bos.  &  P.  539-545.  And 
see  In  re  Rowland,  Law  Rep.  1  Ch.  421, 
and  Rolfe  v.  Flower,  Law  Rep.  1 
P.  C.  27. 

{p)  In  re  Lodge,  1  Ves.  Jr.  165 ; 
Ex  parte  Harris,  1  Rose,  129,  437, 
Lord  Eldon :  "  I  take  it  now  to  be 
necessary,  attending  to  the  result  of 
Lord  Thurlow's  decisions,  /n  re  Lodge, 
and  the  other  cases,  that,  in  order  to 
establish  a  right  of  proof  for  the  joint 
estate  against  the  separate  estate  or 
for  the  separate  estate  against  the  joint 
estate,  it  must  be  made  out  that  the 
money  was  taken  improperly  and 
fraudulently.  In  this  sense,  improperly 
and  fraudulently  that  it  was  taken 
against  tlie  contract  between  the  par- 
ties, express  or  implied ;  or  as  against 
an  individual  partner,  to  increase  his 
private  estate.  I  have  oftener  than 
once  expressed  my  confirmation  of 
that  opinion,  that  those  circumstances 
would,  in  a  legal  sense,  constitute  fraud. 
Cases  of  this  kind,  however,  must  be 


decided  upon  their  particular  cir- 
cumstances ;  and  the  conclusion  of 
law  as  to  fraud  must  depend  upon  the 
nature  of  those  circumstances."  Ex 
parte  Smith,  1  Glyn  &  J.  74;  Ex  parte 
Watkins,  1  Mont.  &  McA.  57. 

(/'/')  [Whether  a  partner  can  claim 
homestead  and  exemption  rights  out  of 
partnership  assets,  is  a  much  debated 
and  quite  unsettled  question.  That  he 
can,  see  Stewart  v.  Brown,  37  N.  Y.  350  ; 
Servant  v.  Rusk,  43  Cal.  235;  In  re 
Richardson,  11  N.  B.  R.  114  ;  Bonsall  v. 
Comly,  44  Penn.  St.  442.  That  he 
cannot,  see  Pond  v.  Kimball,  101  Mass. 
105 ;  Amphlett  v.  H  bbard,  29  Mich. 
298 ;  Clegg  v.  Houston,  1  Phila.  352 ; 
Wright  V.  Pratt,  31  Wis.  99;  Burns  v. 
Harris,  67  N.  C.  140 ;  In  re  Blodgett,  10 
N.  B.  R.  145;  Till's  Case,  3  Neb.  261 ; 
Gaylord  v.  Imhoff,  26  Ohio.  317  ;  In  re 
Brothroyd,  14  N.  B.  R.  323.  A  retir- 
ing partner  from  an  insolvent  firm  can- 
not take  any  money  with  him;  and,  if 
he  do,  and  place  it  in  a  homestead, 
equity  will  take  it  for  the  benefit  of 
the  firm's  creditors.  In  re  SauthofF, 
16  N.  B.  R.  181,  U.  S.  Dist.  Ct.  Wis.] 

(7)  This  statute,  6  Geo.  4,  c.  16, 
§  3,  provides  that  a  fraudulent  convey- 


CH.  XV.]  OP    BANKRUPTCY.  537 

bankruptcy  are  in  the  possession,  order,  and  disposition  of  the 
bankrupt,  as  reputed  owner  thereof,  by  consent  of  the  true 
owner,  shall  be  distributable  as  the  property  of  the  bankruptcy 
among  his  creditors.  This  statute  was  first  enacted  in  the  reign 
of  James  I.,  and  has  been  confirmed  by  6  Geo.  4.  The  statute 
of  James  was  never  adopted  in  this  country,  as  we  had  no 
bankrupt  law  here  until  after  our  independence.  Nor  is  there 
a  similar  provision  in  our  bankrupt  law.  It  is  plain,  however, 
that  the  principle  of  this  statute  is,  to  a  considerable  extent, 
one  of  common  law ;  and  its  purpose  is  one  which  might  in 
many  cases  be  asserted  by  a  court  of  equity,  without 
any  special  statute,  (r)  *  Indeed,  this  principle  is  the  *  495 
same  with  that  which  holds  a  person  as  a  partner  who 
has  been,  with  his  own  consent,  held  out  as  one.  For  such  a 
person  is  so  held  because  the  creditors  of  the  firm  trusted  the 
firm  on  the  credit  of  his  membership,  or,  in  other  words, 
trusted  him ;  and  did  this  by  liis  permission  and  authority,  (s) 
If,  therefore,  this  person,  instead  of  permitting  himself  to  be 
lield  out  as  a  partner,  permits  his  property  to  be  held  out  as  the 
property  of  the  firm,  and  as  forming  a  part  of  the  foundation 
on  which  its  credit  rests,  the  very  same  reason  which  held  him 
personally  in  the  first  case,  with  all  his  property,  would  now 
hold  that  part  of  his  property  so  permitted  to  appear  as  the 
property  of  the  firm.  We  cannot,  therefore,  doubt  that  equity 
would  decide  such  a  case  very  much  in  accordance  with  the 
general  purpose  of  this  law,  although  we  doubt  whether  any 

ance,    "  within    this  country   or  else-  v.  Cator,  5  Ves.  688 ;  Dann  v.  Spurrier, 

where,"   should   constitute   an   act   of  7  id.  231  ;   Raw  v.  Pole,  2  Vern.   239. 

bankruptcy.     Tiiis  language  was  used  In  the  application  of  this  principle,  at 

to    meet    a    decision    under   previous  common  law,  see  Pickard   v.  Sears,   6 

statutes  (Ingliss  v.  Grant,  5  T.  R.  530),  Adol.  &  E.  469-474;   Heane  v.  Rogers, 

that  a  conveyance  made  in  India  by  9  B.  &  C.  586  ;   Graves  v.  Key,  3  B.  & 

one    residing    there,    though    trading  Ad.  318,  a. 

with  England,  could  not  constitute  an  (s)  Spencer    v.    Billing,    3    Camp, 

act  of  bankruptcy.  810;  Parker  v.  Barker,  1  Brod.  &  B.  9, 

(»•)  Storrs  V.  Barker,  6  Johns.  Ch.  3  Moore,  226;   Ex  />arte  Langdale,  18 

166;  Wendell  v.  Van  Rensselaer,  1  id.  Ves.  301;  Guidon  v.  Robson,  2  Camp. 

344;  East  India  Co.  i>.  Vincent,  2  Atk.  302;  Parsons   v.  Crosby,  5  Esp.   199; 

83;    Hanning   v.    Ferrers,  1    Eq.    Cas.  Mclver  i;.  Humble,  16  East,  174;  Smith 

Abr.   356,  pi.   10;    Gilbert's  Eq.  Cas.  v.  Watson,  2  B.   &  C.   411;  Waugh  v. 

83  ;    Raw  v.   Potts,   Prec.  in   Ch.    35 ;  Carver,  2  H.  Bl.  235 ;  De  Berkom  v. 

Hunsden    v.   Cheyney,   2   Vern.    150;  Smith,  per  Lord  Kenyon,  1  Esp.  29. 
Styles  V.  Cowper,  3  Atk.  692 ;  Jackson 


538 


THE   LAW    OP    PARTNERSHIP. 


[CH.  XV. 


court  would,  in  this  country,  without  the  direction  or  authori- 
zation of  a  statute,  carry  this  principle  so  far  as  it  has  been 
applied  in  some  cases,  under  the  statute,  in  England,  {t} 

In  the  cases  under  this  statute,  (?<)  it  has  been  repeatedly 
held  that  property  passed  in  this  way  to  the  creditors  of  the 
firm,  although  there  was  no  imputation  of  fraud  upon  the  actual 

owner.  He  may  have  had  excellent  reasons  for  placing 
*496    his  property  in  the  *  possession  or  at  the  disposal  of  the 

firm  :  the  only  inquiry  was,  Has  he  done  so?  for,  if  he 
has,  he  has  placed  it  within  reach  of  the  creditors  of  the 
firm,  (v)  We  do  not,  however,  see  that  at  common  law,  or  in 
equity,  there  needs  to  be  actual  fraud,  any  more  than  in  the 
analogous  case  of  one  held  personally  a  partner  because  he 
permits  himself  to  be  so  held  out.  If,  for  any  reason  whatever, 
he  permits  his  property  to  enlarge  the  credit  of  the  firm,  either 
he  intends  that  it  shall  be  liable  for  the  debts  contracted  on 
that  credit,  or  he  does  not.  If  he  so  intends,  there  is  no  fraud 
of  any  kind  ;  and  the  law  accepts  his  intention  and  will  carry 

(t)  The  cases  in  equity  collected  in  21  Jac.  1,  eh.  19,  is  repealed  ;  but  the 

our  notes  may  perhaps  go  no  further  11th  section  of  the  statute  of  James  is 

than    to    lioKl,    tliat,    wiiere    the   real  re-enacted   by   the  72d  section  of  tlie 

owner  of  tiie  property  stands  by  and  repealing    statute,    almost   in     folidem 

virtually   assents    to    its   sale   by   the  verbis.    The  adjudged  cases,  therefore, 

reputed  owners,  it  is  a  fraud  on   the  which  were  decided  with  reference  to 

purchaser,   and  the   real  owner  is  es-  the  statute  of  James  are  equally   ap- 

topped  from   subsequently  setting   up  plicable  to  the  statute  of  Geo.  IV. 
title.     This    would   be    the  rule   here.  {v)  Horn  r.  Baker,  9  East,  218 ;  £'x 

The  princ'iple  is  well  stated  by   Chan-  parte  Fell,  10  Ves.  348 ;  Ex  parte  Row- 

cellor   Kent,    in    Storrs   v.    Barker,    6  landson,   1    Rose,  419 ;  Ex  parte  Wil- 

Johns.  Ch.  168.  liams,  11   Ves.   7  ;  Ex  parte  Enderby, 

(it)  By  Stat.  6  Geo.  4,  ch.  16,  §  72,  2   B.   &  C.   389;  Jones  v.  Dwyer,  15 

it  is  enacted,  "  that  if  any  bankrupt,  at  East,  21  ;  Ex  parte  Smith,  3  Madd.  63, 

the  time   he  becomes  bankrupt,  shall.  Buck,  149  ;  Storer  v.  Hunter,  3  B.  & 

by  consent  and  permission  of  the  true  C.  368;  Ex  parte  Arbonin,  1  De  Gex, 

owner  tliereof,  have  in  his  possession,  359  ;  Ex  parte  Lawrence,  id.  269 ;  Ex 

order,   or   disposition,    any    goods    or  parte  Castle,  3  Mont.,  Deac.  &  De   G. 

chattels  whereof  he  was  reputed  owner,  117;  Ex  j)arte  Burn,  \  J&c.  &  W.  378; 

or     whereof     he     had     taken     upon  £a- par/e  Jones,  4  Maule  &  S.  450,  over- 

him  the  sale,  alteration,  or  disposition,  ruling  Ex  parte  Yallop,  15  Ves.  60,  and 

as    owner,    the    commissioners    sliall  Ex  parte  Hougliton,  17  id.  252.     See 

have  power  to  sell  and  dispose  of  the  also  Robinson   v.  INIcDonnell,  5  Maule 

same,  for  the  benefit  of  tlie  creditors,  &  S.  228;  Hay  v.  Fairbairn,  2  B.  &  Aid. 

under  the  commission ;  provided   that  193 ;   Monkhouse   v.  Hay,  2    Brod.  & 

nothing  herein   contained  shall  inval-  B.   114;   Kirkley  v.   Hodgson,  1  B.   & 

idate  or  effect  any  transfer  or  assign-  C.  580.     By  the  statute    6  Geo.  4,  ex,- 

ment  of  any  ship  or  vessel,"  &c.     By  ception  is  now  made  iu  case  of  ships, 

section  1st  of  this  statute,  the  statute  as  will  be  observed. 


CH.  XV.]  OP   BANKRUPTCY.  539 

it  into  effect.  If  he  does  not  so  intend,  then  he  commits  a 
constructive  fraud  upon  the  creditors ;  and  the  law,  or,  if  law 
cannot,  equity,  will  give  to  tliose  creditors  the  benefit  of  that 
property,  (w') 

The  important  consequences  of  the  statute  in  England  fall 
u[)on  retiring  partners,  and  especially  upon  retiring  dormant 
pai'tners,  wlio  leave  their  property  in  the  possession  or  at  the 
disposal  of  the  firm.  And  it  is  obvious  that  tliese  are  the 
parties,  of  all  others,  upon  whom  these  consequences  should 
fall.  If  a  known  partner  retires  and  carries  his  personal  credit 
out  of  the  firm,  but  chooses  to  leave  the  credit  of  his  property 
in  the  firm,  certainly  he  cannot  complain  if  they  who  accept 
this  credit  and  act  upon  it  are  held  in  law  to  be  entitled 
to  the  advantage  of  it.  (a:)  He  should,  *  therefore,  not  *  497 
only  give  such  notice  of  his  retirement  as  will  prevent 
his  personal  liability  from  attaching  to  future  contracts,  but  he 
should  withdraw  all  his  property,  and  thus  prevent  the  credit 
of  this  property  from  so  attaching.  Or,  if  he  cannot  or  will 
uot  so  withdraw  his  property  at  once,  perhaps  a  sufficient  notice 
that  the  property  so  left  is  his,  and  is  not  left  with  the  firm  for 
them  to  trade  on  the  credit  of  it,  might  save  his  property  from 
creditors  who  come  in  after  the  retirement.  This  may  be 
difficult ;  and  the  case  of  the  dormant  or  unknown  partner  is 
still  more  difficult.  He,  it  seems,  may  by  his  retirement  alone, 
without  notice,  cut  off  his  liability  for  future  debts.  He  has 
never  contributed  to  the  firm  any  credit  but  that  of  his  prop- 
erty ostensibly  in  their  possession  as  their  own.  If  he  now 
leaves  this  property  in  their  hands,  he  leaves  with  it  all  this 

(if)  Independently   of  any    consid-  {x)  Ex  parte  Chuck,  8  Bing.  469; 

eration  of  bankruptcy,  it  is  a  general  Ex  parte  Wood,   1   De  Gex,  134;  Ex 

rule  of  law   that  all  secret  sales  and  parte   Gurney,  3  Mont.,   Deac.    &  De 

transfers   of   jiersonal   chattels,   unae-  G.    541 ;    Ex   parte    Thomas,   id.    40, 

companied  by  possession,  are  at  least  affirming  s.  c.  2  id.  294;  Ex  parte  \lsi\- 

priind  facie    fraudulent    and    void    as  lifax,   id.   544 ;   Bannatyne  v.   Leader, 

against  creditors;  since  the  effect  of  10  Sim.  350;   Ex  parte  Heath,  4  Jur. 

them  is  to  enable  a  party   to  gain   a  28 ;  Ex  parte  Simpson,   Mont.    c&,   Ch. 

false  credit  from  the  world.     1  Deacon  662;    Ex   parte    Taylor,    Mont    240; 

B.    L.  400 ;    Hoffinan  v.   Pitt,  5  Esp.  Ex  parte  Dyster,  2  Rose,  256  :  but  see 

25;    Eastwood  v.    Brown,    1   Ryan   &  Caldwell   v.    Gregory,  id.  149;  Curtis 

M.  312;   per  Buller,  .1.,  in  llodsden  v.  v.  Perry,  6  Ves.  747  ;  Ex  parte  Fell,  10 

Stai)]e,  2  T.  R.  697  ;  Bamford  v.  Baron,  id.  347. 
id.  594,  note ;  and  see  Worsley  v.  De 
Mattos,  1  Burr.  467. 


540 


THE   LAW    OF   PARTNERSHIP. 


[CH.  XV. 


credit,  and  it  is  bound  to  make  this  credit  good.  In  such  case, 
if  he  undertakes  to  protect  his  property  against  this  risk,  it 
would  seem  that  he  must  give  notice  of  his  past  relations  and 
liabilities,  and  that  he  has  terminated  them  by  retirement,  and 
leaves  his  property  there  for  certain  reasons,  but  not  to  be  lia- 
ble as  the  property  of  the  firm.  It  may  be  doubted  whether 
even  this  would  save  his  property  as  against  the  statute, 
although  it  might  be  enough  at  common  law  or  in  equity  if 
there  were  no  statute.  (?/) 

It  not  unfrequently  happens  that  persons  who  actually 
*498  are  in  *  partnership,  and  in  one  firm,  appear  to  the 
world  as  distinct  traders,  or  as  distinct  firms,  for  the 
convenience  and  advantage  of  using  the  names  separately  upon 
negotiable  paper.  Thus,  if  there  are  three  partners  who  call 
themselves  so,  they  could  use  only  the  name  of  A.,  B.,  &  Co. 
But,  if  not  known  as  partners,  A.  may  draw  on  B.  in  favor  of 
C,  and  B.  may  accept  and  C.  indorse,  and  the  paper  have 
apparently  three  distinct  liabilities.  The  question  then  may 
arise,  May  the  holder  proceed  against  the  several  estates  of  all 
these  persons,  or  only  against  the  joint  fund  of  their  firm?  (2) 


{}/)  Ex  parte  Woodgate,  2  Mont., 
Deac.  &  De  G.  394.  A  dissolution  of 
partnership  was  advertised  in  the  Ga- 
zette, and  a  circular  sent  in  the  name 
of  the  dissolved  firm,  requesting 
debtors  of  the  firm  to  pay  their  debts 
to  one  partner.  Held,  that  the  notice 
was  insufficient  to  take  the  debts  out 
of  the  reputed  ownership  of  the  firm. 
The  plant  and  stock  in  trade  was 
taken  possession  of  by  the  same  part- 
ner, and  used  in  his  separate  trade 
after  the  dissolution.  Held,  that  it 
was  in  his  separate  reputed  ownership. 
Ex  parte  Sprague,  4  De  Gex,  M.  &  G. 
86B.  And  see  Hunter  v.  Rice,  15  East, 
100;  Ex  parte  Wheeler,  Buck,  25; 
Ex  parte  Clarkson,  4  Deac.  &  Ch.  56 ; 
Ex  parte  Enderhy,  2  B.  &  C.  89  ;  Ex 
parte  Arbonin,  1  De  Gex,  359 ;  Ex 
parte  Riiffin,  6  Ves.  119  ;  Ex  parte 
Fell,  10  id.  347  ;  Ex  parte  Williams,  11 
id.  3  ;  Joy  v.  Campbell,  1  Schoales  & 
L.  328  ;  Ex  parte  Burton,  1  Glyn  &  J. 
207  ;  Ex  parte  Usborne,  id.  358 ;  Ex 
parte  Cooper,  1  Mont.,  Deac.  &  De  G. 


358.  And  see  further,  on  the  effect  of 
notice  or  want  of  notice  bearing  on 
reputed  ownership,  Ex  parte  Barnett, 

1  De  Gex,  194;  Ex  parte  Wood,  3 
Mont.,  Deac.  &  De  G.  314  ;  Ex  parte 
Arkwright,  id.  129  ;  Ex  parte  Wilkin- 
son, 13  Sim.  475;  Ex  parte  Pott,  2  id. 
257,  recognizing  the  rule  in  Williams 
V.  Thorp,  id.  203 ;  and  overruling  Ex 
parte  Smith,  id.  357;  Ex  parte  Nutting, 

2  Mont.,  Deac.  &  De  G.  302  ;  Ex  parte 
Usborne,  1  Glyn  &  J.  358 ;  Ex  parte 
Burton,  id.  207, 

(z)  B.  &  G.  carry  on  business  at 
Manchester  as  commission  agents,  un- 
der the  firm  of  B.  &  Co.,  G.  being  also 
a  trader  on  his  own  separate  account 
at  Stockport,  under  the  firm  of  J.  & 
Co.,  and  being  likewise  a  partner  with 
J.  in  London,  trading  under  the  firm 
of  J.  &  Co.,  and  with  S.  R.  at  Stock- 
port, trading  under  the  firm  of  S.  R. 
B.  &  Co.  drew  two  bills  upon  J.  &  Co., 
payable  to  the  order  of  B.  &  Co.,  which 
J.  &  Co.  accept,  and  which  are  after- 
wards indorsed  by  B.  &  Co.,  G.  &  Co., 


CH.  XV.] 


OF   BANKRUPTCY. 


641 


The  authorities  on  this  point  are  conflicting ;  nor  do  they  cover 
the  whole  ground.  We  would  state  the  result,  however,  thus: 
If  the  holder  took  the  paper  on  the  credit  of  the  several  names, 
and  in  ignorance  of  their  joint  interest,  he  certainly  may  prove 
against  all  the  parties  severally.  But  he  may  elect  to  proceed 
against  the  firm,  or  the  joint  fund,  because  what  lie  held  was 
in  fact  partnership  paper,  (a)  If  he  took  the  paper 
*  knowing  that  these  names  were  the  names  of  part-  *  499 
ners,  it  is  much   more  doubtful  whether  he  can    now 


and  S.  R.  ;  and  of  which  W.  &  Co.  be- 
came the  hohlers  for  a  valuable  con- 
sideration, without  any  knowledge 
that  G.  was  a  partner  in  the  house  of 
B.  &  Co.,  or  in  that  of  J.  &  Co.  B.  & 
G.  and  J.  severally  became  bankrupt. 
Tlie  judges  were  equally  divided  on 
the  question,  whether  W.  &  Co.  could 
prove  the  amount  of  the  bills  botii 
against  the  joint  estate  of  B.  &  G.  and 
the  separate  estate  of  G.,  or  whether 
tliey  must  elect.  But  hekl,  by  all  the 
judges,  that  the  amoimt  of  dividends, 
which  had  been  previously  declared, 
though  not  received  by  W.  &  Co., 
under  the  commission  against  J.,  must 
be  deducted  from  such  proof.  Ex 
parte  Moult,  1  Deac.  &  Ch.  44,  Mont. 
321.  The  question  is  very  elaborately 
argued  by  Erskine,  C.  J.,  and  Sir 
George  Hose,  that  AY.  &  Co.  must 
elect ;  and,  on  a  rehearing  before  the 
Lord  Chancellor,  it  was  so  decided. 
2  Ueac.  &  Ch.  41'J,  Mont.  &  B.  28. 

(a)  A.  &  B.  were  in  partnership, 
B.  being  a  secret  partner ;  and  A.,  on 
the  partnership  account,  drew  bills  in 
his  own  name  on  B.,  which  were  ac- 
cepted by  him.  Held,  on  the  bank- 
ruptcy of  A.  &  B.,  that  the  holder  of 
these  bills,  who  was  ignorant  of  the 
partnership,  was  not  entitled  to  prove 
them  against  the  joint  estate  of  A.  & 
B.  and  the  separate  estate  of  B.,  but 
tiiat  he  was  entitled  to  prove  them 
against  the  sejiarate  estates  of  A.  &  B., 
held,  too,  that  the  holder,  having  proved 
against  the  joint  estate,  might,  after  a 
declaration  of  the  dividend  of  the  joint 
estate,  retire  from  that  proof,  and 
prove    against    the     sei)arate    estate. 


Ex  parte  Husbands,  2  Glyn  &  J.  4, 
reversing  s.  c.  5  Madd.  419.  The 
Lord  Ciiancellor  said :  "  The  circum- 
stances of  this  case  are  peculiar,  and 
create  some  embarrassment  in  the  ap- 
plication of  well-known  principles  of 
the  bankruj)t  law.  It  is  clear,  that 
where  a  party  takes  a  bill,  drawn  by 
some  members  of  a  firm,  carrying  on 
a  distinct  trade,  on  the  firm,  in  igno- 
rance that  the  drawers  constitute  part 
of  the  firm  of  the  acceptors,  proof  is 
admitted  against  both  the  drawers  and 
acceptors  ;  and  it  is  equally  clear,  that 
a  person  holding  a  joint  and  separate 
security'  for  the  same  debt  is  in  bank- 
ruptcy bound  to  elect.  In  this  case, 
however,  the  bills  are  accepted  by  the 
dormant  partner  of  the  partnership  of 
Isaac  and  Peter  Blackburn,  carrying 
on  business  in  the  name  of  Isaac 
Blackburn ;  and  are  drawn  by  Isaac 
Blackburn,  in  his  individual  name 
indeed,  but,  as  I  must  take  it  on  the 
evidence,  in  his  name  as  representing 
the  firm  of  the  two  bankrupts.  It 
does  not  appear  to  me  that  this  case 
ranges  itself  within  that  class  of  cases 
in  which,  contrary  to  the  ordinary  rule 
in  bankruptcy,  the  holder  has  been 
allowed  to  pursue  the  contract  appear- 
ing on  the  face  of  tlie  bills,  and  to 
have  double  proof.  But  I  do  not 
think  that  the  petitioners  are  con- 
cluded by  any  thing  that  has  passed, 
so  as  to  be  prevented  now  from  with- 
drawing the  proof  against  the  joint 
estate,  and  being  admitted  as  creditors 
on  the  two  separate  estates."  See  the 
cases  cited  in  the  following  notes,  for  a 
full  consideration  of  these  questions. 


542  THE   LAW   OF   PARTNERSHIP.  [CH.  XV. 

proceed  against  the  parties  severally.  There  are  dicta  of  great 
weight  (ft)  in  favor  of  his  right,  but  little  or  no  adjudication. 
We  think  the  test  would  be  the  actual  character  of  the  paper. 
If  this  was  in  fact  partnership  paper,  and  the  holder  knew  that 
the  names  were  those  of  partners,  we  think  he  has  only  the 
right  which  attaches  to  partnership  paper ;  and  if  the  holder 
knew  also  that  it  was  partnership  paper,  as  well  as  that  it  bore 
the  names  of  partners,  we  should  be  quite  certain  of  this.  If, 
however,  the  paper  was  not  partnership  paper,  but  the  paper  of 
one  of  the  persons,  or  of  one  of  the  firms  placing  their  names 
on  it,  then  we  should  say  that  the  holder  could  proceed  against 
them  severally,  although  they  were  partners  otherwise,  and  he 
knew  that  they  were  so.  (c) 

If  a  firm  be  indebted  to  one  of  the  partners,  it  has  been  sup- 
posed (fZ)  that  this  debt  formed  a  part  of  the  several  assets  of 
that  partner,  and  that  his  several  creditors  might,  therefore, 
prove  against  the  joint  fund,  for  that  debt,  in  competition  with 

the  joint  creditors.  But  that  partner,  if  solvent,  could 
*  500    not  himself  prove  *  against  the  joint  fund,  to  the  injury 

of  the  joint  creditors,  because  he  is  himself  liable  to 
those  creditors ;  and  the  several  creditors  of  that  partner  take 
on  his  insolvency  only  his  rights  ;  and  therefore  it  seems  now 
to  be  settled,  that  they  cannot  prove  against  the  joint  fund,  in 
such  a  case,  (e)     If,  on  the  other  hand,  a  partner  owes  a  balance 

(6)  These   are   collected   and   com-  parte  Bond,  1  Atk.  98  ;  E.r  parte  Cob- 

mented  on  in  Ex  parte  Moult,  2  Deac.  ham,  1  Bro.  Cii.  576  ;  Ex  parte  Heyden, 

&  Ch.  419.  1  Cooke,  B.  L.  254  ;  Ex  parte   Cheva- 

(c)  Ex  parte  Moult,  1  Deac.  &  Ch.  lier,  1  Mont.  &  A.  345. 
44,  Mont.  321,  and  s.  c.  2  Deac.  &  Ch.  (d)  Ex  parte    Hunter,   1  Atk.  223, 

419,  xMont.  &  B.  28  ;  Ex  parte  Sillitoe,  per  Lord  Harkwicke  ;  Ex  parte  Blake, 

1    Glyn   &  J.   383 ;    In  re  Shakeshaft,  Cooke  B.  L.  503. 

Stirrup,  &  Salisbury,  cited  in  Curtis  v.  (e)  Ex   parte   Reeve,   9    Ves.   588  ; 

Perry,    6    Ves.    743,    747  ;    Ex   parte  Ex  parte  Lodge  &  Fendai,  1   id.  166  ; 

Adam,  2  Rose,  36,  1  Ves.  &  B.  498  ;  Ex  parte  King,   1   Rose,  212.     In  Ex 

Ex  parte  Bigg,  2  Rose,  37  ;   Ex  parte  parte  Reeve,  Lord  Eldon,  in   holding 

Walker,  1  id.  441  ;  Ex  parte  Liddel,  2  that,    under    a    joint    commission     of 

id.  34 ;    Ex  parte   Husbands,  5  Madd.  bankruptcy,  the  right  of  Uie  creditors 

419,  s.  c.  on  appeal,  2  Glyn  &  J.  4  ;  to  interest  subsequent  to  the  date  of 

Ex  parte  La  Forest,  1  Cooke  B.  L.  276  ;  the  commission,  in   the  case  of  a  sur- 

Ex  parte  Benson,  1    Cooke,  278  ;    Ex  plus,  is  preferred  to  a  debt  from  the 

parte  The  Bank  of   England,  2  Rose,  separate  to  the  joint  estate  ;  upon  the 

82;  Ex  parte  Rowlandson,  3  P.  Wms.  princii)le,  that  neither  the  partnership 

405 ;  Ex  parte  Boubonus,  3  Ves.  546  ;  nor  the    individual   debtor   can   claim 

Ex  parte  Blackburn,  10  id.  204;   Ex  in  competition  with  the  creditors,  said: 


CH.  XV.] 


OP   BANKRUPTCY. 


543 


to  the  firm,  the  joint  creditors  cannot,  on  that  account,  prove 
against  his  several  fund,  provided  the  balance  or  debt  against 
the  partner  arose  from  lawful  transactions ;  but  it  seems  that, 
if  this  balance  was  caused  by  a  fraudulent  or  surreptitious  with- 
drawal by  the  partner  of  something  from  the  joint  fund,  this 
should  be  restored  to  that  fund,  for  the  benefit  of  the  joint 
creditors.  So,  if  the  joint  estate  is  larger  at  the  time  of  bank- 
ruptcy, by  any  fraudulent  act  against  one  partner,  his  several 
creditors  may,  it  is  said,  proceed  against  the  joint  estate,  for 
that  amount.  (/) 

If  there  be  dormant  partners,  creditors  who  dealt  in  partner- 
ship business  with  the  ostensible  partners,  without  any  knowl- 
edge of  the  dormant  partners,  may,  upon  discovery,  elect 
whether  to  proceed  against  the  ostensible  partners  alone,  or 
against  the  joint    fund  of  the    actual    partnership.  (^)     But 


"  All  these  cases  were  very  fully  dis- 
cussed by   Lord  Tliurlow,  in  the  case 
of  Lodge  &  Feudal.     Mr.  Feudal  was 
a  creditor  of  the  partnership,  of  him- 
self and    Lodge,   for    large    sums   ad- 
vanced.     Tiiey      became      bankrupts 
immediately    after    tiie    formation   of 
the  partnership  ;   and   those  advances 
formed  the  joint  estate,  to  be  divided. 
There  was  a  struggle  by  Feudal  to  be 
admitted  a  creditor  for  the  amount  of 
his  advances  as  against  tlie   partner- 
ship.    Lord    Thurlow,   after  full   con- 
sideration, was  of  opinion,  that  all  the 
authorities  establish   this ;    that   those 
who,   being  in  partnersliip,  are  them- 
selves, or  some   of   them,  debtors  to 
the   creditors    of  every    class,    cannot 
come  in  competition  with  the  creditors. 
After    their    demands    are   liquidated 
finally,  the  partners  may  be  creditors 
upon    each    other,    but    not    before." 
M'Cauly  i'.  M'Farlane,  2  Uesaus.  239 ; 
Ex  parte   Burrell,    Cooke   B.  L.  503  ; 
Ex  parte  Parker,  id.  ;    Ex  parte  I'ine, 
id. ;    Ex  jmite   Adams,    1    Kose,  305 ; 
Ex  parte   Harris,   id.    438 ;    Ex  parte 
Sillitoe,    1    Glyn  &  J.   382;    Ex  parte 
Ogle,    Mont.   350 ;    Ex    parte    Yonge, 
3  Ves.  &  B.  34,  2  Rose,  44 ;   Ex  parte 
Batson,    Cooke   B.    L.    503 ;   Ex  parte 
Grill,  id. 

(/)  Ex  parte  Smith,  1  Glyn  &  J.  74, 


6  Madd.  2 ;  Ex  parte  Cust,  Cooke  B. 
L.  506 ;  Ex  parte  Harris,  2  Ves.  &  B. 
214,  1  Rose,  129,  437  ;  Ex  parte  Wat- 
kins,  1  Mont.  &  McA.  67 ;  Ex  parte 
Yonge,  3  Ves.  &  B.  31,  2  Rose,  40; 
Ex  parte  Reid,  id.  84. 

((j)  Ex  parte  Reid,  2  Rose,  84;  Ex 
parte  Norfolk,  19  Ves.  458 ;  Ex  parte 
Watson,  id.  459 ;  Ex  parte  Hamper, 
17  id.  403  ;  Binford  v.  Dormnett,  4  id. 
434 ;  Ex  parte  Matthews,  3  Ves.  &  B. 
125 ;  Ex  parte  Hodgkinson,  Cooper, 
101.  As  to  the  conflicting  riglits  of 
joint  and  separate  creditors,  in  cases 
of  partnerships  having  a  dormant  part- 
ner, see  French  r.  Chase,  6  Greenl. 
1(56;  Lord  v.  Baldwin,  6  Pick.  348; 
Cammack  v.  Johnson,  1  Green  Ch. 
164  ;  Witter  v.  Richards,  10  Conn.  37. 
It  is  in  the  option  of  a  firm,  suing  as 
plaintiffs,  either  to  join  the  dormant 
partner  in  the  suit  or  omit  him  ;  as, 
in  the  corresponding  case  of  the  firm 
being  sued  as  defendants,  it  is  at  the 
option  of  the  plaintiff'  to  join  the  dor- 
mant partner  or  not;  and  the  joinder 
or  nonjoinder  will  not  constitute  any 
objection  to  the  maintenance  of  the 
suit.  Skinner  v.  Stocks,  4  B.  &  Aid. 
437 ;  Lloyd  v.  Archbowle,  2  Taunt. 
324  ;  Brassington  v.  Ault,  2  Ring.  177  ; 
Wilson  V.  Wallace,  8  S.  &  R.  55; 
Clarkson    v.    Carter,    3    Cowen,   85 ; 


544 


THE   LAW    OF   PARTNERSHIP. 


[CH.  XV. 


*  601  it  would  seem  that  the  rule  in  *  equity,  above  referred 
to,  that  one  who  may  choose  between  two  funds  shall 
not,  by  such  choice,  injure  one  who  has  no  choice,  here  comes 
in ;  and  that,  if  such  creditors  elect  to  prove  against  the 
separate  estate  of  the  ostensible  partners,  several  creditors  of 
the  ostensible  partners,  who  could  not  proceed  against  the  joint 
fund,  may  now  proceed  against  it  for  an  equivalent  amount.  (A) 
We  have  before  considered  the  case  of  parties  who  are  actu- 
ally partners,  but  do  not  appear  as  such.  If,  however,  they  do 
not  seem  to  constitute  two  distinct  firms,  but  do  so  actually, — 
as,  for  example,  if,  out  of  four  who  are  partners  for  one  kind  of 
business,  two  are  partners  in  another  entirely  distinct  business, 
and  these  two  firms  deal  with  each  other,  —  there  may  be  proof 
by  one  against  the  other,  or  by  the  creditors  of  either  against 
its  own  fund,  in  the  same  way  as  if  the  two  firms  were  formed 
of  different  persons,  (i) 


Boardman  v.  Keeler,  2  Vt.  65 ;  Lord 
V.  Baldwin,  (3  Pick.  348  ;  Alexander  v. 
Barker,  2  Cromp.  &  J.  133  ;  Cothay  v. 
Fennell,  10  B.  &  C.  671. 

(k)  B.  &  S.  were  in  partnership  to- 
gether;  the  latter  being  a  dormant 
partner.  A  joint  commission  issued 
against  them.  B.'s  separate  estate  was 
very  considerable  ;  the  joint  creditors, 
therefore,  availing  themselves  of  their 
right  to  resort  either  to  the  visible  and 
the  dormant  partner,  or  to  the  visible 
partner  only,  adopted  the  latter  alter- 
native, and  proved  tlieir  debt  against 
B-'s  separate  estate.  The  consequence 
of  this  was,  that  B.'s  separate  estate, 
which  would  have  sufficed  for  the  pay- 
ment of  all  the  separate  creditors  in 
full,  was,  by  the  access  of  the  joint 
creditors,  apportioned  iiva  dividend  of 
seven  shillings  in  the  pound ;  while 
the  joint  estate  of  B.  &  S.,  exonerated 
of  its  proper  claimants,  produced  a  sur- 
plus. On  application  of  B.'s  separate 
creditors,  it  was  held,  that  they  had  a 
lien  upon  that  surplus  to  the  extent 
which  their  funds  had  been  diminished 
by  the  resort  of  the  joint  creditors. 
Ex  parte  Reid,  2  Rose,  84. 

{{)  In  re  Richardson,  5  L.  .J.  Ch. 
129;  Ex  parte  St.  Barbe,  11  Ves.  413  ; 


Ex  parte  Silhtoe,  1  Glyn  &  J.  374 ;  Ex 
parte  King,  Cooke  B.  L.  534 ;  Ex  parte 
Johns,  id. ;  Ex  parte  Hesham,  1  Rose, 
146;  Ex  parte  Adams,  id.  305.  In 
re  Shakcshaft,  Stirrup,  &  Salisbury, 
cited  in  6  Ves.  123,  747,  and  in  11  id. 
413.  In  this  last  case,  Lord  Eldon 
said:  "In  the  case  of  Shakeshaft,  Stir- 
rup, &  Salisbury,  Lord  Tlmrlow 
went  upon  this  distinction  :  that  where 
there  is  only  one  partnership  arrang- 
ing different  concerns  belonging  to 
tiiem  all,  in  different  ways,  for  the  ben- 
efit of  different  parts  of  that  joint  con- 
cern, as,  in  that  instance,  the  three  per- 
sons carrying  on  the  business  of  cotton 
manufactures  in  Lancashire,  and  two 
of  them  in  London,  there  could  not  be 
proof  by  the  three  against  tlie  two  ; 
but  if  the  trades  be  perfectly  distinct, 
then  the  three  as  cotton  manufactur- 
ers in  Lancashire  n)ight  be  creditors 
upon  the  separate  concern  of  the  two 
as  ironmongers  in  London."  Ex  parte 
Freeman,  Cooke  B.  L.  534 ;  Ex  parte 
Castell,  2  Glyn  &  J.  124 ;  Ex  parte 
Brenchley,  id.  127 ;  Ex  parte  Stroud, 
id. ;  Ex  parte  Cook,  Mont.  228.  For 
the  limitations  on  this  doctrine,  see  Ex 
parte  Hargreaves,  1  Cox,  440. 


CH.  XV.]  OP   BANKRUPTCY.  545 

*  Wliile  solvent  partners  cannot  prove  against  the  *  502 
joint  fund  to  the  prejudice  of  joint  creditors,  because 
they  are  liable  to  those  creditors,  (y)  they  may  prove  against 
the  joint  fund,  in  competition  with  the  several  creditors,  to 
whom  they  are  not  liable.  (^)  Indeed,  their  rights  are  prior 
to  those  of  the  several  creditors ;  for  those  creditors  can  have 
the  right  of  their  debtor  to  the  joint  fund  only  after  all  claims 
upon  it  are  satisfied,  and,  among  these,  the  claims  of  the  other 
partners.  On  this  point,  it  must  be  the  general  rule,  applicable 
to  all  yiartnerships,  whether  they  be  general,  or  confined  to  a 
particular  business  or  a  particular  transaction,  and,  indeed,  to 
all  joint  adventures  and  enterprises  of  every  kind,  that  they 
must  be  first  settled,  and  the  mutual  claims  and  balances  of 
the  copartners  or  coadventurers  be  adjusted,  before  the  divisible 
surplus  is  ascertained  ;  and  then  the  right  of  each  one  is  only 
to  his  share  of  this  surplus,  and  the  creditors  of  each  one  can 
reach  and  acquire  only  his  right.  It  follows,  therefore,  that 
the  several  creditors  of  each  one  will  be  postponed,  so  far  as 
the  joint  assets  go,  not  only  to  the  joint  creditors,  but  to  the 
claims  of  the  coadventurers  for  balances  due  from  their  com- 
panions, arising  out  of  the  adventure.  (Z) 

( /)  Ex  parte  Adams,  1   Rose,  305.  Hunter,  1  Atk.  225  ;    Ex  parte  Batson, 

A.  lends  a  sum  of  money  to  one  part-  2  Ca.  Ch.  139,  166  ;  Craven  v.  Knight, 

ner,  on  his  own  security',  who  lends  the  2    Chan.    226  ;    Ex   parte    Taylor,    2 

same  to  the  partnership  trade.    A  joint  Rose,  175;   Ex  parte  Ogilvy,   id.  177, 

commission  is  taken  out.     A.  shall  not  3   Ves.   &  B.   133 ;    Ex  parte   Watson, 

come  in  as  a  creditor  upon  the  joint  4  Madd.  477,  Buck,  449,  492;  Ex  parte 

estate  of  the  bankrupts  directly,  with  Willock,  2  Rose,  392  ;  Wood  v.  Dodg- 

the  rest  of  the  partnership  creditors;  son,  2  Maule  &  S.  195;  Aflalo  v.  Four- 

but,  by  way  of  circuity,  he  is  entitled,  drinier,  6  Bing.  309;    Butcher  f.  For- 

as  standing  in  the  place  of  that  partner  man,  6  Hill  (N.  Y.),  583. 
who  has  paid   the  money  to  the  use  (/)  West  u.  Skip.  1   Ves.  142 ;    Ex 

of    the   partnership   trade.      Ex  parte  parte  Ruffin,  6  i|^.  119  (Sumner's  ed.) 

Hunter,  1  Atk.  223.     And  see  Ex  parte  note  (rf)-      Upon  a  dissolution  of  the 

Ellis,  2  Glyn  &  J.  312 ;  Ex  parte  Car-  partnership,   each   partner  lias  a  lien 

ter,  id.   233 ;   Ex  parte  Reeve,  9  Ves.  upon  the  partnership  effects,  as  well 

589 ;   Ex  parte   Ogle,   Mont.   351 ;    Ex  for  his  indemnity  as  for  his  proportion 

parte   Burrell,   Cooke   B.  L.   505;    Ex  of  the  surplus.     But  creditors  have  no 

parte   Broome,    1    Rose,   69;    Ex  parte  lien   upon   tiie  partnership  effects   for 

Rawson,  Jac.  277  ;  Ex  parte  Robinson,  their  debts.    Their  equity  is  tiie  equity 

4  Deac.  &.  Ch.  499.  of    the    partnership    assenting   to   the 

{k)  Ex  parte  Adams,   1  Rose,  305;  payment    of    the    partnership     debts. 

Ex  parte  King,  17  Ves.  115;    Ex  parte  3  Kent  Comm.  (5th  ed.)  65;  Campbell 

Torrell,  Buck,  345;    Goss  v.  Dufres-  «.  Mullett,  2  Swanst.  008,  010;  Ex  parte 

noy,    Davies    B.    L.    371 ;    Ex   parte  Harris,  1  Madd.  583 ).  Murray  v.  Mur- 

35 


546 


THE   LAW   OF   PARTNERSHIP. 


[CH.  XV. 


*  503        *  If  any  such  adventures,  contracts,  or  enterprises  are 

outstanding  at  the  time  of  the  bankruptcy,  the  assignees 
must  wait  until  they  are  concluded  and  adjusted,  and  then  take 
the  share  or  interest  of  their  bankrupt  in  the  result,  (w)  The 
assignees  are  also  entitled  to  claim  unpaid  instalments  due 
from  a  solvent  partner,  for  his  admission  into  the  partnership, 
because  these  form  a  part  of  the  joint  fund,  (n) 

Nor  is  the  interest  of  partners  in  a  foreign  enterprise  lost  by 
seizure  of  the  goods  there,  provided  they,  or  any  part  of  them, 
be  restored.  Thus,  if  there  be  three  partners,  —  two  citizens  of 
one  country,  and  one  of  another,  —  and  between  these  countries 
war  breaks  out,  and  property  of  the  partnership  is  seized  in 
the  country  of  the  one  as  property  of  aliens,  but  the  share 
therein  of  that  one  is  restored  to  him,  the  other  partners  are 

entitled,  on  settlement,  to  a  share  of  the  property  re- 

*  504    stored,  in  the  same  way  as  *  if  it  were  restored  to  the 

partnership  ;  and,  if  insolvent,  their  assignees  take  that 
share. (o)    A  foreign  government  may,  however,  make  a  gift  to 


ray,  5  Johns.  Ch.  60;  Woddrop  v. 
Ward,  3  Desaus.  203;  Bell  v.  New- 
man, 5  Serg.  &  R.  78 ;  Doner  v. 
Stauffer,  1  Penn.  198  ;  White  v.  Union 
Ins.  Co.,  1  Nott  &  McC.  557 ;  Ridgeley 
V.  Carey,  4  Harr.  &  McH.  167 ;  M'Cul- 
loch  V.  Dashiell,  1  Harr.  &  G.  96; 
Hoxie  V.  Carr,  1  Sumn.  181 ;  Conwell 
V.  Sandidge,  8  Dana,  278 ;  Ex  parte 
Williams,  11  Ves.  5;  Holderness  v. 
Shackels,  8  B.  &  C.  612  ;  Hodges  v. 
Holman,  1  Dana,  53;  Pierce  v.  Tier- 
nan,  10  Gill  &  J.  253;  Sumner  v. 
Hampson,  8  Ohio,  328;  Bradford  v. 
Kimberley,  3  Johns.  Ch.  431 ;  Parker 
V.  Muggridge,  2  Story,  347 ;  Payne  v. 
Matthews,  6  Paige,  ^.  The  lien  of 
partners  upon  the  wlrole  funds  of  the 
partnership,  for  the  balance  finally  due 
to  them  respectively,  seems  incapable 
of  being  enforced  in  any  other  manner 
than  by  a  court  of  equity,  through  the 
instrumentality  of  a  sale.  The  cred- 
itors of  the  partnership  have  a  prefer- 
ence to  have  their  debts  paid  out  of 
the  partnership  funds  before  the  pri- 
vate creditors  of  either  of  the  partners. 
But  this  preference  is,  at  law,  generally 
disregarded;  in  equity,  it  is  worked  out 
through  the  equity  of  the  partners  over 


the  whole  funds.  1  Story  Eq.  Jur. 
§  675;  Commercial  Bank  v.  Wilkins, 
9  Greenl.  28 ;  Freeman  v.  Stewart,  41 
Miss.  138. 

(m)  Prench  v.  Fenn,  1  Cooke  B.  L. 
536,  3  Doug.  257  ;  Jackson  v.  Sedg- 
wick, 1  Swanst.  468 ;  Brown  v.  Litton, 
1  P.  Wms.  140;  Smith  v.  De  Silva, 
Cowp.  469.  The  assignees  under  a 
separate  commission  take  only  such 
undivided  interest  or  share  as  the 
bankrupt  himself  had,  and  in  the  same 
manner  as  he  held  it.  Holderness  v. 
Shackels,  8  B.  &  C.  618.  See  also 
Wilson  V.  Greenwood,  1  Swanst.  471, 
481,  n. ;  Hammond  v.  Douglas,  5  Ves. 
539;  Crawshay  v.  Collins,  15  id.  218; 
Hill  V.  Burnham,  cited  id. ;  Brown  v. 
Vider,  15  id.  223,  2  Russ.  340 ;  Brown 
V.  De  Tastet,  Jac.  284 ;  Fearns  v. 
Young,  9  Ves.  549;  Wedderburn  i;. 
Wedderburn,  4  Mylne  &  C.  53. 

()()  Akhurst  r.  Jackson,  1  Swanst. 
85,  1  Wilson,  47. 

(o)  Thompson  v.  Ryan,  cited  in 
Campbell  v.  Mullett,  2  Swanst.  565,  n., 
and  id.  577.  And  see,  as  to  the  effect 
of  war  upon  partnership,  Griswold  v. 
Waddington,  16  Johns.  438,  and  au- 
thorities there  cited. 


CH.  XV.] 


OF  BANKRUPTCY. 


547 


their  own  citizen  ;  and  it  has  been  said,  that  if  the  government 
choose  to  make,  or  cause  to  be  made,  a  compensation  in  money 
to  their  citizen,  instead  of  a  restitution  in  solido,  this  will  be 
held  to  be  a  gift,  in  which  the  copartners  have  no  interest. 
And  this  would  be  especially  true  if  there  were  an  express 
exclusion  of  the  aliens.  Of  course,  the  joint  creditors  could 
not  prove  against  funds  thus  made  several.  (/?) 

The  English  Court  of  Admiralty  has  refused  to  assist  the 
assignees  of  a  bankrupt  in  obtaining  his  share  of  property 
restored  in  solido.  But  we  think  this  arose  from  a  limitation 
of  the  admiralty  power  in  England,  which  does  not  exist 
here,  {q) 


(p)  Campbell  v.  Mullett,  2  Swanst. 
651.  Two  American  citizens  residing 
at  Baltimore,  and  a  French  subject 
residing  at  St.  Domingo,  being  in  part- 
nership, and  owners  of  certain  ships 
captured  by  British  cruisers,  and  the 
commissioners  appointed  imder  the  sev- 
enth article  of  the  treaty  of  commerce, 
concluded  in  1794,  between  England 
and  America,  for  awarding  compensa- 
tions to  American  subjects  who  had 
suffered  losses  by  capture,  for  which 
they  could  obtain  no  redress  in  the 
ordinary  tribunals,  having  awarded,  in 
compensation  of  the  ships  of  the  part- 
nership captured,  certain  sums  to  the 
two  Americans,  with  express  exclusion 
of  the  French  citizen  as  an  alien 
enemy,  the  sums  so  awarded  are  not 
partnership  property,  and  the  creditors 
of  the  partnership  have  no  claim  on 
them,  as  against  the  separate  creditors 
of  tlie  Americans.  In  this  case,  the 
following  distinction  is  made  by  Sir 
Thomas  Plumer,  Master  of  the  Rolls, 
in  delivering  judgment :  "  If  the  very 
joint  stock,  or  a  part  of  it,  as  in 
Thompson  v.  Ryan,  had  been  restored, 
there  would  have  been  notiiing  to  alter 
the  property  :  the  goods  are  returned, 
iti  statu  quo,  the  property  of  the  part- 
ners. But  here  the  ships  are  gone, 
and  never  restored,  and  the  question 
concerns  a  new  property  come  to  the 
two  in  the  way  of  compensation. 
That  is  far  removed  from  a  case  of 
restitution.      Restitution    might  have 


been  made,  if  it  were  still  joint  prop- 
erty' ;  compensation  considers  only  the 
individual  shares,  and  gives  in  the  pro- 
portion of  their  interests  individually 
to  the  two.  There  is  no  more  ground 
for  admitting  the  joint  creditors  than 
the  French  partner."  During  tlie  ar- 
gument, the  Master  of  the  Rolls  put 
the  query,  "  If  a  partnership  sustained 
an  accidental  loss,  as  by  fire,  and  an 
individual  made  a  donation  to  two  of 
the  partners,  in  compensation  of  their 
loss,  would  that  be  partnership  prop- 
erty ? "  And  see  Larazzabel  v.  Gor- 
bea,  cited  id.  572. 

(9)  The  Jefferson,  1  C.  Rob.  Adm. 
325.  Sir  W.  Scott,  indeed,  in  his 
judgment,  expressly  says,  after  the 
decree  for  restitution  had  been  passed  : 
"  The  question  is,  whether  the  court 
shall  proceed  again  to  make  a  sever- 
ance between  these  parties  ?  I  cannot 
think  that  I  have  the  power  to  do  that. 
All  the  severance  that  was  necessary 
in  this  case  to  determine  the  national 
character  of  the  parties  has  been  al- 
ready made :  restitution  stands  decreed 
to  this  house.  I  am  functus  officio,  and 
I  shall  not  begin  again  at  the  prayer 
of  the  assignees,  who  now  suggest  that 
one  of  the  partners  is  likewise  an  Eng- 
lish merchant  and  a  bankrupt.  They 
must  resort  to  some  other  authority  to 
make  the  discrimination  between  this 
American  partnership  stock,  for  the 
purpose  of  subjecting  a  particular 
share  to  a  British  bankruptcy.     It  is 


548 


THE   LAW    OF   PARTNERSHIP. 


[CH.  XV. 


*505  *  It  has  been  repeatedly  said,  that,  if  a  partner  be- 
comes insolvent,  the  accounts  of  a  firm  should  be  closed, 
and  the  assignees  should  not  continue  the  trade  and  business, 
nor  permit  a  continuance  of  it  without  settlement,  (r)  But 
that  may  not  be  a  positive  and  universal  rule  ;  nor  can  the 
solvent  partners  resist  a  bill  by  the  assignees  for  a  share  in 
the  profits  of  a  subsequent  trading,  on  the  ground  that  the 
assignees  did  not  require  an  immediate  settlement,  because  it 
is  no  more  the  duty  of  the  assignees  to  require  this  than  it  is 
the  duty  of  the  solvent  partners  to  make  it.  (s)  Where  a  de- 
ceased partner's  estate  was  insolvent,  and  the  administrators 
had  permitted  the  surviving  partners  to  sell  the  stock  in  the 
usual  course  of  trade  for  the  business  benefit,  and  a  loss  oc- 
curred, they  were  not  held  responsible  therefor,  (i)  But,  on 
the  other  hand,  if  administrators  put  assets,  which  they  have 
in  their  own  hands,  into  the  hands  and  possession  of  the  sur- 
viving partners  to  trade  with,  and  a  loss  occurs,  for  this  they 
will  be  held  responsible,  (m) 


no  part  of  the  duty  of  the  Court  of 
Admiralty  to  do  this,  and  1  dismiss  the 
petition."  See  2  Pars.  Mar.  Law,  b.  3, 
on  the  law  and  jurisdiction  of  admi- 
ralty in  America. 

{>•)  Crawsliay  v.  Collins,  15  Ves. 
218-227;  Kegden  v.  Pierce,  6  Madd. 
353;  Fereday  v.  Wightwick,  1  Tani- 
lyn,  201 ;  3  Kent  Comm.  61 ;  2  Bell 
Comm.  032;  Story  on  Part.  §  350; 
Gow  on  Part.  231;  Collyer  on  Part, 
b.  2,  ch.  2,  §  2,  pp.  146,  147. 

(s)  Crawshay  v.  Collins,  15  Ves. 
228,  per  Lord  Eldon :  "  It  is  said  a 
dut}'  was  imposed  upon  the  assignees 
to  call  for  tiie  account.  That  is  true. 
It  is  farther  urged  that  they  could 
not  be  traders  in  new  adventures. 
This  also  is,  in  a  sense,  true ;  but  the 
proposition  would  be  rash,  that  there 
can  be  no  case  in  which  they  could 
trade  with  consent  of  the  creditors, 
or  of  tlie  creditors  and  the  bankrupt 
together.  If  they  had  the  consent  of 
all  persons  interested,  I  do  not  know 
that  other  persons  with  whom  they 
might  deal  could  make  the  objection. 


The  duty  is  not  as  between  them  and 
the  other  persons,  who  are  not  prop- 
erly to  be  termed  remaining  or  sur- 
viving partners ;  the  destruction  of 
one  being,  unless  it  is  otherwise  pro- 
vided, a  dissolution  of  the  whole  part- 
nership,—  as  if  by  effluxion  of  time, 
or  by  death,  —  except  as  it  may  be 
reasoned  upon  the  effect  in  bank- 
ruptcy of  the  substitution  of  assignees. 
It  is,  however,  no  more  the  duty  of  the 
assignees  to  settle  with  the  others, 
than  it  is  their  duty  to  settle  with  the 
assignees." 

(t)  Thompson  v.  Brown,  4  Jolms. 
Ch.  619.  And  see  Shepherd  v.  Tow- 
good,  Turner  &  R.  379 ;  Reed  v.  Nor- 
ris,  2  Mylne  &  C.  361 ;  Jennison  v. 
Ilapgood,  7  Pick.  1 ;  Sweet  i'.  Jacocks, 
G  Paige,  355. 

{u)  Tliompson  v.  Brown,  4  Johns. 
Ch.  019.  And  see  Barker  v.  Parker, 
1  T.  R.  295;  Ex  parte  Garland,  10  Ves. 
119  ;  Ex  parte  Richardson,  Buck,  209  ; 
Wightman  v.  Townroe,  1  Maule  &  S. 
412;  Viner  v.  Cadell,  3  Esp.  90. 


CH.  XV.]  OF  BANKRUPTCY.  549 


SECTION     V. 

OF    A    SALE   OF    THE    EFFECTS   IX   BANKRUPTCY. 

*  If  there  be  a  bankruptcy  of  the  whole  firm,  it  is  *  506 
very  seldom  that  any  other  mode  of  settlement  is  re- 
sorted to,  but  a  sale  of  the  property,  (v)  And  this  is  so  usual, 
and  recommended  by  so  many  obvious  considerations,  that  as- 
signees must  not  only  have  an  unquestionable  power  to  take 
this  course,  but  would,  perhaps,  find  it  difficult  to  explain  and 
justify  any  other  course,  (w)  In  one  case,  where  creditors 
called  upon  the  English  court  of  chancery  to  restrain  the  as- 
signees from  a  proposed  sale  of  the  bankrupt's  effects,  alleging 
suspicious  circumstances  as  to  the  manner  of  the  sale,  Lord 
Eldon  refused  to  interfere,  on  the  ground  that  the  assignees 
were  acting  in  a  matter  peculiarly  within  their  power  and  at 
their  discretion,  and  the  court  must  recognize  them  as  the  best 
judges  of  the  propriety  and  expediency  and  manner  of  a  sale ; 
and  that  the  assignees  must  abide  their  own  responsibility  for 
what  they  did  in  this  matter.  (2;) 

The  question  comes  up  in  a  different  form  when  a  part  only 
of  the  partners  are  bankrupt,  and  the  residue  solvent.  There  the 
assignees  take  all  the  interest  and  rights  of  the  bankrupt,  but 
take  them  subject  to  the  solvent  partner's  rights,  (z/)  We  should 
say,  therefore,  that  they  had  no  right,  as  a  matter  of  course, 
to  require  a  sale.  (2)  Usually,  there  is  no  sale ;  but  the  solvent 
partners  settle  up  the  concern  so  far  as  to  ascertain  the  value 
of  the  bankrupt's  interest,  and  this  they  pay  to  the  assignees. 
And  sometimes  they  give  security  to  the  assignees  that  they 

(r)  Eden    B.    L.    215;     Ex    parte  (x)  Ex  parte  Montgomery,  1  Glyn 

Gering,    1    Ves.    Jr.    1G8 ;     Ex    parte  &  J.  341.     Ordinarily,  on  a  dissolution, 

Hughes,  6  Yes.  617,  622  ;    Regden  v.  from   whatever  cause,  there   must  be 

Pierce,    6    Madd.    353  ;     Fereday    v.  a   sale.      Dickinson   v.  Dickinson,  29 

Wightwick,  1  Tamlyn,  261.  Conn.  601. 

(ic)  But  if,   in   the   exercise   of    a  (y)  Taylor  v.  Fields,   4   Ves.  396, 

sound  discretion,  a  court  of  equity  is  15  id.  559,  n.  ;  Barker  v.  Goodair,  11 

satisfied  that  a  postponement  of  a  sale  id.  85 ;  Dutton  v.  Morrison,  17  id.  209  ; 

is  for  the  general  benefit  of  the  cred-  Holderness  v.  Shackels,  8  B.  &  C.  618. 

itors,  it  will  be  so  ordered.     Ex  parte  (z)  Allen   i-.   Kilbre,  4  Madd.  464; 

Kendall,  17  Ves.  519;   Ex  parte  Gros-  Ex  parte  Figes,  1   Glyn  &  J.  122.     But 

venor,  14  id.  589.  see  Ex  parte  Montgomery,  id.  338. 


650 


THE   LAW   OF   PARTNERSHIP. 


[CH.  XV. 


will,  without  delay,  settle  the  concern,  and  ascertain  and  pay 
over  the  bankrupt's  share,  (a)  That  the  assignees  may 
*  507  have  an  account,  is  certain  ;  *  and  the  court  would  always 
decree  a  sale  where  the  assignees  requested  it  for  good 
cause,  and  perhaps  it  may  be  said  that  any  decided  advantage 
to  the  estate  of  the  bankrupt  would  be  deemed  good  and  suf- 
ficient cause.  (6) 


(a)  In  Nerot  v.  Burnand,  2  Russ. 
56,  pending  an  appeal  against  a  decree 
declaring  a  partnership  dissolved  and 
directing  tlie  property  to  be  sold,  and 
an  account,  the  court  upon  motion 
suspended  the  sale  upon  the  terms  of 
bringing  title-deeds  into  the  master's 
office,  and  giving  security  for  the  value 
of  the  effects. 


(b)  Crawshay  v.  Maule,  15  Ves.  218  ; 
Gow  on  Part.  234 ;  Lingen  v.  Simpson, 
1  Sim.  &  Stuart,  600;  Featherston- 
haugh  V.  Fenwick,  17  Ves.  309;  Fere- 
day  V.  Wightwick,  1  Tamlyn,  261 ; 
Regden  v.  Pierce,  6  Madd.  353 ;  Cook 
V.  CoUingridge,  1  Jacob,  607  ;  Evans  v. 
Evans,  9  Paige,  178. 


CH.  XVI.] 


OF    AN    ACCOUNT. 


551 


CHAPTER    XYI. 


OF   AN   ACCOUNT. 


SECTION    I. 


WHEN    AX    ACCOUNT    WILL    BE    ORDERED. 


We  have  been  obliged  to  anticipate  many  remarks  about  the 
taking  of  an  account,  when  treating  other  topics  ;  especially  the 
various  modes  of  dissolution,  and  its  consequences.  The  right  to 
demand  an  account  is  almost,  but  not  quite,  peculiar  to  partners 
and  their  representatives.  In  deciding  one  case,  (a)  Lord  Eldon 
seemed  to  think  that  the  having  a  right  to  an  account  was  a 
good  test  of  the  relation  of  partner  ;  that  is,  if  one  by  agreement 
acquires  a  right  to  an  account,  this  will  make  him  a  partner. 
We  should  prefer  saying  that  partnership  is  a  good  test  for  the 
right  to  an  account ;  and  that  the  first  inquiry  must  be,  whether 
a  man  is  a  partner ;  for  though  one  may  have  a  right  to  an  ac- 
count who  is  not  a  partner,  (^aa')  if  he  is  a  partner,  the  con- 


(o)  Ex  parte  Hamper,  17  Ves.  412. 
And  see  Katsch  v.  Slienck,  13  Jur. 
668.  By  a  memorandum  in  writing, 
the  defendant,  a  general  mercliant, 
agreed  with  the  plaintiff,  in  considera- 
tion of  tlie  general  services  in  business 
of  the  latter,  to  allow  him,  in  addition 
to  a  fixed  salary,  one-fifth  of  the  net 
profits  on  all  new  business  entered 
into  through  him  :  semhle,  a  partner- 
ship was  thereby  constituted  between 
the  parties  ;  and  held,  that,  at  any  rate, 
the  plaintiff  therebj'  acquired  a  right, 
as  against  the  defendant,  to  an  account 
of  profits,  and  the  appointment  of  a 
receiver.  The  Vice-Chancellor :  "  It 
strikes  me,  that  by  the  agreement  the 
plaintiff  has  become  a  partner  ;  and 
there  is  a  failure  of  evidence  to  show 
that,  notwithstanding  the  words  of  the 
agreement,  there   was   subjoined  any 


stipulation  that  the  plaintiff  should 
not  be  taken  as  a  partner ;  without 
further  entering  into  the  question,  as 
between  the  plaintiff  and  defendant, 
there  is  an  interest  created  in  the 
plaintiff  to  know  what  is  the  amount 
of  profits,  and  therefore  an  interest 
to  see  that  those  things  out  of  which 
the  profits  arise  are  properly  disposed 
of,  which  is,  in  itself,  very  like  a 
partnership  interest.  I  think,  on  prin- 
ciple, a  receiver  ought  to  be  ap- 
pointed." See  Salter  v.  Ham,  31  N. 
Y.  321 ;  CoUyer  v.  Collyer,  38  Penn. 
257. 

{aa)  [One  compensated  by  a  .share 
of  the  profits  may  have  an  account, 
though  not  a  partner.  The  right  to 
an  account  is  not  a  conclusive  test  of 
partnership.    Ante,  p.  *  60,  note  (J)f)-] 


652 


THE   LAW    OF   PARTNERSHIP. 


[CH.  XVI. 


elusion  follows,  that  he  has  a  riglit  to  an  account.  This  right 
he  may  transfer  ;  for  not  only  do  all  partners  possess  this  right, 
but  it  is  one  among  those  rights  which  originates  in  or  arises 

out  of  a  partnership,  and  yet  which  a  partner  transfers 
*  509    to  *  his  representatives,  whether  they  be  executors  or 

administrators,  assignees  in  bankruptcy,  execution  cred- 
itors, or  transferees,  although  they  do  not  thereby  become  part- 
ners. Every  one  of  tliese,  and  every  other  party  who  has 
acquired  the  partner's  interest  in  the  joint  fund,  may  call  for  an 
Account,  in  order  to  settle  and  determine  what  that  interest 
is.  (6) 

It  is  partly  as  a  consequence  of  this  universal  and  important 
right,  that  all  partners,  having  any  charge  of  the  business  of  the 
firm,  are  bound  to  keep  constantly,  regular,  intelligible,  and 
accurate  accounts  of  all  the  business,  and  to  give  all  the  part- 
ners at  all  times  access  to  them,  and  to  the  means  of  verifying 
them.     And  if  they,  for  any  considerable  time,  disregard  and 


(b)  In  Crawshay  v.  Collins,  2  Russ. 
842,  Lord  Eldon  says  :  "  A  partnership 
may  expire  by  death,  or  by  effluxion 
of  time,  or  by  notice,  or  by  the  bank- 
ruptcy of  a  partner;  but,  in  all  tliese 
cases,  though,  in  a  certain  sense  of  the 
word  expiration,  a  partnersliip  does  so 
expire  in  each  and  every  one  of  them, 
yet,  in  most  instances,  a  partnersliip 
does  not  and  cannot  then  expire  as  to 
all  purposes.  In  some,  it  may  not 
expire  for  years  after  the  period  in 
wliicii,  in  one  sense  of  the  word,  we 
say  it  does  expire  ;  and  it  must  depend 
upon  the  nature  of  the  partnership,  in 
Avliat  way  it  is  to  be  carried  on  during 
the  period  in  which  it  is  to  be  wound 
up.  If  it  expires  by  bankruptcy,  there 
are  introduced  into  it,  as  persons  in- 
terested in  the  manner  of  winding  it 
up,  the  assignees  of  the  bankrupt.  If 
it  expires  by  death,  there  are  intro- 
duced, in  like  manner,  tlie  executors  of 
the  deceased  partner;  who  may  be 
stated,  tliough  certainly  not  in  a  very 
correct  use  of  the  term,  to  be  a  sort  of 
assignees  of  the  deceased  partner. 
When  it  expires  by  notice,  it  may 
happen  that  in  many  cases  the  party 
who   gave    the   notice   may    die   long 


before  the  time  arrives  when  it  may 
be  said  to  be  quite  dissolved,  and  his 
executors  may  become  partners  in  the 
concern.  In  short,  in  every  species  of 
dissolution  which  may  take  place,  in 
different  events  persons  in  the  course 
of  time  may  be  introduced  into  the 
partnership,  with  reference  to  whom 
accounts  must  be  settled  much  in  the 
same  manner  as  it  would  have  been 
necessary  to  have  settled  them  with 
the  original  partners."  See  Bailey  v. 
Moore,  25  111.  347.  See,  as  to  what 
interest  gives  a  right  to  an  account, 
Moffat  V.  Moffat,  10  Bosw.  4G8.  [Even 
a  member  of  a  firm  organized  for  the 
purposeof  hindering  and  delaying  cred- 
itors of  a  prior  firm  may  have  an  ac- 
count. Harvey  v.  Varney,  98  Miss.  118. 
Where  after  dissolution  the  re- 
spective partners  continue  in  settle- 
ment of  the  affiiirs  of  the  partnership, 
the  statute  of  limitation  begins  to 
run  against  the  right  of  either  to  an 
account  from  the  others,  from  tiie  date 
of  the  last  transaction,  receipt,  or  pay- 
ment by  either,  and  no  demand  is 
necessary  before  suit.  McClung  v. 
Capehart.  Sup.  Ct.  Minn.,  1  N.  W. 
Reptr.  123.] 


CH.  XVI.] 


OF   AN    ACCOUNT. 


553 


refuse  to  perform  this  duty,  a  court  of  equity  will  coerce  them 
to  its  full  discharge,  (c) 

*  It  is  possible  that  for  a  breach  of  this  duty,  especially  *  510 
where  tlicre  was  an  express  contract  to  perform  it,  an 
injured  party  might  have  redress  at  law  ;  but  he  can  compel 
the  performance,  and,  generally,  find  a  remedy  for  the  ill  con- 
sequence of  a  non-performance,  only  in  equity.  But  this  court 
has  full  power  in  the  premises,  and  usually  acknowledges  the 
right  to  an  account  of  any  partner,  or  representatives  of  a 
partner,  unless  it  is  obviously  unnecessary,  and  requested  for 
frivolous  reasons,  or  with  malicious  intent.  (cZ) 


(c)  Rowe  V.  Wood,  2  Jac.  &  W.  358, 
per  Lord  Eldon  :  "  One  partner  cannot 
exclude  anotlier  from  an  equal  man- 
agement of  the  concern  ;  and  it  is  the 
duty  of  each  to  keep  precise  accounts, 
and  to  have  tliem  always  ready  for 
inspection,  and,  in  short,  to  keep  good 
faith  towards  each  other.  I  think  that 
the  plaintiff,  subject  to  the  equities 
which  may  be  ultimately  declared 
between  the  parties,  has  a  clear  right 
to  insist  that  regular  accounts  shall 
be  kept  of  all  receipts,  payments, 
transactions,  and  so  on,  relative  to  the 
mine,  and  to  bave  constant  access  for 
tlie  purpose  of  inspecting  the  accounts  ; 
and  also,  that,  subject  to  those  equities, 
he  has  a  clear  right  to  control  the 
working  of  the  mines,  and  if  he  is 
impeded  in  the  exercise  of  any  of 
these  rights,  let  him  come  to  the  court 
again.  The  application,  after  the 
other  parties  have  been  apprised  of 
what  the  court  expects  them  to  do, 
will  be  differently  treated."  Beacham 
V.  Eckford,  2  Sandf.  Ch.  116.  See 
Tyng  V.  Thayer,  8  Allen,  301. 

(d)  Smith's  Merc.  Law  (5th  ed.), 
85 ;  Marshall  v.  Colman,  2  Jac.  &  W. 
266.  Where  plaintiff  has  an  adequate 
remedy  at  law  by  action  of  account, 
it  is  held,  in  Connecticut,  that  chan- 
cery has  no  jurisdiction.  Stannard  v. 
Whittlesey,  9  Conn.  556.  It  has  also 
been  held  in  Connecticut,  that  no  action 
at  law  will  lie  for  the  settlement  of  a 
partnership  account,  where  the  number 
of  partners  exceeds  two  ;  the  remedy 


is  in  equity.  Beach  v.  Hotchkiss,  2 
Conn.  425.  But  it  is  otherwise  in 
Pennsylvania.  Whelen  v.  Watmough, 
15  Serg.  &  R.  153 ;  Griffith  v.  Wilbing, 
3  Binn.  317  ;  Brightly  Eq.  Jur.  §§  121, 
122,  128;  Adams  Eq.  225;  1  Story 
Eq.  §  449.  And  see  Bracken  v.  Ken- 
nedy, 3  Scam.  658;  Giliett  v.  Hall, 
13  Conn.  426  ;  Cunningham  v.  Little- 
field,  1  Edwards  Ch.  104.  Partners 
cannot  sue  one  another  at  law  for  any 
of  the  business  or  undertakings  of  the 
partnership.  This  can  only  be  done 
in  chancery,  by  asking  a  dissolution 
and  an  account.  Stone  v.  Fouse,  3 
Cal.  294;  Nugent  v.  Locke,  4  id.  320; 
Wilson  V.  Lassen,  5  id.  116;  Barnstead 
V.  Empire  Min.  Co.,  id.  299.  On  the 
action  of  account  at  law,  see  3  Steph, 
Bl.  532 ;  Foster  v.  Allanson,  2  T.  R. 
479 ;  Jackson  i'.  Stopherd,  4  Tyrw. 
330;  Elgie  v.  Webster,  5  M.  &  W.  518; 
Brown  v.  Tapscott,  6  id.  119.  It  has 
been  held,  that  partners  may  sue  each 
other  at  law  for  a  breach  of  any  dis- 
tinct engagement  in  the  partnership 
agreement,  and  that  generally  ade- 
quate relief  can  in  sucli  case  be  ob- 
tained. Where  this  can  be  done, 
equity  will  not  interfere.  Kinloch  v. 
Hamlin,  2  Hill  Ch.  19;  Duncan  v. 
Lyon,  3  Johns.  Ch.  360;  Hunt  v. 
Gookin,  6  Vt.  462.  [But  where  two 
persons  enter  into  a  partnership  as  to 
certain  proposed  contracts,  and,  after 
the  completion  of  one,  one  partner 
notifies  the  other  that  as  to  the  other 
contracts  he  shall  proceed  on  his  sole 


654 


THE   LAW    OF    PARTNERSHIP. 


[CH.  XVI. 


*  511  *  Whenever  there  is  a  dissolution  of  a  partnersliip,  for 
any  cause,  it  would  seem  that  there  must  be  an  account, 
if  it  be  demanded  by  any  party  in  interest,  (e)  But  it  is 
always  possible  for  partners  or  their  representatives  to  agree 
together  upon  some  arrangements  which  render  an  account 
unnecessary.  Nor  is  this  very  unfrequent  in  fact.  The  parties 
interested  value  the  property,  good-will,  &c.,  and  found  their 
arrangements  upon  this  estimate ;  one  paying  to  the  other  a 
sum  of  money,  without  any  account  being  taken.  (/)    But  such 


account,  the  remedy  is  by  suit  for  a 
breach  of  tlie  contract,  and  not  by  a 
bill  to  account  for  profits.  Doyle  v. 
Bailey,  75  111.  418.]  See  Cross  v. 
Cheshire,  7  Exch.  43.  Where  there 
is  a  distinct  promise  to  pay  an  ascer- 
tained sum,  as  where  a  balance  of 
accounts  is  struck,  assumpsit  will  lie 
between  partners.  Hall  v.  Stewart, 
12  Penn.  213  ;  Hamilton  v.  Hamilton, 
18  id.  20.  See  Morrow  v.  Riley,  15 
Ala.  710;  Gridley  v.  Dole,  4  Comst. 
486;  Miller  v.  Andress,  13  Ga.  866. 
And  where  an  acgount  stated  resulting 
in  such  balance  is  retained  by  a  part- 
ner without  objection,  a  promise  will 
be  implied,  as  in  other  cases.  Van 
Amringe  v.  EUmaker,  4  Penn.  281. 
But  in  matters  of  difficulty  or  con- 
troversy between  partners,  it  is  now 
most  usual  to  resort  to  a  court  of 
equity  for  their  final  adjudication  and 
settlement.  Bracken  v.  Kennedy,  3 
Scam.  558.  It  will  entertain  jurisdic- 
tion, although  account  or  other  action 
would  lie  between  the  parties.  Gillett 
V.  Hall,  13  Conn.  426 ;  Cunningham  v. 
Littlefield,  1  Edw.  Ch.  104.  And  al- 
though one  partner  cannot  bind  the 
firm  by  deed,  Donaldson  v.  Kendall, 
2  Ga.  Decis.  227  ;  Napier  v.  Catron, 
2  Humph.  534;  Dickinson  v.  Legare, 
1  Desaus.  537  ;  Skinner  v.  Dayton,  19 
Johns.  518 ;  Fisher  v.  Tucker,  1  Mc- 
Cord  Ch.  170 ;  Williams  i-.  Hodgson, 
1  Harris  &  J.  474  ;  yet,  in  some  cases, 
a  court  of  equity  will  regard  a  debt 
secured  by  the  specialty  of  one  partner 
as  a  simple  contract  debt,  and  hold 
all  the  partners  bound  by  it.  See 
Gait  V.   Calland,   7  Leigh,  594;    Mc- 


Naughten  v.  Partridge,  11  Ohio,  123  ; 
Christian  v.  Ellis,  1  Gratt.  396;  An- 
derson V.  Tompkins,  1  Brock.  456 ; 
Kyle  V.  Roberts,  6  Leigh,  495 ;  James 
V.  Bostwick,  Wright,  142.  As  to 
pleadings  and  practice  in  taking  an 
account,  see  Auld  v.  Butcher,  2  Kan. 
135. 

(e)  Adams  Eq.  ch.  3,  p.  239,  et  seq. ; 
Collyer  on  Part.  (3d  Am.  ed.)  §  298; 
1  Story  Eq.  Jur.  §  671 ;  Forman  v. 
Hanfray,  2  Ves.  &  B.  329;  Harrison 
V.  Armitage,  4  Madd.  143 ;  Russell  v. 
Loscombe,  4  Sim.  8;  Knowles  v. 
Haughton,  11  Ves.  168;  Waters  v. 
Taylor,  15  id.  15 ;  Ex  parte  Broad- 
bent,  1  Mont.  &  A.  635.  See  Hayes 
V.  Reese,  34  Barb.  151 ;  Vermillion 
V.  Bailey,  27  111.  230;  Pope  v.  Sals- 
man,  35  Mo.  362.  [A  partner  may 
have  an  account,  although  he  has 
failed  to  pay  in  the  capital  he  agreed 
to  contribute.  Palmer  v.  Tyler,  15 
Minn.  106.  But  see  Stevenson  v.  Ma- 
thers, 67  111.  123.  An  account  will  not 
be  decreed,  if  it  appears  that  the  party 
praying  for  it  has  no  real  cause  of  com- 
plaint, and  that  no  good  purpose  can 
be  served  by  directing  an  account  to 
be  taken.  McKacy  v.  Hebb,  42  Md. 
227.  Nor  when  one  partner  has  re- 
ceived, by  agreement  with  his  copart- 
ners, all  he  could  in  any  event  be 
entitled  to,  so  that  he  has  no  interest 
in  the  accounts.  Wagner  v.  Wagner, 
50  Cal.  76.] 

(/)  7  Jarman  Convey.  31;  Cook- 
son  V.  Cookson,  8  Sim.  529.  But  see 
Cook  V.  CoUingridge,  Jac.  607,  620. 
[Where  one  partner  sells  out  his  in- 
terest to  another,  the  presumption  is  that 


CH.  XVI.] 


OF   AN  ACCOUNT. 


555 


an  arrangement  can  arise  only  from  an  agreement ;  for  if  the 
parties  differ  as  to  the  value  of  the  property,  or  of  their  respec- 
tive interests  therein,  an  account  must  be  taken,  as  the  only 
means  of  determining  this.  (^)  Indeed,  the  taking  of 
an  account  is  a  frequent  preliminary  to  any  *  further  *  512 
action  by  a  court  of  equity ;  because  by  this  means 
alone  can  the  court  ascertain  the  true  relation  of  the  parties  as 
to  their  rights  and  obligations.  (A)  An  account  and  a  dissolu- 
tion seem  to  be  so  clearly  connected,  that  Lord  Eldon,  as  we 
have  seen,  was  unwilling  to  grant  an  account,  unless  the 
petitioner  prayed  also  for  a  dissolution :  (i)  but  this  cannot  be 

the  price  paid  is  based  upon  a  set- 
tlement of  accounts.  Wiggin  v.  Good- 
win, 63  Me.  389 ;  Noonan  v.  Huddles- 
ton,  64  111.  11.] 

((/)  Featherstonhaugh  v.  Fen  wick, 
17  Ves.  298,  309,  per  Sir  William 
Grant :  "  The  next  consideration  is, 
whether  the  terms  upod  which  the 
defendants  proposed  to  adjust  the 
partnership  concern  were  those  to 
which  the  plaintiff  was  bound  to  ac- 
cede. The  proposition  was,  that  a 
value  should  be  set  upon  the  partner- 
ship stock ;  and  that  they  should  take 
his  proportion  of  it  at  that  valuation, 
or  that  he  should  take  away  his  share 
of  the  property  from  the  premises. 
My  opinion  is  clearly,  that  these  are 
not  terms  to  which  he  was  bound  to 
accede.  They  had  no  more  right  to 
turn  him  out  than  he  had  to  turn 
them  out,  upon  those  terms.  Their 
rights  were  precisely  equal :  to  have 
the  whole  concern  wound  up  by  a  sale, 
and  a  division  of  the  produce.  As, 
therefore,  they  never  proposed  to  him 
any  terms  which  he  was  bound  to 
accept,  the  consequence  is,  that,  con- 
tinuing to  trade  with  his  stock,  and  at 
his  risk,  they  come  under  a  hability 
for  whatever  might  be  produced  by 
that  stock.  In  the  case  of  Crawshay 
V.  Collins,  15  Ves.  218,  there  was  no 
circumstance,  except,  merely,  that  there 
had  been  no  adjustment  of  accounts 
with  the  assignees  of  the  bankrupt. 
Here,  the  defendants  proposed  ad- 
justing the  accounts  on  certain  terms, 
but  terms  which  the  other  party  was 


not  bound  to  accept.  Though  he, 
thinking  they  had  no  right  to  dissolve 
the  partnership,  might  not  have  gone 
into  any  detail  of  the  principles  on 
which  the  dissolution  should  take 
place,  }'et  I  conceive  it  to  have  been 
their  duty,  in  the  first  place,  to  put 
themselves  right  by  offering  to  him 
those  terms  upon  which  the  law  gave 
him  a  right  to  insist ;  and,  not  having 
done  so,  but  continuing  to  trade  with 
his  stock  under  the  liability  to  answer 
for  the  profits,  the  same  inquiry  should 
be  directed  as  in  Crawshay  t'.  Collins, 
to  ascertain  what  that  stock  was  at 
the  period  of  the  dissolution,  what 
use  was  afterwards  made  of  it,  and 
wliat  profits  were  produced  by  the 
trade."  Wilson  v.  Greenwood,  1 
Swanst.  471,  482  ;  Rigden  v.  Pierce,  6 
Madd.  353 ;  Cook  v.  CoUingridge,  Jac. 
607. 

(h)  It  has  often  been  held  that  there 
can  be  no  division  of  partnership  prop- 
erty until  all  the  accounts  of  the  part- 
nership have  been  taken,  and  the  clear 
interest  of  each  partner  ascertained ; 
that  the  chancellor  may,  in  a  proper 
case,  dissolve  the  partnership,  but 
cannot  aid  in  carrj'ing  it  on.  Baird 
V.  Baird,  1  Dev.  &  B.  524;  McRae  v. 
McKenzie,  2  id.  282;  Camblat  v. 
Tupery,  2  La.  Ann.  10 ;  Kennedy  v. 
Kennedy,  3  Dana,  240.  But  see  Hud- 
son V.  Barrett,  1  Pars.  Sel.  Eq.  Cas. 
414. 

(i)  Forman  v.  Hanfray,  2  Ves.  &  B. 
829. 


656 


THE   LAW   OP   PARTNERSHIP. 


[CH.  XVI. 


deemed  a  rule  of  equity,  (/)  although  in  the  great  majority  of 
cases,  where  the  relations  between  the  j)artners  are  such  that 
one  of  them  can  obtain  an  account  only  through  the  interposi- 
tion of  a  court,  a  dissolution  is  and  should  be  asked,  (/c) 


SECTION    11. 


OF   OPENING   AN   ACCOUNT   FOR   ERROR. 

*  513        *  Mere  errors  alone  will  not  always  lead  to  the  open- 
ing and  restating  of  accounts.     If  the  parties  agree,  as 
they  sometimes  do,  that  closed  accounts  shall  not  be  opened 
for  error,  after  the  death  of  the  parties,  or  after  a  fixed  period,  a 


ij)  In  Harrison  v.  Armitajje,  4 
Madd.  14;j,  it  is  said  that  the  rule  laid 
down  by  Lord  Eldon  applies  only  to 
the  case  of  an  injunction,  or  to  a  case 
of  interim  management.  The  following 
cases  bear  on  the  question;  Loscombe 
V.  Russell,  4  Sim.  8 ;  Knowles  v. 
Haughton,  11  Ves.  168;  Waters  v. 
Taylor,  15  id.  15;  Walworth  v.  Holt, 
4  Mylne  &  C.  619,  635.  In  this  last 
case.  Lord  Cottenham  made  a  very 
full  review  of  the  autliorities  ;  deciding 
that  a  relief  of  this  limited  kind  could 
be  given  without  a  prayer  for  dissolu- 
tion, and  a  final  winding  up  of  the  af- 
fairs of  the  company.  This  rule,  al- 
though not  without  great  conflict, 
seems  now  to  be  decided.  Richardson 
V.  Hastings,  7  Beav.  301  ;  Fairthorne 
V.  Weston,  3  Hare,  387;  Miles  v. 
Thomas,  9  Sim.  609 ;  Goodman  v. 
Whitcomb,  1  Jac.  &  W.  593 ;  Richards 
V.  Davies,  2  Russ.  &  M.  347  ;  Rich- 
ardson V.  Hastings,  cited  in  8  Hare, 
391  ;  Chappie  i'.  Cadell,  Jac.  537. 

(k)  Loscombe  v.  Russell,  4  Sim.  8; 
Waters  v.  Taylor,  15  Ves.  10 ;  Forraan 
V.  Hanfray,  2  Ves.  &  B.  329;  Goodman 
V.  Whitcomb,  1  Jac.  &  W.  -589  ;  Chap- 
man V.  Beach,  id.  594 ;  Marshall  v. 
Colraan,  2  id.  266  ;  Vansandau  v. 
Moore,  1  Russ.  441;  Pigott  v.  Bagley, 
McClel.  &  y.  569;  Krebell  v.  White, 
2  Younge  &  C.  15.  In  an  action  by 
one   partner  for  a  dissolution  of  the 


partnership,  and  an  account,  &c.,  al- 
leging that  dividends  of  profits  were 
to  be  made  at  stated  periods,  tlie  court 
may  decree  ^he  payment  of  the  sum 
due  for  such  dividends,  before  final 
distribution  of  the  assets.  O'Conner 
V.  Stark,  2  Cal.  155.  The  ordinary 
course  is  to  pray  that  the  partnership 
may  be  dissolved,  and  the  surplus 
assets  distributed;  but  this  practice 
has  been  relaxed  in  favor  of  joint- 
stock  companies,  and  of  other  numer- 
ous partnerships,  and  bills  have  been 
sustained  -which  asked  more  limited 
relief  ;  namely,  that  the  assets  of  an 
abandoned  or  insolvent  partnership 
might  be  collected  and  applied  in  dis- 
charge of  the  debts,  leaving  the  ques- 
tions of  dissolution  and  contribution  as 
between  the  partners  entirely  open 
for  future  settlement.  Adams  Eq. 
241 ;  Goodman  v.  Whitcomb,  1  Jac.  & 
W.  572 ;  Marshall  v.  Colman,  2  id.  266; 
Glassington  v.  Thwaites,  1  Sim.  & 
Stuart,  124 ;  Loscombe  v.  Russell,  4 
Sim.  8  ;  Walworth  v.  Holt,  4  Mylne  & 
C.  619 ;  Richardson  v.  Hastings,  7 
Beav.  301,  323;  Apperly  v.  Page,  1 
Phillips,  779;  Fairthorne  v.  Weston,  3 
Hare,  387. 

A  creditor  cannot  file  a  bill  to  stop 
a  partnership,  and  wind  up  its  con- 
cerns. It  is  only  at  the  instance  of  a 
partner  that  this  can  be  done.  Cle- 
ment V.  Foster,  3  Iredell  Eq.  213. 


CH.  XVI.] 


OP   AN    ACCOUNT. 


657 


court  of  equity  will  always  respect  such   an  agreement,  (Z) 
unless  gross  mistake,  fraud,  or  great  danger  of  fraud,  be 
shown,  (m)     And  the  same  reasons  which  cause  *  part-    *  514 
ners  to  make  such  an  agreement  would  induce  a  court 
to  open  an  account  only  for  important  error,  after  the  death  of 
parties  or  long  acquiescence,  (n)     But  it  has  been  held,  that 


(/)  Gainsborough  v.  Stork,  Barnard. 
312.     See  Heath  v.  Corning,  3  Paige, 
560  ;  Stoughton  v.  Lynch,  2  Johns.  Ch. 
218.      In    Mackellar  v.    Wallace,    26 
Eng.  L.  &  Eq.  62,  8  Moore  P.  C.  Cas. 
378,  the  following  distinction  is  drawn  : 
"  Parties     having     accounts    between 
them  may  meet  and  agree   to   settle 
those  accounts   by  the  ascert^iinment 
of  the  exact  balance  ;  it  may  be  nec- 
essary for  that  case,  and  probably  it 
is  necessary  in  most  cases,  that  vouch- 
ers should  be  produced,  and  that  all 
the  information  possessed  on  one  side 
and  the  otlier  should  be  furnished  in 
the  settlement  of  that  account ;  and,  if 
it  afterwards  turn  out  that  there  were 
errors  in  that  account,  it  is  a  sufficient 
ground  for  opening  such  account,  and 
setting  it  right  in  a  court  of  equity. 
If,  on  the   other  hand,   persons  meet 
and  agree,  not  to  ascertain  the  exact 
balance,  but  a  sum  which  one  is  willing 
to  pay,   and   the  other  is  content  to 
receive  as  the  result  of  those  accounts, 
—  in  a  case  of  that  sort,  it  is  obvious 
that    the    production   of    vouchers    is 
entirely    unnecessary,   and   errors    in 
the   account  are   entirely   out   of  the 
question;    for  the  very  object  of  the 
parties  is   to  avoid  the   necessity  for 
producing   those    vouchers,   upon    the 
assumption  that  there  are  or  may  be 
errors    in    the    account    so     settled. 
Therefore,   it    is    either    an    account 
stated  and  settled,  in  the  formal  sense 
of  the  expression,  or  it  is  the  case  of 
a  settlement  by  compromise." 

(m)  Oldaker  v.  Lavender,  7  Sim. 
239.  In  Mackellar  v.  Wallace,  cited 
supra,  the  court,  after  laying  down  the 
doctrine  as  above,  go  on  to  say  :  "  In 
either  case,  the  transaction  might  be 
vitiated  by  fraud.  In  either  case,  it  is 
good  for  nothing  if,  either  from  the 
collusion  of  the  parties,  or  from  the 


circumstances  under  which  the  settle- 
ment takes  place,  it  is  proved  in  a 
court  of  equity  that  tlie  transaction 
was  not  so  fairly  and  so  fully  under- 
stood between  the  parties,  either  from 
the  confusion  in  which  it  was  involved, 
or  from  misrepresentation  made  on 
the  one  side  or  the  other,  as  it  ought  to 
have  been,  and  that  injustice  has  been 
done  on  either  side."  Slee  v.  Bloom, 
20  Johns.  669,  5  Johns.  Ch.  366  ;  Lee's 
Admr.  v.  Heed,  4  Dana,  112;  Botifeur 
t;.  Weyman,  1  McCord  Ch.  156 ;  Bar- 
row V.  Rliinelander,  1  Johns.  Ch.  650  ; 
Johnson's  Executors  v.  Ketchum,  3 
Green  Ch.  364 ;  Bloodgood  v.  Zeily,  2 
Cai.  Cas.  124;  Gray  v.  Washington, 
Cooke,  321  ;  Chappedelaine  i'.  Dech- 
enaux,  4  Cranch  S.  C.  309  ;  Stoughton 
V.  Lynch,  2  Johns.  Ch.  218,  219,  1 
Madd.  Ch.  Pr.  (2d  ed.)  103,  262,  280; 
Herrick  v.  Ames,  8  Bosworth,  115 ; 
Cann  v.  Cann,  1  P.  Wms.  127 ;  Sta- 
pilton  V.  Stapilton,  1  Atk.  10 ;  Pullen 
V.  Ready,  2  Atk.  692 ;  Lewis  v.  Pead, 
1  Ves.  Jr.  19  ;  Vernon  v.  Vawdry,  2 
Atk.  119,  2  Eq.  Cas.  Abr.  8;  Gordon  v. 
Gordon,  3  Swanst.  476 ;  Halhed  v. 
Marke,  id.  444,  note,  1  Hovenden  on 
Frauds,  160 ;  Osmond  v.  Fitzroy,  3 
P.  Wms.  130 ;  Willis  v.  Jernegan,  2 
Atk.  251  ;  Milnes  v.  Cowley,  8  Price, 
620 ;  Lloyd  i'.  Passingham,  Cooper, 
156  ;  Beaumont  v.  Bramley,  1  Turner, 
61 ;  Evans  v.  Bicknell,  6  Ves.  183, 189; 
[Pomeroy  v.  Benton,  67  Mo.  531.] 

(n)  A  suit  to  impeach  an  account 
ought  to  be  brought  within  a  reasona- 
ble time,  or,  at  farthest,  within  the 
statutory  period  for  commencing  an 
action  at  law,  upon  matters  of  account. 
Lupton  V.  Janney,  13  Pet.  381.  And 
where  the  bar  of  the  statute  is  inap- 
plicable, —  namely,  where  the  demand 
is  purely  equitable,  —  the  court  is  reluc- 
tant to  interfere  after  a  considerable 


558 


THE   LAW    OF   PARTNERSHIP. 


[CH.  XVI. 


where  a  partnership  had  existed  for  eight  years,  and  during 
this  time  accounts  had  been  taken,  without  cancellation  of 
books,  releases,  or  discharges  in  full,  an  account  might  be 
called  for.  («n)  Where  there  is  danger  of  fraud,  or  where 
the  accounts  were  made  up  by  parties  having  unrestricted 
power,  and  acting  under  strong  personal  interest,  as  in  the 
case  of  accounts  between  an  executor  partner  and  the  legatees 
of  the  deceased  partner,  a  long  acquiescence  will  not  establish 
them  beyond  the  reach  of  inquiry ;  (o)  and  in  one  case,  else- 


lapse  of  time  ;  particularly  after  the 
death  of  parties  whose  transactions  are 
involved  in  the  inquiry.  Adams  Eq. 
227 ;  Baker  v.  Biddle,  Baldwin  C.  C. 
418;  Ellison  v.  Moffat,  1  Johns.  Ch. 
46;  Ray  v.  Bogart,  2  Johns.  Cas.  432; 
Rayner  v.  Pearsall,  3  Johns.  Ch.  578, 
586;  Mooers  v.  White,  6  id.  360,  370; 
Boiling  V.  Boiling,  5  Munf.  334;  Ran- 
dolph V.  Randolph,  2  Call,  537,  id.  (2d 
ed.)  453;  Dexter  v.  Arnold,  2  Sumner, 
108;  Wilde  i-.  Jenkins,  4  Paige,  481; 
Dakin  v.  Demming,  6  Paige,  95; 
Bloodgood  V.  Zeily,  2  Cai.  Cas.  124  ; 
Gregory's  Ex'rs  v.  Forrester,  1  IMc- 
Cord  Ch.  318,  382;  Ex'rs  of  Radcliffe 
V.  Wightnian,  id.  408;  Hutchins  v. 
Hope,  7  Gill,  119;  Chesson  v.  Chesson, 
8  Ired.  Eq.  141.  But,  where  there  has 
been  fraud,  the  court  will  open  and 
examine  accounts  after  any  length  of 
time,  even  though  the  person  who 
committed  the  fraud  be  dead.  Boti- 
feur  V.  Weyman,  1  McCord  Ch.  166. 
But  it  must  be  shown  that  the  fraud 
was  not,  and  could  not  with  reasonable 
diligence  be,  discovered,  until  witliin 
six  years  before  the  commencement  of 
suit.  Ogden  v.  Astor,  4  Sandf.  S.  C. 
311. 

(nn)  Lynch  i\  Bitting,  6  Jones  Eq. 
238.  And  see  Stephens  i;.  Orman,  10 
Fla.  9. 

(o)  A.,  B.,  &  C,  in  1796,  became 
partners,  as  merchants,  under  articles 
for  seven  years,  and  it  was  provided, 
that,  if  either  party  died  in  the  mean 
time,  the  partnership  should  be  deter- 
mined, as  to  his  share,  from  the  first 
of  May  following  his  death  ;  and   that 


thereupon  an  account  should  be  taken, 
and,  after  payment  of  debts,  "  pay- 
ment, appropriation,  and  delivery " 
should  be  made,  between  the  surviving 
partners  and  the  executors  of  the  de- 
ceased partner,  of  the  residue  of  tlie 
moneys,  goods,  &c.,  of  the  partnership. 
In  1801,  B.  died,  and  appointed  his 
wife  and  surviving  partners,  A.  and  C, 
his  executors  and  guardians  of  his 
infant  children,  who  were  his  residuary 
legatees.  A.  and  C,  only,  proved  the 
will,  and  having  caused  a  valuation 
and  account  of  the  partnership  assets 
to  be  made,  a  balance  sheet  was  set- 
tled up  to  the  first  of  May,  1801, 
showing  what  amount  was  due  to  the 
testator's  estate  (which  included  out- 
standing credits  to  a  large  amount), 
and  his  estate  was  credited  accordingly 
in  the  partnership  books,  and  tiie 
partnership  continued  by  the  surviv- 
ing partners,  but  no  severance  of  the 
assets  was  made.  In  May,  1809,  the 
eldest  son  came  of  age,  and  an  account 
was  stated,  by  the  executors,  of  the 
testator's  residuary  personal  estate, 
but  which  assumed,  as  its  basis,  the 
valuation  and  account  made  on  the 
testator's  death.  Another  account 
was  stated  of  the  debts  and  credits 
remaining  unpaid  and  uncollected, 
showing  what  was  then  divisible  ;  and 
another  of  the  moneys  expended  for 
the  eldest  son's  maintenance.  A  deed, 
dated  September,  1809,  between  A. 
and  the  eldest  son,  was  executed,  on 
which  these  accounts  were  indorsed, 
and  A.  covenanted  for  the  payment, 
by  instalments,   of  the  share  due  to 


CH.  XVI.] 


OF   AN    ACCOUNT. 


559 


where  *  referred  to,  they  were  opened  after  some  thirty    *  515 
years  of  acquiescence.  ( ji?)    "Where  fraud  had  been  com- 
mitted, an  account  was  opened  after  nearly  as  long  a  time, 
although  the  fraudulent  partner  had  long  been  dead,  (g)     And 
if  the  bill  praying  for  the  opening  of  a  settled  account  do  not 


the  eldest  son,  so  far  as  the  same  had 
been  realized ;  and  the  eldest  son  de- 
clared he  was  "  content  and  satisfied 
with  the  disclosures  thus  far  made  and 
accounts  thus  far  given,"  &c. ;  and  it 
was  provided  that  he  should  not  be  pre- 
vented from  claiming  any  further  share 
"  not  as  yet  received,  or  fallen  in,  or 
accounted  for."  In  1810,  1815,  1821, 
1826,  and  1830,  changes  took  place  in 
the  partnership  firm.  There  were 
three  younger  children,  who  attained 
twenty -one,  respectively,  in  1812,  1813, 
and  1820,  when  similar  accounts, 
founded  on  the  same  basis,  were 
stated  in  each  of  them  by  the  execu- 
tors ;  and  a  similar  deed  of  settlement 
executed  by  the  two  former,  and  a 
release  by  the  latter,  and  further  divi- 
sions of  the  testator's  assets  made  ac- 
cordingly. In  1816,  the  only  other 
child  died  an  infant,  and  then  also  a 
division  of  assets  was  made  ;  and,  in 
1822,  a  deed  of  release  was  executed 
by  the  trustees  of  the  settlement  of 
one  of  the  daughters,  in  respect  of  a 
balance  not  included  in  the  deed  exe- 
cuted by  her.  The  bill  was  filed  in 
1831,  by  the  several  children  and  their 
representatives.  Held,  that  A.  and 
C,  being  executors  and  guardians  as 
well  as  surviving  partners,  and  the 
release  being  partial  only,  and  founded 
on  insufficient  knowledge  by  the  ces- 
tuis  que  trust  of  the  partnership  affairs 
and  accounts,  the  plaintiffs  were  not 
precluded,  by  tlieir  deeds  or  by  lapse 
of  time,  from  inquiring  into  the  mode 
in  which  the  assets  of  the  old  firm  had 
been  dealt  witli,  and  claiming  a  share 
in  the  profits  arising  from  the  testator's 
assets  having  been  used  in  the  business 
of  the  successive  partnerships.  Wed- 
derburn  v.  Wedderburn,  2  Keen,  722, 
4  Mylne  &  C.  41.  And  see  Cook  v. 
CoUingridge,   1   Jac.   607 ;   Walker   v. 


Symonds,  3  Swanst.  64-69;  Greg- 
ory I'.  Gregory,  Cooper,  201,  Jac.  631 ; 
Champion  v.  Rigby,  1  Russ.  &  M.  639 ; 
Chalmers  v.  Bradley,  1  Jac.  &  W.  51 ; 
Downs  V.  Gazebrooke,  3  Meriv.  200; 
Ex  parte  Lacey,  6  Ves.  628;  Cock- 
erell  r.  Cholmeley,  1  Russ.  &  M.  425, 
on  the  strictness  of  equity  in  similar 
cases  of  trust.  See  also  Smith  v.  Clay, 
3  Bro.  C.  C.  639,  note ;  Townsend  v. 
Townsend,  1  Cox,  28  ;  Bonney  v.  Rid- 
gard,  id.  145;  Beckford  v.  Wade,  17 
Ves.  87,  97  ;  Hickes  v.  Cook,  4  Dow, 
16,  on  the  question  of  the  length  of 
time  that  had  elapsed.  Dickenson  v. 
Lord  Holland,  2  Beav.  310 ;  Purcell  v. 
Cole,  1  Longf.  &  T.  449 ;  Edwards  v. 
Meyrick,  2  Hare,  60,  6  Jur.  924. 

(l))  Wedderburn  v.  Wedderburn,  2 
Keen,  722,  4  Mylne  &  C.  41.  And 
see  Hoe  v.  Richards,  2  Beav.  305. 
Under  particular  circumstances  of 
fraud,  imposition,  and  delay,  a  court 
of  equity  will  decree  an  account  of 
rents  and  profits  of  an  estate  after  an 
adverse  possession  of  fifty  years. 
Stackpole  v.  Davoren,  1  Bro.  P.  C.  9. 
And,  in  another  case,  where  an  entry 
in  an  administrator's  account,  which 
had  been  settled,  was  shown  to  be 
fraudulently  made,  the  whole  account 
was  opened,  notwithstanding  the  lapse 
of  forty  years  since  the  death  of  the 
intestate,  seventeen  since  the  settle- 
ment of  the  account,  and  more  than 
two  since  the  discovery  of  the  entry 
complained  of.  Special  directions 
were  inserted  in  a  decree  for  the 
protection  of  the  accounting  party. 
AUfrey  v.  Allfrey,  1  Macn.  &  G. 
87,  1  Hall  &  T wells,  179,  13  Jur. 
269. 

(q)  Vernon  v.  Vawdry,  2  Atk.  119  ; 
Botifeur  v.  Weyman,  1  McCord  Ch. 
161  ;  Lowe  v.  Farlie,  2  Madd.  Ch.  102; 
Beames'  Pleas  in  Eq.  232. 


660 


THE   LAW   OF   PARTNERSHIP. 


[CH.  XVI. 


allege  fraud,  but,  in  the  opinion  of  the  court,  the  facts  stated 

imply  fraud,  the  prayer  will  be  granted,  (r) 
*  516  *  A  party  seeking  to  open  an  account  for  error  must 
specify  the  errors  so  particularly  that  each  may  be 
judged  of  by  itself.  For  tlie  court  may  be  unwilling  to  open  an 
account  if,  when  it  is  opened,  it  may  be  examined  and  unravelled 
from  end  to  end.  (s)  But  they  may  be  willing  to  permit  the 
plaintiff  to   surcharge   and    falsify.  (^)      If  an   omission   has 


(r)  Farnham  v.  Brooks,  9  Pick.  212. 
And  see  Worniley  v.  Wormley,  8 
Wheat.  421;  Fullagar  v.  Clark,  18 
Ves.  481.  Courts  of  equity  feel  them- 
selves at  liberty  to  infer,  juJicially,  a 
fraudulent  purpose,  from  suspicious 
circumstances,  well  corroborated  and 
in  no  way  rebutted,  though  such  cir- 
cumstances fall  short  of  legal  proof. 
Earl  of  Chesterfield  v.  Janssen,  2  Ves. 
Sen.  155  ;  Walker  v.  Symonds,  9 
Swanst.  71  ;  Taylor  v.  Jones,  2  Atk. 
602;  Stileman  v.  Ashdown,  id.  480. 
A  party  who  has  once  admitted  an 
account  to  be  correct  cannot  after- 
wards file  a  bill  to  have  the  account 
taken  in  equity,  upon  the  mere  alle- 
gation that  he  had  no  means  of  ascer- 
taining that  the  account  so  delivered 
was  correct,  witliout  charging  specific 
acts  of  fraud  against  the  defendant; 
and  it  is  not  necessarily  an  allegation 
of  fraud  to  say  that  the  accounting 
party  agreed  to  deliver  up  certain 
cliattels  demanded  by  the  other,  upon 
condition  of  having  his  alleged  balance 
admitted  and  paid.  Darthery  v.  Lee, 
2  Younge  &  C.  5,  5  L.  J.  n.  8.  Exch. 
Eq.  73 ;  President,  &c.,  of  Orphan 
Board  v.  Van  Reenen,  1  Knapp,  100. 

(s)  Union  Bank  v.  Knapp,  8  Pick. 
113;  Kinsman  v.  Barker,  14  Ves.  579; 
Shepherd  v.  Morris,  4  Beav.  252 ; 
Chambers  v.  Goldwin,  9  Ves.  254 ; 
Calvit  V.  Markham,  3  How.  (Miss.) 
343;  Mebane  v.  Mebane,  1  Ired.  Eq. 
403;  De  Montmorency  v.  Devereux, 
1  Drury  &  Walsh,  119;  Leaycraft  v. 
Dempsey,  15  Wend.  83 ;  Baker  v. 
Biddle,  1  Bald.  394,  418;  Bainbridge 
V.  Wilcocks,  id.  536,  540 ;  Consequa  v. 
Fanning,  3  Johns.  Ch.  587,  17  Johns. 


511,  1  Madd.  Ch.  Pr.  (4th  Am.  ed.) 
103 ;  Taylor  v.  Hamlin,  2  Bro.  C.  C. 
310;  Wide  v.  Jenkins,  4  Paige,  481; 
Weed  V.  Small,  7  id.  573;  liobart  v. 
Andrews,  21  Pick.  526  ;  Chappedelaine 
V.  Dechenaux,  4  Crancli,  306  ;  Bullock 
V.  Boyd,  2  Edw.  Ch.  293;  Pliilips  v. 
Belden,   id.    1 ;    Stoughton    v.   Lyncli, 

2  Johns.  Ch.  209  ;  Hickson  v.  Ayhvard, 

3  Moll.  1.  Where  an  account  stated 
is  open  a  long  time,  as  sixteen  years, 
after  it  has  been  rendered,  it  will  not 
generally  be  opened.  It  will  be  opened 
as  to  fraud  or  mistakes  charged  in  the 
bill,  and  so  far  proved  that  the  court 
is  satisfied  they  ought  to  be  corrected  ; 
and,  when  some  such  errors  are  j)roved, 
then  as  to  other  errors  charged,  which 
the  court  is  satisfied  ought  to  be  made 
tlie  subjects  of  further  examination. 
Ogden  V.  Astor,  4  Sandf.  S.  C  311. 
And  see  Clarke  v.  Tipping,  9  Beav. 
282 ;  Holland  (,-.  Holland,  6  Ired.  Eq. 
407  ;  Pritt  v.  Clay,  6  Beav.  503  ;  Scott 
V.  Milne,  5  id.  215,  affirmed  12  L.  J, 
y.  s.  Ch.  233,  7  Jur.  709;  Jones  v. 
Latimer,  1  id.  980 ;  Johnson  v.  Curtis, 
3  Bro.  C.  C.  226 ;  Taylor  v.  Hayling, 
1  Cox,  435;  Dunbar  v.  Lane,  1  Bro. 
P.  C.  3 ;  Maund  v.  Allies,  5  Jur.  860  ; 
Milliken  v.  Gardner,  37  Penn.  456. 
The  court  will  not  open  a  settled 
account  where  it  has  been  signed,  or  a 
security  taken  on  the  foot  of  it,  unless 
tlie  whole  transaction  appears  fraudu- 
lent, upon  errors  specified  in  the  bill, 
anil  supported  by  evidence.  Drew  v. 
Power,  1  Sch.  &  Lef.  182.  See  Parker 
V.  Jonte,  15  La.  Ann.  290,  as  to  alleged 
errors  in  books. 

(?)  Consequa  v.  Fanning,  3  Johns. 
Ch.  587 ;  Troup  v.  Haight,  Hopk.  239 ; 


CH.  XVI.] 


OF   AN    ACCOUNT. 


561 


been  made  of  a  credit  due,  the  *  plaintiff,  by  show-  *  517 
ing  the  same,  will  be  permitted  to  add  it ;  and  this 
is  a  surcharge.  If  a  wrong  charge  is  stated  in  the  account, 
the  plaintiff  may  be  permitted  to  remove  it ;  and  this  is  falsifi- 
cation, (if)  It  may  be  added,  as  a  general  remark,  that  when- 
ever accounts  are  stated  by  persons  having  great  trust  reposed 
in  them,  and  great  power,  a  court  of  equity  allows  a  latitude  in 
opening  and  examining  such  accounts,  bearing  some  proportion 
to  that  trust  and  power,  (v) 

In  England,  the  practice  is  quite  uniform  of  requiring  a  part- 
ner who  petitions  for  an  account,  and  either  admits  expressly 
or  by  implication  that  he  is,  or  is  shown  to  be,  owing  to  the 
partnership  a  private  debt  or  balance,  to  j)ay  that  debt  or 
balance  into  court  before  a  decree  will  issue,  (w)     This  is  not 


Cliappedelaine  v.  Dechenaux,  4  Cranch 
30(5;    Redman  v.    Green,    3  Ired.   Eq 
64;  Bullock  v.    Boyd,  1  Hoff.  Cli.  294 
Nourse   v.    Prime,   7   Johns.    Ch.    69 
Philips   V.    Belden,    2    Edw.    Ch.    1 
Grover  v.  Hall,  3  Har.  &  J.  43  ;  Free- 
land  V.  Cocke,  2  Munf.  352  ;  Compton 
V.   Greer,  2  Dev.    Cii.    93  ;    Miller   v. 
Wornack's    Adm'rs,    Freeman's    Miss. 
Ch.  486;  Lilly  v.  Kroesen,  3  Md.  Ch. 
83;    Williams  v.  Savage  Manuf.   Co., 
1  id.  306  ;  Kinsman  v.  Barker,  14  Ves. 
579;  Vernon  v.  Vawdry,  2  Atk.   119, 
Barn.  Ch.  280,  305 ;    Sewei  v.  Bridge, 

1  Ves.  Sen.  297  ;  Earl  Pomfret  v.  Lord 
Windsor,  2  id.  482;  Pit  v.  Cholmon- 
deley,  id.  565  ;    Brovvnel  v.  Brownel, 

2  Bro.  Ch.  62;  Chambers  v.  Goldwin, 
9  Ves.  254;  Anon.,  2  Eq.  Abr.  12. 
Plaintiff,  in  his  bill,  having  assigned 
150  errors  in  five  stated  accounts,  an 
order  was  made  on  him  to  pick  out 
those  he  would  insist  on,  and,  if  the 
court  should  be  of  opinion  they  were 
not  errors,  to  consent  to  waive  the 
rest.    If  the  court  thought  them  errors. 


Davies  v.  Spurling,  1  Tamlyn,  199,  1 
Buss.  &  M.  64 ;  Millar  v.  Craig,  6 
Beav.  433.  The  party  complaining 
of  errors  in  a  settled  account  should 
make  the  errors  appear  by  proof.  Bry 
V.  Cook.  15  La.  Ann.  493. 

((«)  In  reference  to  these  terms,  see 
1  Story  Eq.  Jur.  §  525;  Pitt  v.  Chol- 
monileley,  2  Ves.  Sen.  565,  566 ;  Per- 
kins r.  Hart,  11  Wheat.  237,  256. 

(;;)  Matthews  v.  Wallyn,  4  Ves. 
118  ;  Newman  v.  Payne,  2  Ves.  Jr. 
199;  Pit  V.  Cholmondeley,  2  Ves. 
Sen.  565;  Stoughton  i'.  Lynch,  2  Johns. 
Ch.  217 ;  Higginson  v.  Fabre,  3 
Desaus.  93.  Thus,  in  ordinary  cases, 
the  ride  is,  that  the  establishment  of  a 
material  mistake  is  necessary  to  in- 
duce the  court  to  give  a  decree  en- 
titling the  party  to  surcharge  and 
falsify  an  account.  But,  wliere  the 
relation  of  attorney  and  client  subsists, 
the  ordinary  rule  does  not  prevail ;  for 
there,  though  the  party  only  alleges 
generally  that  the  accounts,  as  settled, 
are  erroneous,  the  court  will,  if  suffi- 


there  would  be  good  cause  either  to    cient  cause  be  shown,  make  a  decree 


decree  an  open  account,  or  give  jilain- 
tiff  leave  to  surcharge  and  falsify. 
Rodney  v.  Hare,  Mos.  296.  See  fur- 
ther, on  the  question  of  surcharging 
and  falsifying,  Roberts  v.  Kuffin,  2 
Atk.  112;  Chambers  v.  Goldwin,  5 
Ves.  837  ;  Ex  parte  Townshend,  2  Moll. 
242;    Hickson  v.  Aylward,  3  id.   14; 


opening  tliose  accounts.  Lawless  v. 
Mansfield,  1  Drury  &  War.  557,  4  Ired. 
Eq.  113. 

{w)  Vin.  Abr.  Partners  (E),  5; 
Melioruchi  v.  Royal  Ex.  Ass.  Co.,  1 
Eq.  Abr.  8;  Gold  v.  Canham,  2  Swanst. 
325,  1  Ch.  Ca.  311.  See  Mulhollan  u. 
Eaton,  11  Curry  (La.),  291.    Payment 


562 


THE    LAW    OF    PARTNERSHIP. 


[CH.  XVI. 


true  of  a  debt  on  partnership  account ;  for  if  a  partner  avers 
that  he  has  taken  money  from  the  firm,  but  avers  also  that 
*  518  a  balance  is  still  due  to  him,  he  *  is  not  required  to  pay 
into  court  the  money  thus  taken,  unless  special  reasons 
exist  for  the  requirement,  (.t)  The  rule  is,  therefore,  applica- 
ble only  to  a  private  and  personal  debt.  It  would  hardly  be 
applied  here,  merely  on  the  authority  of  the  English  practice  ; 
but  it  rests  in  that  country  on  the  general  principle,  that  he 
who  asks  equity  must  be  ready  to  do  equity  ;  and  it  may  be 
expected  that  a  similar  rule  will  be  provided  for  here,  by  the 
rules  of  practice  of  the  courts  of  equity.  (?/) 


of  money  into  court  is  directed  wliere 
the  defendant  admits  money  to  be  in 
liis  bands  wliicli  lie  does  not  claim  as 
his  own,  and  in  which  he  admits  that 
the  applicant  is  interested.  Adams 
Eq.  850.  See,  on  this  subject,  Hosack 
V.  Rogers,  9  Paige,  468 ;  Clagett  v. 
Hall,  9  Gill  &  J.  81 ;  Contee  i'.  Dawson, 
2  Bland,  293 ;  Nokes  v.  Leppings,  2 
Phillips,  19  ;  Maddox  v.  Dent,  4  Md. 
Ch.  543. 

(x)  Foster  v.  Donald,  1  Jac.  &  W. 
252.  In  this  case,  tlie  plaintiffs  and 
the  defendant  carried  on  business 
together  in  the  north  of  J^ngland.  It 
had  been  proposed  to  dissolve  the 
partnership  ;  and  the  terms  of  dissolu- 
tion had  been  nearly  arranged,  when 
the  defendant  represented  that,  before 
finally  acceding  to  them,  he  thought  it 
proper  to  go  to  London,  for  the  purpose 
of  consulting  a  friend  residing  there. 
In  the  course  of  his  journey,  he  went 
round  to  several  customers  of  the  firm, 
in  different  parts  of  the  country,  and 
collected  of  tliem  debts  due  to  the 
partnership  to  the  amount  of  about 
2,318/.  In  one  instance,  a  debt  due  by 
himself  had  been  set  off  against  a  debt 
due  to  the  firm,  and  he  received  the 
difference.  The  bill  was  filed  for  an 
account  of  the  partnersiiip  transac- 
tions. The  defendant,  in  his  answer 
disclosing  these  facts,  stated  that  he 
believeil  the  balance  of  the  account 
would  be  in  his  favor.  Lord  Eldon  : 
"  If  a  partner,  as  partner,  receives 
money  beh)nging  to  the  firm,  and,  ad- 
mitting that  lie  has  received  it,  insists 


that  there  is  a  balance  in  his  favor, 
there  is  no  pretence  for  making  him 
pay  it  in.  But  if  he  has  received  it 
under  circumstances  from  which  you 
can  infer  that  he  had  agreed  not  to 
receive  it,  and  that  his  receiving  it 
was  contrary  to  good  faith,  then  he 
may  be  ordered  to  bring  it  into  court. 
Cases  may  happen  where  10,000/.  may 
be  due  to  him,  and  yet  he  may  have 
received  1,000/.  under  such  circum- 
stances that  he  will  not  be  allowed  to 
retain  it.  .  .  .  Though  it  is  very  true 
that  a  partner  may  receive  partnership 
effects,  and  insist  on  not  paying  in  the 
amount,  unless  all  the  other  partners 
will  pay  in  what  thej'  have  in  their 
hands,  yet  I  think  the  defendant  has 
admitted  himself  to  have  received 
these  sums  in  a  manner  in  which  he 
ought  not  to  have  received  them.  He 
must,  therefore,  pay  them  in."  See 
Kichardson  v.  The  Bank  of  England, 
4  Mylne  &  C.  165,  in  which  the  ques- 
tion is  fully  considered.  See  also  Mills 
V.  Hanson,  8  Ves.  68,  91  ;  Domville  v. 
Solly,  2  Russ.  372  ;  Toulniin  v.  Cop- 
land, 3  Younge  &  C.  648.  In  Jervis  v. 
White,  6  Ves.  738,  the  defendant  was 
ordered  to  pay  money  into  court  be- 
fore answer  in  a  case  of  gross  fraud, 
appearing  upon  affidavit  by  the  plain- 
tiff, and  by  a  corresponding  affidavit 
by  the  defendant.  Daniel's  Ch.  Pr. 
(Perkins' ed.)  2024;  Vann  i'.  Barnett, 

2  Bro.  C.  C.  158 ;  Costeker  v.  Horrox, 

3  Younge  &  C.  530. 

(i/)  Under  section  244  of  the  New 
York  Code  of  Procedure,  as  amended 


CH.  XVI.]  OF    AN    ACCOUNT.  563 


SECTION     III. 


HOW   AN   ACCOUNT   SHOULD   BE   TAKEN- 

*As  to  the  manner  of  taking  an  account,  the  first  *  519 
remark  to  be  made  is,  that  the  parties  themselves  may 
regulate  this,  and  the  court  will  respect  their  agreement,  (z) 
This  may  be  contained  in  the  original  articles,  or  in  subsequent 
agreements.  Or  it  may  be  derived  from  their  practice.  Where 
partners  have,  for  a  considerable  time,  settled  their  accounts  in 
a  certain  way  and  upon  certain  terms,  it  is  obviously  reason- 
able to  infer  that  this  was  their  agreement  and  understanding. 
Equity  will  draw  this  inference,  and  direct  the  account  to  be 
taken  in  a  similar  manner,  (a)  Indeed,  this  evidence  from 
custom,  or  from  conduct  and  acquiescence,  is  even  stronger 
than  tiiat  of  expressed  agreement.  For  if  there  be  certain 
terms  agreed  upon,  and  the  accounts  have  been  kept  in  disre- 
gard of  them  for  a  considerable  time,  and  without  objection, 
we  have  seen  that  the  court  will  treat  it  as  a  waiver  of  the 
terms  by  the  party  whom  they  benefit,  or  as  a  subsequent 
agreement  cancelling  them.  (6)     And  the  accounts  need  not 

in  July,  1851,  a  partner,   who  by  his  though   he    swears   tliose    sums    were 

answer  admits  that  lie  has  in  liis  hands  discharged,  yet  it  is  still  a  ground  for 

partnership  funds,  which  on  his  state-  directing  an  account.    Brace  y.  Taylor, 

nient  appear  to  belong  to  the  adminis-  2  Atk.  253. 

trators  of  his  deceased  partner,  will  be  (z)  See  ante,  p.  *  302,  note  (s). 
ordered  to  pay  over  such  funds  to  (a)  Jackson  v.  Sedgwick,  1  Swanst. 
them,  although  there  are  outstanding  460,  469,  per  Lord  Eldon :  "  Partner- 
contested  claims  against  the  firm,  and  ship  accounts  may  be  taken  in  various 
it  has  claims  to  enforce  which  will  wajs.  The  distinction  is,  tliat,  in  the 
require  time  and  disbursements.  Tiie  absence  of  a  special  agreement,  the 
order  for  such  payment  will,  however,  accounts  must  be  taken  in  the  usual 
require  the  administrators  to  give  se-  way  ;  but  wiiere  a  special  agreement 
curit^'  to  the  surviving  partner  to  con-  has  been  made,  it  must  be  abided  by, 
tribute  to  the  outstanding  claims,  if  provided  that  the  parties  have  acted 
established,  and  to  pay  their  share  of  on  it ;  if  not,  I  always  understood  that 
the  expenses  that  may  be  incurred  in  the  articles  are  read  in  this  court  as 
prosecuting  the  demands  of  the  firm,  not  containing  the  clauses  on  which 
The  surviving  partner  will  also  be  the  parties  have  not  acted." 
permitted  to  retain  sufficient  to  cover  (/')  Geddes  t?.  Wallace,  2  Bligh,  270; 
such  claims  against  the  deceased  part-  Petty  v.  Janeson,  6  Madd.  146 ;  Const 
ner  as  are  contested  in  the  suit  in  v.  Harris,  Turn.  &  lluss.  496,  523 ; 
which  the  order  is  made.  4  Sandf.  Jackson  v.  Sedgwick,  1  Swanst.  460, 
642.  If  a  defendant  by  his  answer  469. 
acknowledges  any  particular  sum  due, 


564 


THE   LAW   OP   PARTNERSHIP. 


[CH.  XVI, 


be  signed  by  the  parties,  if  there  be  other  evidence  of  acquies- 
cence. The  possession  of  the  account  and  vouchers  for  a  long 
time,  without  objection,  will  be  deemed  evidence  of  acquies- 
cence ;  not  only  from  its  intrinsic  proliability,  but  because  the 
other  parties  have  a  right  to  know  and  meet,  at  an  early  period, 

any  objections  which  exist,  or  else  to  go  on  upon  the 
*  520    assumption  that  none  exist,  (c)     Hence,  in  *  a  leading 

American  case,  it  was  held^  that  a  partner  would  be  deemed 
to  acquiesce  in  any  statement  of  account  to  which  he  did  not 
object  within  a  reasonable  time,  (f?) 


(c)  Willis  V.  Jernegan,  2  Atk.  251. 
The  plaintiff's  counsel  objected  to  tlie 
defenrlant's  plea  of  a  stated  account,  on 
the  ground  tliat  it  was  not  signed  by 
the  parties.  Lord  Hardwicke  :  "  Tiiere 
is  no  absolute  necessity  that  it  should 
be  signed  by  the  parties  who  have 
mutual  dealings,  to  make  it  a  stated 
account ;  for  even  where  there  are 
transactions  supposed  between  a  mer- 
chant in  England  and  a  merchant  be- 
yond sea,  and  an  account  is  trans- 
mitted here  from  the  person  who  is 
abroad,  it  is  not  the  signing  which 
will  make  it  a  stated  account,  but  the 
person  to  whom  it  is  sent,  keeping  it 
by  him  any  length  of  time,  without 
making  any  objection  which  shall  bind 
him,  and  prevent  his  entering  into  an 
open  account  afterwards."  Id.  252. 
Tickel  V.  Short,  2  Ves.  Sen.  239 ;  Morris 
V.  Harrison,  Colles  P.  C.  157;  I  Story, 
Eq.  Jur.  §  526  ;  2  Dan.  Ch.  Pr.  7U2 ; 
Jessup  V.  Cook,  1  Halst.  436  ;  Lamalere 
V.  Caze,  1  Wash.  C.  C.  430,  2  P.  A. 
Browne,  128  ;  Murray  v.  Toland,  3 
Johns.  Ch.  569;  Wilde  v.  Jenkins, 
4  Paige,  481  ;  Freeland  v.  Heron,  7 
Cranch,  147  ;  Codman  v.  Rodgers,  10 
Pick.  112.  But  in  Clancarty  v.  La- 
touche,  1  Ball  &  B.  428,  it  was  held,  by 
Lord  Chancellor  Manners,  that  acqui- 
escence alone,  in  accounts  furnished, 
does  not  amount  to  a  settlement,  al- 
though it  must  have  considerable 
effect.  This,  however,  was  in  refer- 
ence to  an  account  which  was  usurious  ; 
and  whicii,  even  if  expressly  concurred 
in,  would  have  been  set  aside.  Where 
an  account  relied  on  as  a  stated  ac- 


count has  not  been  signed,  it  is  not 
enough  to  prove  the  delivery  of  it. 
The  acquiescence  of  the  other  ])arty 
in  it  must  also  be  proved.  Irving  v. 
Young,  1  L.  J.  Ch.  108.  In  the 
Attorney-Gener.il  v.  Brooksbank,  2 
Younge  &  J.  42,  the  chief  baron  of 
the  exchequer  expressed  an  opinion 
that  an  account  stated  must  be  actu- 
ally signed  by  the  parties,  to  enable 
the  defendant  to  plead  it  in  bar  to  a 
suit  for  an  account  ;  although  he 
seemed  to  suppose  an  account  not 
signed  might  be  a  good  defence,  if  set 
up  in  the  answer  and  proved  at  the 
hearing.  Commenting  on  this.  Chan- 
cellor Walworth  says  :  "  That  opinion 
is  clearly  not  law  ;  and  it  is  directly 
opposed  to  that  of  Lord  Hardwicke,  in 
Willis  V.  Jernegan,  2  Atk.  252,  where 
he  says,  in  express  terms,  that  it  is  not 
necessary  that  the  account  should  be 
signed  by  the  parties."  Heartt  v. 
Corning,  3  Paige,  566. 

(t/)  Heartt  v.  Corning,  3  Paige,  566. 
And  see  1  Story,  Eq.  Jur.  §  526 ;  Com. 
Dig.  Ch.  2  A.  3 ;  Lamalere  v.  Caze,  1 
Wash.  C.  C.  436  ;  Kiilam  v.  Preston,  4 
Watts  &  S.  14.  In  Lamalere  v.  Caze, 
the  court  says  :  "  To  constitute  a  set- 
tled account,  all  the  parties  must  con- 
sent to  it;  all  must  be  bound  by  it,  or 
none  are.  This  consent  must  be  either 
expressed  or  implied.  I  am  inclined 
to  think,  that  if,  after  dissolution,  one 
partner  were  to  state  the  account,  and 
send  it  to  the  other,  who  should  by 
his  conduct  show  his  acquiescence,  by 
retaining  it  for  a  considerable  time, 
without   objections,  that  he  might  be 


CH.  XVI.]  OP   AN    ACCOUNT.  565 

*  But  the  terms  of  an  account,  whether  proved  ex-  *  521 
pressly  or  by  implication,  are  not  conclusive.  Even  if 
the  articles,  or  subsequent  agreements,  or  practice  with  acqui- 
escence, or  all  together,  would  lead  to  the  conclusion  that  certain 
terms  had  been  agreed  upon,  still,  if  fraud,  oppression,  or 
uncompensated  and  extreme  injury,  can  be  shown,  the  court 
will  direct  the  account  to  be  stated  upon  premises  more  consist- 
ent with  justice,  (e)  It  may  be  said,  in  general,  that  whenever 
on  a  dissolution  questions  arise  among  the  partners  as  to  the 
division  of  the  property  or  profits,  these  questions  fall  within 
the  jurisdiction  and  practice  of  equity,  (^ee) 

If  a  decree  for  an  account  issues,  and  the  case  is  referred  to 
a  master  to  take  an  account,  his  method  of  proceeding  will  be 
governed  very  much  by  the  rules  and  custom  of  his  own  court. 
In  general,  the  parties  must  produce  before  him  all  books, 
vouchers,  and  evidence,  bearing  upon  the  general  account  or 
any  special  items  ;  and  he  may  examine  not  only  witnesses,  but 
all  the  parties,  and  should  examine  any  party  at  the  suggestion 
or  desire  of  any  opposite  party,  unless  this  be  obviously  and 
certainly  unreasonable.  (/) 

bound  by  that  statement,  as  well  <as  the  dertaking  sufficient."  And  see  Irving 
other,  and  that  this  action  for  the  bal-  v.  Young,  1  Sim.  &  Stuart,  333.  And 
ance  might  then  be  maintained."  But  see  further,  on  this  question,  Attwater 
in  Kiliam  v.  Preston,  Kennedy,  J.,  de-  v.  Fowler,  1  Edw.  417;  Story  Eq.  PI. 
livering  the  opinion  of  the  court,  and  §801;  Cooper  Eq.  PI.  278,  279;  Mo- 
deciding  that  a  partnership  account  ravia  v.  Levy,  2  T.  R.  483,  note  ;  Casey 
stated  by  one  partner  after  the  disso-  v.  Brush,  2  Caines,  296 ;  Ozeas  v. 
lution,  and  presented  to  the  other,  wlio  Johnson,  1  Binn.  191,  and  cases  in 
retains  it   in  his  possession  for  more  previous  note. 

than  a  year  without  objecting  to  it,  is  (e)  Oldaker    v.    Lavender,    7    Sim. 

not  sufficient  evidence,  upon  which  a  239;  Story  on  Part.  §  206;  Collyer  on 

recovery  of  the  balance  appearing  to  Part.  (Perkins'  ed.)  b.  2,  ch.  2,  §  225. 
be  due  upon  it  maybe  had,  said  :  "It  (ee)  See,  for   cases    in    which    the 

would   seem,  from  the  weight   of  au-  English  court  of  chancery  took  juris- 

thority,  that  there  must  not  only  be  a  diction    of   such    questions.    Wood    v. 

final   settlement   and   balance    struck,  Scoles,  Law  Rep.  1  Cli.  369 ;  Ibbotsara 

but  an  express  promise  to  pay ;  other-  i>.  Elam,  Law   Rep.  1  Eq.  188;   Hom- 

■wise  the  action  cannot  be  maintained,  fray   v.   Fothergill,   Law    Rep.    1    Eq. 

Foster  v.  Allanson,  2  T.  R.  479  ;  Fro-  5G7. 

mont  r.  Coupland,  2  Bing.  170,  9  Eng.  (/)  Ferry  v.  Henry,  4  Pick.  75; 
Com.  Law,  367.  The  only  authority  Glyn  v.  Caulfield,  6  Eng.  L.  &  Eq.  1, 
to  the  contrary  that  I  am  aware  of  is  15  Jur.  807  ;  Toulmin  v.  Copland,  3 
a  nisi  priits  decision  of  Gibbs,  C.  J.,  in  Younge  &  C.  655 ;  Beckford  v.  Wild- 
Rackstraw  v.  Imber,  Holt,  N.  P.  Cas.  man,  16  Ves  438.  In  one  case,  where 
S68,  3  Eng.  Com.  Law,  132,  wliere  a  surviving  partner,  who  had  posses- 
he  says  he  considers   an  implied  un-  sion  of  the  partnership  books,  wilfully 


666 


THE    LAW    OF    PARTNERSHIP. 


[CH.  XVI. 


*  522  *  Generally,  the  master  should  begin  from  the  last  ac- 
count which  was  closed  and  settled,  taking  the  balance 
thereof  as  his  basis  ;  unless,  by  order  of  court,  or  for  reasons 
shown,  he  goes  behind  this  account.  If  there  be  no  settled 
account,  ho  must  supply  the  want  of  one,  by  beginning  with  the 


and   fraudulently   refused  to  produce 
them,    to    have    the    accounts    taken 
under  a  decree  for  tliat  purpose,  the 
master,  in   the  absence  of  other  evi- 
dence, charged  ten  percent  per  annum 
on  the  capital  stock,  as  the  net  gains 
made    during    the    partnership,    and 
debited   the  surviving  partner  with  a 
moiety  thereof.    The  court  held  that  the 
master  was  justified  in  so  doing,  and 
made  a  decree  accordingly.    Walmsley 
V.  Walmsley,  3  Jones   &  La  T.  556. 
And  in  another  case,  where  the  defend- 
ant denied  charges  in  the  bill  of  fraud 
and  misconduct,  and  explained  others 
away,  alleging  his  inabilit3'  to  put  in 
a  full  answer,  by  reason  that  plaintiff 
withheld    imi)roperly    the    partnership 
books,  the  court  refused  (but  without 
prejudice   to    future    application)    the 
injunction  prayed  by  the  bill.     Little- 
wood   V.   Caldwell,   11    Price,  97.      In 
1811,  A.  &  B.  entered  into  a  partner- 
ship, which  continued  till  1818,  when 
it  was  dissolved,  and  the  affairs  wound 
up,   except    as    to    some    outstanding 
debts.     In  1820,  a  deed  of  release  was 
executed,    from     which     these   debts 
were    excluded.      Partnership    books 
relating  generally  to  these  and  other 
debts  were  all  along  suffered  to  remain 
in    A.'s   hands.     All   the   outstanding 
debts  were  subsequently  settled.      In 
1830,   B.    was   declared  bankrupt,  till 
which  time   the    books    were    never 
called  for  by  B.     Held,  that  A.  &  B., 
nevertheless,     continued     tenants     in 
conmion  in  respect  of  them,  and  that 
the  length  of  time  did  not  affect  that 
relationship ;  and,  therefore,  altliough 
there  was  no  charge  of  fraud  in  the 
settled  account,  yet  the  commissioner 
had  jurisdiction  to  call  A.  before  him, 
and  examine  him  and  the  books  rela- 
tive   to    the   former   dealings   of    the 
bankrupt.    Ex  parte  Trueman,  1  Deac. 
&  Ch.  464  ;  Ex  parte  Levett,  1  Glyn  & 


J.  185.  So,  the  solicitor  of  the  pur- 
chaser of  an  estate  from  a  bankrupt 
has  been  ordered  to  attend  (but  with- 
out prejudice  to  privilege)  for  the  pur- 
pose of  being  examined.  Ex  parte 
Hodgson,  2  Glyn  &  J.  21.  But  where 
a  partnership  has  expired  by  efflux  of 
time,  and,  in  a  suit  for  account,  &c.,  a 
receiver  has  been  appointed  before 
decree,  the  court  will  not  compel  de- 
fendant (the  former  managing  partner) 
to  deliver  up  to  receiver,  for  the  pur- 
pose of  making  out  bills  of  costs,  part- 
nership books  and  accounts  which 
have  remained  in  his  hands,  and  title- 
deeds  belonging  to  a  third  person, 
which  came  into  the  possession  of  the 
copartners  as  solicitors ;  such  defend- 
ant offering  the  receiver  free  access 
thereto,  and  to  assist  in  making  out 
such  bills.  Dacie  v.  John,  McClel. 
206,  13  Price,  446.  Partnership  ac- 
counts having  been  directed  to  be 
taken  by  the  masters  in  a  case  in 
which  some  of  the  books  have  been 
lost,  the  court  directed  the  master,  if 
it  should  appear  in  taking  the  account 
that  any  necessary  books,  &c.,  should 
be  wanting,  to  report  the  same  spe- 
cially, and  whether  in  consequence  of 
the  want  of  such  books  he  was  unable 
to  proceed  satisfactorily  in  taking  the 
account.  Millar  v.  Craig,  6  Beav.  438. 
See  further,  in  reference  to  accounts  in 
partnership  books,  Heartt  v.  Corning, 
3  Paige,  566  ;  Caldwell  v.  Leiber,  7  id. 
483;  Simms  I-.  Kirtley,  1  T.  B.  Mon- 
roe, 80 ;  Stoughton  v.  Lynch,  2  Johns. 
Ch.  217,  218;  Allen  v.  Coit,  6  Hill 
(N.  Y.),  318 ;  Withers  v.  Withers,  8 
Peters,  359;  United  States  Bank  v. 
Binney,  5  Mason,  188;  Phillips  v. 
Turner,  2  Dev.  &  B.  Eq.  123  ;  Fletcher 
V.  Pollard,  2  Hen.  &  Munf.  544  ;  Brick- 
house  V.  Hunter,  4  id.  363  ;  K3le  v. 
Kyle,  1  Graft.  52G ;  Hallett  v.  Hallett, 
2  Paige,  432. 


CH,  XVI.] 


OP   AN    ACCOUNT. 


567 


partnersliip,  and  stating  the  account  according  to  ordinary  rules 
and  usage,  unless  tliey  are  controlled  by  some  agreement  of  the 
parties,  or  some  peculiar  circumstances,  which  he  will  be 
careful  to  report.  (^)  And  he  must  *  continue  the  ac-  *  523 
count  to  the  day  on  which  he  makes  it,  unless  there  has 
been  a  previous  dissolution.  In  that  case,  he  will  continue  it 
to  the  dissolution,  and  either  stop  there,  or  from  that  day 
begin  a  new  account;  for  the  dissolution  has  terminated  the 
partnership,  and  the  account  thereafter  is  not  an  account  be- 
tween partners.  (//)     And  if  there  be  outstanding  items  to  be 


(//)  Beak  v.  Beak,  Cas.  temp. 
Finch,  190.  In  this  very  early  case 
on  the  question,  a  bill  was  brought  to 
liave  an  account  of  the  estate  of  Elias 
Beak,  deceased,  and  of  a  stock  of 
money  by  him  broujjht  into  trade  with 
the  defendant,  Arnold  Beak,  his 
brother,  in  the  year  1648.  The  bill 
set  forth  that  in  April,  1G62,  a  balance 
was  made  ;  that  from  the  year  1G48  a 
joint  trade  was  carried  on  between  the 
brothers,  till  February,  1673;  that  sev- 
eral balances  were  made  in  loose  pa- 
pers, and  "  a  particular  balance  in 
February,  1673,"  when  all  the  particu- 
lars were  agreed  between  them,  except- 
ing only  an  error  of  a  small  amount. 
It  appears,  however,  from  the  further 
report  of  the  case,  that  Elias  made  his 
will  in  March,  1667,  and  soon  after 
died.  It  was  admitted  on  all  sides, 
that  an  account  ought  to  be  had  of  the 
estate  in  partnership;  but  the  question 
was  about  the  time  it  should  begin, 
and  how  long  it  should  continue.  The 
counsel  for  the  plaintiffs  insisted  on  an 
account  stated  in  the  year  1062,  and 
that  it  ought  to  proceed  from  that 
time  without  any  retrospect;  and  that 
the  stock  of  Elias  might  not  be  carried 
on  in  a  pretended  partnersliip  after  his 
death,  but  that  it  might  be  accounted 
as  his  separate  estate  from  that  time. 
The  counsel  for  the  defendant  argued 
that  the  account  of  the  joint  trade 
ought  to  be  carried  on  till  all  the 
accounts  relating  to  the  partnership 
could  be  settled  and  made  even.  The 
court  decreed  an  account,  and  that  if 
the  master  should  find  a  balance  con- 


cerning the  j(jint  trade,  either  in  1662, 
or  in  1673,  or  at  any  other  time,  then 
he  was  to  take  it  from  such  time ; 
otherwise,  it  must  take  its  rise  from  the 
year  1048,  when  the  partnership  first 
began,  and  must  be  carried  on  to  the 
death  of  Elias,  but  not  afterwards. 
For  the  plaintiff  ought  not  to  be  con- 
cluded by  any  new  or  growing  account 
in  trade,  but  only  is  to  have  an  account 
of  what  was  then  in  partnership,  and 
the  j)roceeds  thereof  till  got  in. 

(k)  Booth  V.  Parks,  1  Molloy,  465, 
per  Sir  A.  Hart,  Lord  Chancellor: 
"  There  can  be  no  partnersliip  without 
existing  partners.  It  is  not  correct  to 
say,  that  the  survivor,  carrying  on  the 
business  for  the  purpose  of  winding  it 
up,  carries  on  a  partnership-trade : 
he  only  deals  with  the  effects  finally  ex 
necessitate,  and  rather  in  the  character 
of  a  trustee.  If  he  continues  it  as  a 
trade,  it  is  at  his  own  risk,  liable  to  the 
option  of  accounting  for  profits,  or 
being  charged  with  interest  upon  the 
deceased  partner's  share  of  the  surplus, 
as  taken  at  his  death."  In  Dyer  v. 
Clark,  5  Metc.'575,  Shaw,  C.  J.,  says  : 
"  The  time  of  the  dissolution  fixes  the 
time  at  which  the  account  is  to  be 
taken,  in  order  to  ascertain  the  relative 
rights  of  the  partners,  and  their  respec- 
tive shares  in  the  joint  fund.  The 
debts  may  be  numerous,  and  the  funds 
widely  dispersed  and  difficult  of  collec- 
tion;  and,  therefore,  much  time  may 
elapse  before  the  affairs  can  be  wound 
up,  the  debts  paid,  and  the  surj)lus 
put  in  a  condition  to  be  divided.  But 
whatever  time  may  elapse  before  the 


568 


THE    LAW    OF    PARTNERSHIP. 


[cH.  xvr. 


settled  afterwards,  when  they  are  settled  they  must  be  referred 
back  to  that  period,  {i)  The  same  principles  of  appropriation 
of  payment  which  have  already  been  spoken  of  will  be  applied 
to  the  account ;  the  most  general  one  being  that  the  earliest 
payment  shall  be  applied  to  the  earliest  debt,  and  the  first 
sum  paid  in  by  a   customer  who  deposits  and  draws  is  the  first 

sum  drawn  out.  (j) 
*  524        *  In  regard  to  the  terms  of  the  account  and  settlement, 

and  the  charges,  credits,  or  allowances  to  be  made,  it 
has  been  conceded,  by  the  highest  authority,  that  specific  rules 
are  of  little  use,  because  the  justice  of  every  case  requii-es  that 
its  peculiar  facts  and  merits,  the  nature  of  tlie  trade,  the  con- 
duct of  the  parties,  and  all  the  various  circumstances  which 
affect  the  rights  of  the  parties,  must  be  taken  into  consideration 
in  determining  what  they  are  or  should  be.  In  our  note  will 
be  found  many  cases  in  which  special  circumstances  were 
considered  by  English  and  American  courts.  (A;)     One  rule, 


final  settlement  can  be  practically 
made,  tliat  settlement,  when  made, 
must  relate  back  to  the  time  when  the 
partnership  was  dissolved,  to  deter- 
mine the  relative  interests  of  the  part- 
ners in  the  funds." 

(i)  Stoujjhton  v.  Lynch,  2  Johns. 
Ch.  209 ;  Dyer  v.  Clark,  5  Mete.  575. 
And  see  Tyng  v.  Thayer,  8  Allen,  391 ; 
Brinley  v.  Kupfer,  6  Pick.  179;  Wil- 
liams V.  Henshaw,  11  id.  79,  12  id.  378; 
Dickinson  v.  Granger,  18  id.  315,  -317. 

ij)  Clayton's  Case,  in  Devaynes 
i;.  Noble,  1  Meriv.  572 ;  Bodenham  v. 
Purchas,  2  B.  &  Aid.  39 ;  Pemberton  v. 
Oakes,  4  Buss.  154 ;  Toulmin  v.  Cop- 
land, 3  Younge  &  C.  625.  In  this  last 
case,  it  was  decided  that  where  persons 
carry  on  business  in  the  nature  of  a 
banking  business,  —  as,  for  instance, 
that  of  navy  agents,  —  and  a  change 
takes  place  in  the  house  by  the  death  or 
retirement  of  a  partner,  on  taking  the 
partnersliip  accounts,  the  rule  in  Clay- 
ton's Case  will  be  held  prima  facie  to 
apply  as  well  between  the  partners 
themselves  as  between  tlie  partners 
and  third  persons ;  and  there  must  be 
strong  evidence  to  rebut  the  presump- 
tion as  to  that  mode  of  taking  the  part- 


nership  accounts.      Therefore,   where 

A.  and  B.  were  partners  as  navy 
agents,  and  A.,  becoming  a  lunatic, 
that  partnership  was  dissolved,  and 
the  business  was  carried  on  upon  the 
same  terms  by  B.  and  C,  and  B.  died, 
and  the  accounts  of  both  partnerships 
were  unsettled,  —  held,  that  the  ac- 
counts of  A.  and  B.  must  be  taken  on 
the  foundation  of  the  rule  in  Clayton's 
Case,  although  C,  in  order  to  estab- 
lish an  agreement  to  the  contrary,  set 
up  certain  affidavits  made  by  B.,  in  a 
suit  brought  against  him  by  the  com- 
mittee of  the  lunatic,  in  which  he 
alluded  to  an  understanding  between 

B.  &  C.  (which,  in  some  instances,  had 
been  acted  upon),  that  the  advances 
made  to  the  customers  of  their  firm 
should  be  repaid  before  any  portion  of 
the  moneys  paid  in  by  those  customers 
was  applied  in  liquidation  of  their  debts 
due  to  tlie  original  firm. 

(k)  Willett  f.  Blanford,  1  Hare,  253, 
269,  per  Sir  James  Wigram,  V.  C. :  "I 
have  again  considered  the  subject,  and 
read  the  cases  to  whicli  I  was  referred  ; 
and  I  remain  of  the  opinion  I  ex- 
pressed at  the  close  of  the  argument, 
that  there  is  no  rule  of  this  court  ap- 


CH.  XVI.] 


OF    AN    ACCOUNT. 


569 


already  stated,  is  of  so  much   practical  importance,  that  we 
repeat  it  here  ;  it  is,  that  a  partner  settling  the  business,  as  a 


plicable  alike  to  all  cases  ;  and  that 
there  is  no  rule  which  is  so  estahlished 
or  fieneral  in  its  apj)li('ation,  that  it  is 
to  be  taken  to  be  the  general  rule, 
until  circumstances  are  shown  which 
displace  it.  Tlie  facts  of  each  case 
must  be  fully  brought  under  the  view 
of  the  court,  before  it  can  be  in  a  posi- 
tion to  state  what  justice  to  the  party 
seeking  its  protection  may  require, 
with  due  regard  to  the  interest  of  other 
parties.  No  one  can  attend  to  the 
elaborate  judgments  of  Lord  Eldon  in 
Crawshay  v.  Collins,  Brown  v.  De 
Tastet,  and  even  in  Cook  v.  Colling- 
ridge,  without  being  satisfied  that  his 
mind  saw  the  impossibility  of  subject- 
ing cases  so  various  as  those  of  trading 
partnerships  to  any  universal  rule. 
The  decrees  in  those  cases,  that  of  Sir 
William  Grant  in  Featherstonhaugh  v. 
Fenwick,  and  the  ju<lgment  and  de- 
cree of  Lord  Cottenham  in  Wedder- 
burn  V.  Wedderburn,  confirming  Lord 
Langdale's  decree  in  the  same  case,  all 
concur  to  establish  the  soundness  of 
Lord  Eldon 's  opinions  ;  and  I  think  it 
is  impossible  to  consider  the  subject, 
abstracti'dly  from  authority,  witliout 
feeling  satisfied  that  justice  would  be 
endangered  by  an  attempt  to  subject 
all  cases  of  this  description  to  any  uni- 
form rule."  [Where  one  firm  enters 
into  copartnership  with  a  third  person 
as  a  distinct  firm,  they  are  all  in  the 
new  firm  as  individuals,  and  the  profits 
must  be  divided  equally  amongst  all. 
Warren  v.  Smith,  9  Jur.  n.  s.  168.  If 
no  valuation  of  the  services  of  the 
respective  partners  is  agreed  upon, 
none  can  be  made  in  settling  the  ac- 
count, however  much  they  may  differ 
in  value.  Kniser  v.  Wilhelm,  2  Mo. 
Ap.  596.  A.,  the  partner  of  B.,  having 
charge  of  the  firm  business  at  a  certain 
place,  employs  a  firm,  of  which  he  is 
also  a  member,  to  conduct  it  on  com- 
mission. Accounts  are  rendered  to 
B.,  who  makes  no  objection.  A.  also 
sells  goods  of  one  firm  to  the  other 
firm,  with  notice  to  B.,  and  at  full  mar- 


ket value.  B.  cannot,  after  dissolution 
and  settlement,  demand  an  account  of 
A.'s  share  of  the  commission ;  nor  is 
A.  to  account  for  profits  received  by 
him  as  partner  in  the  purchasing  firm, 
although  said  firm  takes  the  goods  to 
fill  contracts  for  delivery  at  a  larger 
price  than  they  pay  for  it.  Fuch  v. 
Blakiston,  Sup.  Ct.  Penn.,  15  Alb.  L.  J. 
288.  An  attorney  at  law,  who  is  a 
partner  in  a  commercial  firm,  cannot 
charge  against  his  firm  commissions 
for  collecting  accounts  due  it.  Van- 
duzer  v.  McMillan,  37  Ga.  299.  In 
making  up  accounts  between  partners, 
presumptions  are  against  those  who, 
by  fraud  or  negligence,  embarrass  the 
settlement ;  and  it  will  be  the  duty  of 
the  master,  in  such  case,  to  protect  the 
firm.  Harvey  v.  Varney,  104  Mass. 
436.  Where  partners  are  to  share 
equally,  and  on  dissolution,  after  a 
losing  business,  one  is  found  to  have 
contributed  more  than  the  other  to 
the  capital,  the  loss  must  be  shared 
equally,  notwithstanding  the  inequal- 
ity of  contribution.  Nowell  v.  Novvell, 
L.  R.  7  Eq.  538.  Articles  between 
C,  W.,  B.,  &  S.  provided  that  C.  and 
W.  should  contribute  the  whole  capital 
in  unequal  proportions  ;  that  C.  should 
contribute  "  such  terms  as  he  may  be 
able  to  give ;  "  that  \V.,  B.,  &  S.  should 
each  contribute  all  their  time  to  the 
business  ;  that  each  partner  should  re- 
ceive one-fourth  of  the  net  profits ;  and 
that  C.  and  W.  should  receive  interest 
on  the  capital  contributed  by  them. 
The  business  resulted  in  loss,  and  the 
firm  was  dissolved.  It  was  lield,  that 
the  capital  constituted  a  debt  of  the 
firm,  to  which  all  the  partners  were 
obliged  to  contribute  equally  ;  and  that, 
one  of  them  being  insolvent,  the  loss 
was  to  be  borne  equally  by  the  other 
three.  Whitcomb  v.  Converse,  119 
Mass.  38.  A.,  the  owner  of  an  estab- 
lished business,  agrees  with  B.  that  the 
latter  shall  receive  a  certain  percentage 
of  the  profits,  annually,  up  to  $5,000. 
In  accounting,  A.  cannot  charge  profit 


570 


THE   LAW   OF    PARTNERSHIP. 


[CH.  XVI. 


surviving  or  remaining  partner,  is  looked  upon  as  a  trustee,  and 
the  rules  of  equity  devised  to  secure  the  faithful  discharge  of 
a  trust  are  all  of  them  applicable  to  him.  (/)  In  a  case  in 
Louisiana,  it  is  said  that  the  correct  rule  in  taking  an  account 
between  partners  is  to  ascertain  what  each  has  contributed, 
and  first  to  make  them  equal,  and  then  divide  the  balance  of 
the  proceeds.  {II) 

A  sale  is  sometimes  decreed  as  a  preliminary  proceeding, 
or  a  means  for  making  an  account;  and,  in  some  instances,  a 


and  loss,  with  interest  on  capital,  or  on 
old  business  debts,  or  with  B.'s  salary. 
But  he  may  charge  depreciation  of 
plant ;  and,  if  the  business  is  sold  at  an 
advance  above  the  estimated  value  at 
the  time  of  the  agreement,  B.  has  no 
right  to  a  percentage  on  the  difference. 
Rishton  v.  Grissell,  L.  R.  5  Eq.  326. 
When  a  dissolution  takes  place  under 
such  circumstances  that  one  partner, 
who  has  paiil  a  bonus,  is  in  fact  a  loser 
by  failure  of  consideration,  the  court 
will  consider  this  loss  as  an  element  of 
the  account.  Atwood  v.  Maude,  L.  R. 
3  Ch.  369;  MacKenna  v.  Parkes,  36 
L.  J.  866  ;  Wilson  i'.  Johnstone,  L.  R. 
16  Eq.  606.  But  see  Carleton  v.  Cum- 
mings,  51  Ind.  478.  Where  A.  and  B. 
enter  into  a  copartnership  for  the  pur- 
pose of  a  commission  and  warehouse 
business,  A.  to  furnish  the  buildings 
and  fixtures,  and  B.  to  keep  the  books 
and  to  give  his  time  and  talents  to  the 
business,  B.  may,  on  his  own  account, 
procure  other  houses  for  storage,  if  A. 
refuses,  and  the  firm  business  is  not 
neglected.  And,  if  in  such  case  the 
managing  partner  dies,  his  estate  will 
be  entitled  to  share  in  the  profits  upon 
storage  earned  in  his  lifetime,  but  not 
collected  till  after  his  death,  deducting 
the  actual  expenses  accruing  after  the 
decease.  And,  if  the  proceeds  of  sales 
are  not  called  for  for  twelve  years,  the 
estate  of  the  deceased  partner  will  be 
entitled  to  a  decree  for  his  proportion 
thereof.  Farnell  v.  Robinson,  Sup.  Ct. 
Ga.  1877,  4  L.  &  Eq.  Reptr.  13.  As  to 
interest,  see  ante,  p.  *  230.  When,  after 
a  dissolution,  the   continuing  partner 


carries  on  the  business  with  the  part- 
nership stock  pending  settlement,  he 
will  not  be  required  to  account  for 
profits  made  subsequent  to  dissolution, 
if  at  that  time  the  retiring  partner  had 
no  interest  in,  but  was  in  debt  to,  the 
firm.  Taylor  v.  Hutchinson,  25  Gratt. 
(Va.)  536.  On  a  bill  against  surviv- 
ing partners  for  an  account,  they 
should  be  charged  with  the  value  of 
the  assets  as  likely  to  be  realized  on 
reasonable  diligence  in  the  disposition 
thereof,  and  not  with  their  value  as  of 
the  date  of  the  decease.  Moore  v. 
Huntington,  17  Wall.  (U.  S.)  417. 
The  surviving  partner  may  be  allowed 
for  expenditure  not  strictly  on  partner- 
ship account,  if  made  in  accordance 
with  the  previous  practice  of  the  firm, 
and  the  business  has  been  continued  at 
request  of  the  deceased  partner.  Til- 
lotson  V.  Tillotson,  34  Conn.  355.] 

(/)  Cook  V.  Collingridge,  Jac.  607, 
6-22,  2  Fonb.  Eq.  186;  Simpson  v. 
Feltz,  1  McCord  Ch.  213,  220;  Honore 
V.  Colmesnil,  7  Dana,  201  ;  Beacham  v. 
Eckford's  Exec,  2  Sandford's  Ch.  116; 
West  V.  Skip,  2  Ves.  Sen.  242.  [Where, 
after  dissolution  by  death,  cotton  held 
on  commission  was  sold  by  the  surviv- 
ing partner,  and  the  proceeds  were 
not  claimed  within  twelve  years,  it  was 
held  that  the  estate  of  the  deceased 
partner  was  entitled  to  its  proportion 
of  such  unclaimed  proceeds.  Parnell 
V.  Robinson,  4  L.  &  Eq.  Reptr.  13,  Sup. 
Ct.  Ga.  See  also  Keye's  Appeal,  65 
Penn.  St.  196.] 

(//)  Frigerio  v.  Crottes,  20  La.  Ann. 
351. 


CH.  XVI.]  OF   AN   ACCOUNT.  571 

sale  will  be  ordered  on  mere  motion,  (m)  "We  have  already 
adverted  to  the  fact,  tliat  a  sale  is,  generally  speaking,  that 
method  of  disposing  of  the  property,  or  facilitating  its 
division,  which  is  least  open  *  to  the  danger  of  fraud  or  *  525 
mistake,  and  is,  therefore,  much  favored.  Perhaps  the 
rule  may  be  stated  thus :  The  presumption  is  always  in  favor  of 
a  sale  ;  the  parties  may  agree  to  substitute  something  else,  and 
the  court  will  sanction  such  an  agreement,  unless  it  is  open  to 
obvious  and  decided  objection,  as  tainted  with  fraud  or  oppres- 
sion, or  leading  to  injustice,  (w)  But  no  party  has  a  right  to 
insist  on  taking  the  property  at  a  valuation,  without  the  consent 
of  the  other  ;  nor  may  he  insist  as  a  matter  of  course  upon  the 
division  of  the  property  m  specie,  although  this  would  be  more 
favored  than  the  taking  at  a  valuation  without  consent,  (o) 
Still,  it  must  always  be  possible,  that  the  peculiar  circumstances 
of  the  case  may  make  a  sale  injurious,  and  that  the  true  interests 
of  all  parties  may  be  better  preserved  and  protected  without  it ; 
and  then  a  court  is  under  no  obligation  to  require  a  sale,  (p) 

(m)  Crawshay  v.  Maule,  1  Swanst.  607;   Regden  v.  Pierce,  6  Madd.  353; 

623.  Sigourney  r.  Munn,  7  Conn.  11 ;  Evans 

(«)  Ex  parte  Montgomery,  1  Glyn  &  v.  Evans,  9  Paige,  178;  Dougherty  v. 

J.  341 ;  Featherstonliaugh  v.  Fenwiok,  Van  Nostrand,  1  Hoff.   Ch.  68 ;    Con- 

17  Ves.  298;  Fox   v.  Hanbury,  Cowp.  well  v.  Sandidge,  8  Dana,  278;   Craw- 

445;  Crawshay  y.  Collins,  15  Ves.  218;  shay    v.  Maule,   1    Swanst.   495,   523; 

Regden  v.  Pierce,  6  Madd.  353;  Fere-  Simmons  v.  Leonard,  3  Hare,  581. 
day    V.   Wightwick,    1    Tamlyn,   261 ;  {p)  See  cases  cited  ante,  in  the  two 

3  Kent  Conim.  G4  ;  2  Bell  Comm.  632,  preceding   notes.     [A   partner's   inter- 

633 ;    Evans   v.   Evans,  9  Paige,   178 ;  est  in  a   trade-mark  or   brand   is  too 

Cook  V.  Collingridge,  Jac.  607  ;  Leach  unsubstantial  to  justify  a  court  in  or- 

V.  Leach,  18  Pick.  75.  dering  a    sale.      Taylor   v.   Bemis,   4 

(o)  Featherstonhaugh    v.   Fen  wick,  Biss.  (C.  Ct.  U.  S.)  406.] 
17  Ves.  298 ;  Cook  v.  Collingridge,  Jac. 


572  THE   LAW   OF   PARTNERSHIP.  [CH.  XVII, 


CHAPTER    XVII. 

OF   LIMITED   PARTNERSHIPS. 

Formerly  the  name  of  limited  partnership  was  given  to  one 
formed  for  a  special  or  particular  business  or  enterprise,  (a) 
The  meaning  of  this  phrase  was  not  well  defined,  and  it  was  of 
no  importance  in  the  law.  Now,  however,  in  this  country, 
it  is  applied  to  a  new  thing.  A  limited  partnership,  in  the 
present  sense  of  the  phrase,  is  one  in  which  one  or  more  of 
the  partners  are  so  in  the  usual  way,  in  respect  to  power, 
property,  and  obligation  ;  and  one  or  more  of  them  have  placed 
a  certain  sum  in  the  business,  and  may  lose  that,  but  are  not 
liable  further. 

The  purpose  of  the  law  in  permitting  such  a  partnership  is 
obvious.  It  is  to  encourage  and  facilitate  trade  and  commerce, 
and  induce  capitalists  to  embark  their  capital  therein,  or  a 
certain  part  of  their  capital,  by  relieving  them  from  the  peril, 
hanging  over  all  partnership  by  the  common-law  merchant,  of 
losing  not  only  all  they  have  in  the  trade,  but  all  they  have  be- 
side. On  the  continent  of  Europe,  it  has  long  been  known,  (6) 
and  found  to  be  useful  and  safe.  And  almost  forty  years  ago 
it  was  permitted  in  the  great  commercial  State  of  New 
*  527    York,  by  a  statute  *  copied  substantially  from  the  French 

(a)  Willett  V.  Chambers,  Cowp.  Lord  Loughborough  :  "  In  many  parts 
814,  816;  2  Bell  Comm.,  b.  7,  ch.  2,  of  Europe,  limiterl  partnersliips  are 
p.  261,  5tli  ed.  See  also  Robey  v.  admitted,  provided  they  be  entered  on 
Howard,  2  Stark.  N.  P.  C.  557.  For  a  register;  but  the  law  of  England  is 
illustrative  cases,  see  Carriok  v.  Vick-  otiierwise,  the  rule  being,  that,  if  a 
ery,  Doug.  652,  n.  ;  Holmes  v.  Higgins,  partner  shares  in  advantages,  he  also 
IB.  &C.  74;  Livingston  y.  Roosevelt,  shares  in  all  disadvantages."  Limited 
4  Johns.  251 ;  Dubois  v.  Roosevelt,  id.  ■partnerships  (la  Socleie  en  cotmnandii^) 
262 ;  Livingston  v.  Hastie,  2  Caines,  were  established  in  France  by  the  or- 
246  ;  Lansing  v.  Gaine,  2  Johns.  300  ;  dinance  of  1673,  and  have  been  con- 
Ensign  V.  Wands,  1  Johns.  Cas.  171  ;  tinued  and  regulated  by  the  new  code 
Schollenberger  v.  Seldonridge,  49  of  commerce.  Repertoire  de  Jurispru- 
Penn.  83.  dence   par   Merlin,   tit.    Soci^ie,   art.    2 ; 

(6)  Coope  V.  Eyre,  1  H.  Bl.  48,  per  Code  de  Commerce,  b.  1,  tit.  3,  §  1. 


CH.  XYII.]  OF   LIMITED   PARTNERSHIPS.  573 

Code  of  Commerce  ;  this  being,  says  Chancellor  Kent,  the 
first  instance  in  the  history  of  the  legislation  of  that  State, 
in  wliich  the  statute  law  of  any  other  country  than  Great  Britain 
has  been  closely  imitated  and  adopted.  (<?)  Not  long  after- 
wards, the  example  was  followed  by  other  States  ;  and  now 
there  are  similar  provisions  in  upwards  of  twenty  States,  (d) 

In  England,  this  salutary  law  is  not  yet  adopted,  excepting 
as  to  joint-stock  companies,  (e)  But  of  late  years  there  have 
been  repeated  attempts  in  Parliament  to  enact  a  law  extending 
this  principle  to  partnerships  generally,  some  of  which  were 
almost  successful.  They  still  fear,  however,  or  say  they  fear, 
that  it  relaxes  the  liability  of  partners  to  a  dangerous  extent, 
and  encourages  speculation  and  reckless  enterprise,  by  taking 
away  or  lessening  one  of  its  most  important  checks.  On  this 
point,  the  experience  of  this  country  is  entitled  to  much  consid- 
eration ;  and  an  innovation  upon  mercantile  law  which  has 
stood  the  severe  test  of  American  practice  for  a  whole  genera- 
tion, and  has  never  been  recalled  or  importantly  modified,  (/) 
nor  found  dangerous  or  injurious  to  the  public,  nor  seriously 
objected  to  in  any  point  of  its  working,  may  be  regarded  as 
resting  upon  good  authority.  ((7) 

(c)  3  Kent's  Conmi.  36,  7th  ed.  18  &  19  id.  ch.  133  ;  19  &  20  id.  ch.  47  ; 

(f/)  Maine,    Massachusetts,    Rhode  25  & '26  id.  ch.  89.      By  21  &  22  id.  ch. 

Island,    Connecticut,    Vermont,    Xew  91,  joint-stock  banking  companies  are 

York,      New      Jersey,     Pennsylvania,  allowed  to  be  formed  on  the  principle 

Maryland,    Indiana,    ^lichigan,    South  of   limited   liability.      In   the    British 

Carolina,    Georgia,    Slississippi,    Ala-  province  of  Xew  Brunswick  (ch.  121, 

bama,     Florida,     Louisiana,     Illinois,  Rev.  Stat,  of  N.  B.),  the  principle  has 

Virginia,  Kentucky,   Delaware,    Ten-  been    adopted    for    general    business, 

nessee,     Oliio,     and     California,     and  with  the  usual  exceptions  of  banking 

probably    in   other    States,    of    which  and    insurance.     And    also    in    Nova 

the  information  has   not   yet   reached  Scotia,    with    like    exceptions.      Rev. 

us.      Banking  and  insurance   are   ex-  Stat.  ch.  79,  §§  12-25. 
cepted    in    New    York,    New   Jersey,  {/)   Troubat  [Limited  Partnership, 

Pennsylvania,  Maryland,  South  Caro-  §   39j    says  :    "  That   the   statutes   on 

lina,      Alabama,      Georgia,      Florida,  limited     partnership    in    the    various 

Maine,      Massachusetts,      Mississippi,  States   should  be,  in  substance,  iden- 

Connecticut,  Vermont,  Rhode  Island,  tical,   is   perfectly   natural;    inasmuch 

Delaware,  Tennessee,  Ohio,  and  Call-  as  the  common  source,  the  commercial 

fornia.  code  of  France,  the  work  of  the  jurists 

(e)  The  principle  has  been  applied  of  the  empire,  has  been  largely  bor- 

in  England  to  joint-stock  companies  ;  rowed  from  by  them  all." 
and  a  great  number  of  statutes  have  {g}  "  Every    one,"    says     an    able 

been  passed  in  relation  thereto.     The  French  writer,  "  may  have  an  interest 

most    important    are    the    following;  in  commerce  and  trade,  under  sucli  a 

viz.,  1  Vict.  ch.  73;  7&8  id.  ch.  110;  system,  for   amounts   small  or  large. 


574 


THE   LAW   OF   PARTNERSHIP. 


[CH.  XVII. 


*  528  *  No  one  doubts  that  the  general  liabilities  of  part- 
ners, however  severely  they  may  press  upon  individuals 
in  some  cases,  are,  on  the  whole,  wise  and  necessary.  And  if 
the  limited  partnership,  which  Is  free  from  these  stringent  lia- 
bilities, is  useful  and  safe,  both  for  those  who  engage  in  it  and 
ftr  the  community,  it  must  be  from  the  excellence  of  that 
system  of  precaution  by  which  the  community  is  protected. 
The  general  principles  of  this  system  are,  first,  ascertaining 
the  actual  placing  of  the  sum  proposed  within  the  joint  funds, 
where  it  may  be  liable  for  the  joint  debts  ;  secondly,  giving 
adequate  public  notice  of  the  amount,  and  of  the  parties,  and 
of  the  business,  so  that  the  public  may  estimate  correctly  the 
credit  to  be  given  to  the  firm,  and  providing,  also,  that  nptice 
should  be  given  of  any  important  change  ;  thirdly,  securing 
this  joint  fund  from  undue  diminution,  and  thus  preventing 
the  original  notice  from  being  deceptive  and  injurious.  The 
statutes  of  no  two  States  are  verbally  alike;  but  they  all  imi- 
tate the  statute  of  New  York  in  these  essentials,  which  that 
statute  borrowed  from  the  Code  of  Commerce  of  France.  (A) 


The  facility,  too,  of  realization  has 
thrown  round  this  form  of  investment 
considerable  attraction.  We  have 
seen  large  capitals  thus  drawn,  in  the 
promptest  and  easiest  way,  into  the 
general  industrial  and  commercial 
movement;  and  the  adjunction  of  bail- 
ors of  funds  to  responsible  general 
partners  constitutes  not  a  union  of 
persons,  but  an  association  of  capitals 
analogous  to  that  of  incorporated  com- 
panies. In  this  manner  has  it  come 
to  pass  that  limited  partnerships  have 
become  in  reality  so  many  incorpora- 
tions, wherein  the  liability  of  the  gen- 
eral partners  stands  in  lieu  of  the 
authorization  of  government.  .  .  .  To 
convey  an  idea  of  the  immense  service 
rendered  by  limited  partnersliips,  with 
capitals  divided  into  sliares  thus  trans- 
ferable, it  will  suffice  to  say  that  cal- 
culations, untinged  with  exaggeration, 
carry  to  above  a  thousand  millions 
the  capital  engaged  in  this  form  of 
social  business.  A  few  years,  too, 
have  sufficed  to  bring  about  this  truly 
colossal  result,   in  spite  of  the  cases 


of  gross  swindling  and  signal  frauds 
that  have  marked  the  progress  of  the 
new  combination  of  interests.  But  by 
these  frauds  it  was  not  creditors  who 
suffered ;  it  was  the  shareholders, 
themselves."  Wolowsky,  Des  Societ€s 
par  Actions,  7,  9,  13.  In  reference  to 
the  same  matter,  Watson  on  Part.  2, 
citing  Pothier  on  Obligations,  says: 
"  Society  in  commendam,  &c.,  was  that 
between  two  persons,  one  of  whom 
only  put  his  money  into  stock,  without 
doing  any  other  office  of  a  copartner  ; 
the  other,  who  was  called  the  comple- 
mentary of  the  society,  despatching  all 
the  business  in  his  own  name.  This 
society  was  very  useful  to  the  State  ; 
inasmuch  as  all  kinds  of  persons,  even 
nobles  and  professional  men,  might 
contract  it,  and  thus  make  their  money 
of  service  to  the  public;  and  those 
who  had  no  fortune  of  their  own  to 
trade  withal,  hereby  found  means  of 
establishing  themselves  in  the  world, 
and  of  making  their  industry  and  ad- 
dress serviceable." 

{h)  In  Ames  v.  Downing,  1  Bradf. 


CH.  XVII.] 


OF   LIMITED   PARTNERSHIPS. 


575 


They  differ  *  more  or  less  in  the  exact  provisions  by    *  529 
which  these  essential  precautions  are  taken ;  but  they 


321,  329,  the  court,  in  holding  tliat  a 
special  partnership,  formed  under  the 
provisions  of  the  Kevised  Statutes  of 
New  York,  is  dissolved  by  the  death 
of  the  special  partner,  and  that  it  is, 
like  a  general  partnership,  a  personal 
contract,  expiring  with  tiie  death  of 
any  of  the  parties,  make  an  elaborate 
examination  of  the  origin,  history,  and 
nature  of  limited  partnerships.  We 
quote  at  some  length.  "  The  system 
of  limited  partnerships,"  say  the  court, 
"  whicli  was  introduced  by  statute  into 
this  State,  and  subsequently  very 
generally  adopted  in  many  other  States 
of  the  Union,  was  borrowed  from  the 
French  code.  3  Kent  Comm.  36 ; 
Code  de  Commerce,  19,  23,  24.  Under 
the  name  of  la  Sociele  en  commandite, 
it  has  existed  in  France  from  the  time 
of  the  Middle  Ages  ;  mention  being 
made  of  it  in  the  most  ancient  com- 
mercial records,  and  in  the  early  mer- 
cantile regulations  of  Marseilles  and 
Montpelier.  In  the  vulgar  Latinity 
of  the  Middle  Ages,  it  was  styled  com- 
mendn,  and  in  Italy  accomenda.  In  the 
statutes  of  Fisa  and  Florence,  it  is 
recognized  as  far  back  as  the  year 
1160;  also,  in  the  ordinance  of  Louis- 
leHutin,  of  1315 ;  the  statutes  of  Mar- 
seilles, 1253;  of  Geneva,  of  1588.  In 
the  Middle  Ages,  it  was  one  of  the 
most  frequent  combinations  of  trade, 
and  was  the  basis  of  the  active  and 
widely-extended  commerce  of  the  opu- 
lent maritime  cities  of  Italy.  It  con- 
tributed largely  to  the  support  of  the 
great  and  prosperous  trade  carried  on 
along  the  shores  of  the  Mediterranean  ; 
was  known  in  Languedoc,  Provence, 
and  Lombardy ;  entered  into  most  of 
the  industrial  occupations  and  pursuits 
of  the  age ;  and  even  travelled,  under 
the  protection  of  the  arms  of  the 
Crusaders,  to  the  city  of  Jerusalem. 
At  a  period  when  capital  was  in  the 
hands  of  nobles  and  clergy,  who,  from 
pride  of  caste,  or  canonical  regulations, 
could  not  engage  directly  in  trade,  it 
afforded  the  means   of    secretly   em- 


barking in  commercial  enterprises,  and 
reaping  the  profits  of  such  lucrative 
pursuits,  without  personal  risk  ;  and 
thus  the  vast  wealth,  which  otherwise 
would  have  lain  dormant  in  the  coffers 
of  the  rich,  became  the  foundation,  by 
means  of  this  ingenious  idea,  of  that 
great  commerce  which  made  princes 
of  the  merchants,  elevated  the  trading 
classes,  and  brought  the  commons  into 
position  as  an  influential  estate  in  the 
commonwealth.  Independent  of  the 
interest  naturally  attaching  to  the 
history  of  a  mercantile  contract  of 
such  ancient  origin,  but  so  recently 
introduced,  where  the  general  part- 
nership, known  to  the  common  law, 
has  hitherto  existed  alone,  I  have  been 
led  to  refer  to  tiie  facts  just  stated,  for 
the  purpose  of  showing  that  the  special 
partnership  is,  in  fact,  no  novelty,  but 
an  institution  of  considerable  anti- 
quity, well  known,  understood,  and 
regulated.  Ducange  defines  it  to  be, 
'  SociETAS  Mercatoru.m  qua  uni 
sociorum  tola  negotiationis  ciira  commen- 
datur,  cerlis  condilionibus.'  It  was  al- 
ways considered  a  proper  partnership 
(societas),  with  certain  reserves  and 
restrictions  ;  and  in  the  ordinance  of 
Louis  XIV.,  of  1673,  it  is  ranked  as  a 
regular  partnership.  In  the  Code  of 
Commerce,  it  is  classed  in  the  same 
manner.  I  may  add,  as  an  important 
fact,  for  the  explanation  of  a  distinc- 
tion to  which  I  shall  shortly  advert, 
that  the  French  code  permits  a  special 
partnership,  of  which  the  capital  may 
be  divided  into  shares  or  stock,  trans- 
missible from  hand  to  hand.  In  such 
a  case,  the  death  of  the  special  partner 
does  not  dissolve  the  firm,  the  creation 
of  transmissible  shares  being  a  proof 
that  the  association  is  formed  respectu 
negotii,  and  not  respectu  personarum ; 
but,  even  in  such  a  partnership,  the 
death  of  the  general  partner  etti.'cts  a 
dissolution,  unless  it  is  expressly  stip- 
ulated otherwise.  But,  says  M.  Trop- 
long,  it  would  be  wrong  to  extend  the 
rule  that  a  partnership,  of  which  the 


576 


THE   LAW    OF    PARTNERSHIP. 


[CH.  XVII. 


resemble  each  other  so  much  in  these  that  they  may  be  stated 
generally  as  follows  :  — 


capital  is  divided  into  transmissible 
shares,  is  not  dissolved  b}'  the  deatli  of 
a  sliareliolder,  to  a  special  partnership, 
the  capital  of  whicli  is  not  so  divided. 
The  statute  of  New  York  recognizes 
only  the  latter  kind  of  partnership  ;  the 
names  of  the  parties  being  required  to 
be  registered,  and  any  cliange  in  the 
name  working  a  dissolution,  and  turn- 
ing the  firm  into  a  general  j)artnership. 
Such  a  partnershii)  has  always  been 
held  to  be  dissolved  by  tlie  death  of 
tiie  special  partner.  This  partnership 
remains  under  the  dominion  of  tlie 
common  law.  It  has  created  between 
the  special  and  tlie  general  partner  a 
tie  wiiich  is  not  subjected  to  the  ca- 
price of  unforeseen  clianges  ;  it  has 
produced  mutual  relations  of  confi- 
dence, whicii  the  general  partner  can- 
not be  forced  to  extend  to  strangers. 
M.  Troplong,  Comm. ;  du  CoiUrut  de 
Socie'ie  Civile,  S^-c,  T.  1,  preface,  57, 
§  377,  &c.,  T.  2,  §  888,  p.  sijS.  Tlie 
French  jurists  generally  take  the  same 
position ;  defining  tlie  special  partner- 
ship as  a  proper  partnership,  and  ap- 
plying the  law  of  dissolution  by  death 
to  all.  Pothier,  Traite,  du  Contrat  de 
Society,  ch.  2,  §  2,  ch.  8,  §  3  ;  Merlin, 
He'pertoire  de  Jurisprudence,  art.  Socie'ie, 
§  7  ;  Duranton,  Droit,  Franqais,  torn.  17, 
1.  3,  tit.  9,  §  470.  Pardessus  discusses 
the  question  somewiiat  at  length. 
Droit  Commercial,  tom.  4,  pt.  5,  tit.  3, 
ch.  1,  §  4.  It  might  be  thought,  he 
says,  with  some  appearance  of  plausi- 
bility, that  the  rule  of  a  dissolution  by 
death  should  be  limited  to  general 
partnerships,  in  forming  which  the 
probity  and  intelligence  of  each  mem- 
ber have  been  reciprocally  taken  into 
consideration.  Indeed,  the  special 
partner  does  not  suppose,  on  the  part 
of  the  general  partners,  any  personal 
confidence  in  the  special  partners  ; 
and,  as  the  interests  and  the  rights  of 
the  latter  are  exclusively  limited  to 
their  shares,  it  would  seem  that  they 
were  not  modified  by  their  decease, 
and  their  heirs   called   to  take    their 


place  could  have  no  right  to  insist 
that  death  has  dissolved  the  firm,  nor 
the  general  partners  insist  ujion  that 
result.  These  reasons,  to  question  the 
general  rule,  appear,  nevertheless,  to 
yield  to  others  more  decisive.  The 
persons  and  the  character  of  the 
special  partners  have  been  regarded 
by  the  general  partners  when  they 
formed  this  kind  of  association.  The 
special  partners  are,  in  effect,  to  a 
greater  or  less  extent,  called  to  the 
annual  accountings,  to  meetings  for 
tlie  settlement  of  the  profits  and  losses, 
and  to  an  examination  of  the  state  of 
the  affairs.  This  scrutiny,  and  a  right 
to  insist  upon  a  dissolution  in  conse- 
quence of  a  breach  of  the  contract,  or 
to  urge  their  claims  when  the  affairs 
are  liquidated,  are  more  or  less  rig- 
orously exercised.  The  difficulty  of 
acting  harmoniously  with  different 
persons,  substituted  in  the  place  of 
those  with  whom  the  original  contract 
was  made,  the  distrust  of  heirs,  wlio 
have  not  the  grounds  of  esteem  and 
confidence  which  influenced  the  de- 
ceased, and  the  impossibility  of  treat- 
ing easily  with  minors,  —  are  some  of 
the  reasons  which  will  not  permit 
special  partnerships  to  be  excepted 
from  the  general  rule.  It  may  be 
objected  that  these  reasons  apply  only 
in  favor  of  the  general  partners,  and 
that  it  is  for  them  to  judge  as  to  the 
continuation  of  the  business  with  the 
heirs.  But  the  heirs  of  the  deceased 
ought  to  enjoy  tlie  same  privilege. 
Reciprocal  rights  ought  to  result  from 
a  mutual  agreement.  There  is  no 
solid  reason  why  the  special  partner- 
ship should  not  be  dissolved  by  the 
death  of  one  of  the  partners,  except 
when  tlie  capital  is  divided  into  trans- 
missible shares  ;  in  wliicli  case,  the  as- 
sociates having  consented  tiiat  each 
may  substitute  another  in  his  place, 
as  he  may  desire,  without  the  author- 
ity of  the  others,  it  is  natural  to  con- 
clude that  the  heirs  of  a  deceased 
member  fill   his    place    in    the    same 


CH.  XVII.]  OF   LIMITED   PARTNERSHIPS.  677 

*  There  must  be  some  persons  who  are  general  part-    *  530 
ners,  all  of  whose  names  are  used  in  the  firm,  without 
the   addition   of  *"  company,"   or   any   other   phrase    *o31 
indicating  that  there  are  other  general  partners. 

All  of  these  general  partners  are  liable  to  creditors  in  pre- 
cisely the  same  way  as  if  there  were  no  special  partners. 

The  general  partners  alone  conduct  and  control  the  business 
of  the  partnership.  But,  in  some  States,  the  statute  permits 
the  special  partner  to  examine  at  his  pleasure  into  the  accounts 
and  business  of  the  firm,  and  give  advice  in  relation  to  it ;  and, 
where  this  is  not  expressly  permitted,  it  would  doubtless  be 
allowed  from  its  inherent  propriety  and  necessity. 

There  must  be  a  certificate,  signed  by  all  the  parties,  setting 
forth  sundry  particulars,  verified  by  the  oath  or  affirmation  of 
the  parties  before  a  magistrate  ;  and,  before  the  business  com- 
mences, this  certificate  must  be  properly  advertised,  and  also 
recorded  with  some  public  records,  (a)  in  the  place  where  the 
parties  reside,  or  where  the  firm  is  to  do  business,  or  in  both, 
and  in  every  other  place  where  the  firm  is  to  do  business. 

The  particulars  wliich  this  certificate  must  state  are  generally 
these  :  — 

The  names  of  all  the  partners,  distinguishing  between  those 

manner  as  if  he  had  assigned  his  share,  brief  experience,  —  the  effect  of  the 
I  have  given  the  substance  of  tlie  rea-  death  of  tlie  special  partner  is  to  dis- 
soning  of  Pardessiis;  and  the  result  he  solve  the  firm.  This  agrees  with  the 
attains  has  not  only  the  authority  of  conclusion  I  had  attained  upon  inde- 
M.  Troplong  in  its  favor,  but  also  that  pendent  reasoning,  before  consulting 
of  other  commentators  (J/ J/.  il/«//)fyre  those  authorities;  and  I  am,  conse- 
et  Jourdain,  No.  474;  M.  Persil,  Fils,  quently,  led  to  pronounce  the  firm  in 
p.  344),  while  it  does  not  appear  to  which  the  testator  was  a  special  part- 
have  been  questioned  or  doubted,  ner,  dissolved  at  his  death  ;  and  to  hold 
(But  as  to  this,  see  Troubat  on  Lim-  tiie  executor,  who  was  his  general 
ited  Part.  (Phila.)  1853,  §  430,  citing  partner,  responsible  for  the  testator's 
Fierli,  vol.  1,  46,  47 ;  Casareyis  de  interest  in  the  firm  at  that  time,  upon 
Comnier.,  Disc.  29,  No.  10;  Zanch  de  a  liquidation  of  the  affairs,  as  if  made 
Soci€le,  No.  19,  20).  It  thus  appears  then."  pp.  329-3.33.  For  a  similar 
that,  in  the  jurisprudence  of  that  na-  resume,  see  Jacquin  v.  Buisson,  11 
tion  whence  the  peculiar  contract  of  a  How.  (N.  Y.)  Prac.  385,  et  seq., 
special  partnersliip  has  been  adopted  in  which  the  above  opinion  is  con- 
by   us,  and    grafted   into   our   law, —  curred  in. 

where  the  system  has  long  existed,  is  (a)   [The  articles  do  not  take  effect 

familiarly  known,  and  its  nature,  qual-  till  they    are  recorded.     As   to  trans- 

ities,  and  practical  relations  to  various  actions  before  that  time,  the  partners 

events  and  circumstances    have   been  are  general  partners.     Levy  v.  Lock, 

well  considered  under  tlie  light  of  no  5  Daly  N.  Y.  C.  P.  46.] 

87 


678 


THE   LAW   OP   PARTNERSHIP. 


[CH.  XVII. 


who  are  to  be  general  partners  and  those  who  are  to  be  only 
special  partners  ;  and  the  residences  of  all. 

The  name  which  the  firm  is  to  bear.  The  amount  of  monej 
actually  paid  in,  in  cash,  by  the  special  partners. 

The  nature  of  the  business  in  which  the  firm  proposes  to 
engage,  or  for  which  it  is  formed. 

The  time  for  which  the  partnership  is  formed  ;  that  is,  the 
day  on  which  it  is  to  begin  and  the  day  on  which  it  is  to  end, 
or  the  period  for  which  it  is  to  endure. 

All  of  these  are  preliminary  measures  of  notice  and 
*  532  precaution.  *  And  the  special  partner  must  look  to  it 
that  all  are  complied  with ;  for  a  substantial  mistake,  or 
an  intended  omission  or  error,  by  himself  or  by  a  general  part- 
ner, or  by  any  other  special  partner,  destroys  the  limitation 
of  the  partnership,  and  all  the  partners  stand  at  once  on  the 
common  liabilities  of  partners.  (^)  This  is  certainly  so  as  to 
creditors,  without  exception  or  qualification.     As  between  the 


(i)  Richardson  v.  Hogg,  38  Penn. 
153  ;  [Vandike  v.  Rosskane,  67  Penn. 
St.  330;]  Bowen  v.  Argall,  24  Wend. 
496 ;  Madison  County  Bank  v.  Gould, 
5  Hill,  309 ;  Smith  v.  Argall,  6  id.  479 ; 
3  Denio,  435.  [A  contribution  "  in 
cash  and  goods  "  is  not  a  contribution 
"  in  cash,"  Van  Ingen  v.  Whitman, 
62  N.  Y.  513;  Re  Merrill,  13  N.  B.  R. 
91 ;  nor  is  a  permission  to  use  certain 
United  States  bonds,  the  bailee  not 
having  notice  of  this  permission, 
Haggerty  v.  Poster,  103  Mass.  17.] 
One  who  has  not  strictly  complied 
with  the  requisitions  of  the  statutes 
respecting  limited  partnerships  cannot 
claim  exemption,  as  a  special  partner, 
from  liability  for  the  debts  of  the  firm 
of  which  he  is  a  member.  Thus,  tiie 
provision  in  the  Gen.  Stats.,  ch.  65, 
§  2,  of  Massachusetts,  requiring  an 
actual  cash  payment,  as  capital,  to  be 
made  by  one  who  enters  a  firm  as  a 
special  partner,  in  order  to  exonerate 
him  from  liability  for  the  debts  of  the 
firm,  is  notcomplied  with  by  the  delivery 
to  the  firm  of  promissory  notes,  which 
are  received  and  treated  as  cash.  And 
further  held,  that  the  actual  cash  pay- 


ment, as  capital,  required  by  the 
statute,  of  one  who  enters  a  firm  as 
special  partner,  must  be  made  prior 
to  the  publication  of  the  certificate  of 
tlie  formation  of  the  firm.  Pierce  v. 
Bryant,  5  Allen,  91.  [In  New  York, 
where  the  certificate  was  made,  dated, 
and  filed,  Dec.  23,  1870,  which  by  its 
terms  was  to  take  effect  Jan.  1st 
1871,  and  the  special  partner  at  the 
same  time  gave  his  check  for  the 
amount  of  his  capital,  dated  Dec.  31, 
1870,  to  his  copartners,  this  was  held 
not  a  cash  payment.  Durand  v. 
Abendroth,  N.  Y.  Ct.  of  App.  15  Alb. 
J.  289.]  A  statement  in  the  certificate 
of  the  formation  of  a  limited  partner- 
ship, that  the  special  partner  has  con- 
tributed a  certain  sura,  when,  in  fact, 
a  portion  of  that  sum  has  been  con- 
tributed by  another  person,  with  the 
design  of  securing  the  rights  and 
benefits  of  a  special  partner  without 
becoming  one,  renders  all  the  parties 
liable  as  general  partners.  Bulkley  v. 
Marks,  15  Abb.  Pr.  454.  And  see 
Ha vi land  v.  Chace,  39  Barb.  283  ; 
Ward  V.  Newell,  42  id.  482. 


CH.  XVII.] 


OF  LIMITED   PARTNERSHIPS. 


679 


partners,  their  agreements  might  still  be  valid,  and  would  then 
affect  their  mutual  rights  and  obligations. 

Besides  these  preliminary  precautions,  there  are  others,  which 
come  into  force  after  the  partnership  is  established,  and  remain 
in  force  so  long  as  it  is  in  operation,  which  are  not  less  impor- 
tant. The  capital  is  not  to  be  reduced  during  the  partnership. 
If  a  special  partner  withdraws  any  part  of  the  capital,  and  the 
firm  becomes  insolvent,  he  is  liable  to  the  creditors  for  the 
amount  so  withdrawn,  with  interest,  (j)  Whether  a 
withdrawal  or  a  *  diminution  of  the  capital  by  a  general  *  533 
partner,  without  the  consent,  or  knowledge,  or  with 
ignorance  through  negligence,  of  the  special  partner,  would 
make  him  liable,  does  not  distinctly  appear ;  but  we  should  say 
it  would  not.  (^)  If  the  name  of  the  special  partner  be  used 
in  any  contract  with  his  consent,  and,  still  more,  if  he  take  an 
active  part  in  the  formation  of  any  contract,  he  is  liable  upon 
it  as  a  general  partner.  (/) 


(7)  La  Chomette  v.  Thomas,  1  La. 
Ann.  120 ;  Bulklej'  v.  Marks,  15 
Abb.  Pr.  454.  Where,  during  the  con- 
tinuance of  a  special  partnership,  the 
special  partner  sold  out  his  interest 
in  the  concern  to  the  general  partner, 
for  a  sum  exceeding  the  amount  of 
the  capital  lie  had  placed  in  the  busi- 
ness, and  for  the  price  of  his  interest 
so  sold  received  a  security,  pledging 
to  him  all  the  personal  property  of 
the  partnership,  it  was  held  that 
this,  in  effect,  amounted  to  a  with- 
drawal by  him  of  the  capital  he  origi- 
nally contributed  to  the  copartnership  ; 
that  he  had  secured  to  him  that  which, 
by  the  copartnership,  he  had  con- 
tributed in  cash,  and  without  security, 
to  be  employed  in  the  business,  and  to 
stand  as  indemnity  to  those  who  should 
deal  with  the  partnership ;  and  that 
the  transaction  was,  in  effect,  an  alter- 
ation of  the  capital  of  the  partnership  ; 
and  the  consequence  prescribed  by  the 
statute  ensued ;  viz.,  if  the  business 
was  carried  on,  he  was  thereafter 
liable  as  general  partner.  Beers  v. 
Reynolds,  12  Barb.  (S.  C.)  288,  1 
Kernan,  97.  But  in  Lachaise  r. 
Marks,   4  E.   D.    Smith,    610,   where 


there  had  been  an  agreement  of  disso- 
lution, held,  that  the  mere  giving  of 
notes,  pa^'able,  at  a  future  time,  by 
the  general  partners,  to  the  special 
partner,  in  the  same  name  as  that  of 
the  partnership,  upon  the  making  of 
such  agreement,  with  a  view  of  pur- 
chasing his  interest,  is  not  a  with- 
drawal of  capital.  The  receipt,  by 
the  special  partner,  of  dividends,  as  a 
device  to  withdraw  capital,  will  render 
him  liable  as  a  general  partner ;  but 
dividends  may  be  paid  to  him  in  good 
faith,  with  only  the  effect  to  require 
him  to  restore  in  case  the  capital  shall 
thereby  be  unintentionally  reduced. 
Id.  In  Robinson  v.  Mcintosh,  3  E.  D. 
Smitli,  221,  in  a  case  of  limited  part- 
nership, it  was  held,  that  a  court  of 
equity  has  power,  at  the  suit  of  one 
partner,  to  compel  another  to  con- 
tribute a  sum  stipulated  as  capital,  or 
to  restore  it  to  the  common  fund,  if 
he  have  withdrawn  it  before  the  debts 
are  paid. 

(k)  See  Singer  v.  Kelly,  44  Penn. 
145. 

(/)  Jonau  V.  Blanchard,  2  Rob.  (La.) 
513;  Madison  County  Bank  y.  Gould, 
5   Hill,   30y.     In    this   last  case,  the 


580 


THE   LAW   OF    PARTNERSHIP. 


[CH.  XVTI. 


In  New  York,  it  is  provided  that,  if  the  firm  make  an  arrange- 
ment for  the  payment  of  their  debts,  and  therein  make  any 
preference  among  their  creditors,  or  provide  for  the  special 
partner  as  a  creditor,  the   arrangement  would    be  void,  (m) 


court  say :  "  If  tlie  defendant,  Gould, 
went  beyond  advising  with  his  part- 
ners, and  was  actively  concerned  in 
negotiating  and  ^laking  the  purchase 
of  the  mill,  he  has  already  rendered 
himself  liable  to  answer  as  a  general 
partner,  so  far  as  relates  to  any  lia- 
bility of  the  partnership  gi-owing  out 
of  that  particular  transaction.  And 
we  think  he  must  also  be  deemed  a 
general  partner  as  to  all  the  debts  and 
liabilities  of  the  firm.  The  legislature 
has  plair.ly  manifested  the  intention  of 
excluding  the  special  partner  from  all 
active  participation  in  the  business  of 
the  firm ;  and  his  interference  is  for- 
bidden upon  the  pain  of  losing  his 
character  and  protection  as  a  special 
partner.  The  moment  he  engages  in 
the  business  of  the  firm,  he  violates 
one  of  the  conditions  on  which  his 
exemption  from  liability  depends,  and 
lie  becomes  a  general  partner  by  his 
own  voluntary  act."  [So  if  he  repre- 
sents himself  to  be  a  general  partner. 
Barrows  v.  Downs,  9  R.  I.  446.  If  a 
special  partner  buys  out  the  entire 
property  of  the  firm  before  the  limita- 
tion expires,  and  continues  the  busi- 
ness of  the  firm,  he  is  liable  as  a  gen- 
eral partner  from  the  beginning. 
First  Nat.  Bk.  v.  Whitney,  4  Lans. 
(N.  Y.)  34.]  See  Richardson  v.  Hogg, 
38  Penn.  153;  McKnight  v.  Ratcliffe, 
44  Penn.  156.  [If  the  special  terms 
of  the  partnership  are  violated  to  the 
advantage  of  the  firm,  the  firm  is 
liable.  Johnson  v.  Bernheim,  7(3  N.  C. 
130.] 

(m)  Hayes  v.  Bement,  3  Sandf. 
894;  Innes  v.  Lansing,  7  Paige,  583; 
Mills  V.  Argall,  6  Paige,  577 ;  White- 
wright  V.  Stimpson,  2  Barb.  379; 
Jackson  v.  Sheldon,  9  Abb.  Pr. 
127.  But  in  The  Artisans'  Bank  v. 
Treadwell,  34  Barb.  (N.  Y.)  553,  it 
was  held,  that,  when  a  limited  partner- 
ship  becomes  insolvent,  its  assets  do 


not,  from  that  time,  irrespective  of  the 
condition  of  any  creditor's  demand, 
become  trust  funds  for  the  benefit  of 
all  the  creditors  of  the  partnership ; 
so  as  to  prevent  a  creditor,  either  by 
superior  diligence  or  by  the  favor  of 
the  partners,  from  acquiring  or  pos- 
sessing a  valid  lien  thereon  in  prefer- 
ence to  other  creditors.  The  assets 
of  the  partnership  are  trust  funds  for 
the  benefit  of  the  creditors  equally, 
except  such  as,  by  superior  vigilance, 
have  obtained  a  lien  on  the  property 
of  the  partnership.  And  they  become 
trust  funds  for  such  mode  of  distribu- 
tion, so  far  as  any  action  of  the  part- 
ners is  concerned,  at  the  time  of 
insolvency ;  and,  so  far  as  the  action 
of  creditors  is  concerned,  at  the 
time  the  court  takes  possession  of 
the  fund,  either  by  decree  or  by  the 
appointment  of  a  receiver.  Until  that 
time,  it  is  the  right  of  every  creditor 
to  seek  a  preference,  and  to  obtain 
one,  if  he  can,  by  superior  vigilance. 
In  Hayes  v.  Bement,  cited  ante,  in 
holding  that,  where  a  limited  part- 
nership becomes  insolvent,  and  the 
special  partner  is  a  general  partner 
in  another  firm  to  which  the  lim- 
ited partnership  is  indebted,  neither 
the  debt  due  to  such  firm,  nor  such 
general  partner's  interest  therein,  is 
postponed  under  the  provisions  of  the 
statute  directing  that  a  special  partner 
shall  not  claim  as  a  creditor  against 
the  limited  partnership,  of  which  he  is 
a  member,  until  the  claims  of  all  the 
other  creditors  are  satisfied,  —  the  court 
say  :  "  The  statute  authorizing  and 
regulating  limited  partnerships  is 
strict  and  severe ;  and  though,  per- 
haps, not  unnecessarily  so,  we  are  not 
disposed  to  put  such  a  construction 
upon  its  language  as  would,  in  a  great 
measure,  impair  the  usefulness,  if  not 
defeat  the  objects  intended  to  be  ac- 
complished   by    its     passage.       The 


CH.  XVII.] 


OP   LIMITED   PARTNERSHIPS. 


581 


*  All  suits  must  be  brought  by  and  against  the  general    *  534 

*  partners,  unless  the  special  partners  have  become  gen-    *  535 


special  partner  is  under  disabilities 
which  are  not  imposed  upon  general 
partners,  and,  in  consideration,  lie  is 
relieved  from  liability,  except  to  the 
extent  of  the  capital  wliich  he  may 
contribute;  but  as  in  many,  if  not 
most,  of  such  limited  copartnersliips, 
the  bulk  of  the  cash  caj)ital  is  con- 
tributed by  the  special  partner,  it  must 
generally  be  for  his  interest  to  sus- 
tain, as  far  as  possible,  and  save  the 
partnership  wlien  organized,  and  to 
prevent  its  failure  or  insolvency.  If, 
endeavoring  to  do  this,  he  becomes  a 
creditor,  and  still  tlie  partnership  fails 
and  becomes  insolvent,  he  loses  liis 
capital,  and  his  debt  is  postponed  ;  at 
the  same  time,  he  has  not  directed  or 
managed  its  affairs.  In  cases  of  cor- 
porations, a  fixed  sum  may  be  paid  in 
as  capital ;  that  sum  is  all  tiiat  is  put 
at  hazard.  The  parties  contributing 
it  may  be,  and  generally  are,  the  chief 
managers.  If  tlie  stockholders  loan  to 
the  corporation,  tliey  are  put,  in  case 
of  insolvency,  upon  the  same  footing 
as  other  creditors :  their  debt  is  not 
postponed.  In  limited  partnerships, 
which  are  a  kind  of  quasi  corporations, 
the  special  partner,  who  contributes 
his  capital,  can  have  no  voice  in  the 
management  of  the  business  ;  and,  if 
he  loans  to  the  firm,  his  debt  must  be 
postponed  to  those  of  all  the  other 
creditors:  and  we  are  now  asked  to 
say,  that,  if  any  other  firm  of  which 
he  happens  to  be  a  member  sliall  loan 
to  such  copartnership,  even  though  it 
be  without  his  knowledge,  or  shall,  in 
the  usual  course  of  business  or  deal- 
ings, become  creditors  of  sucli  copart- 
nership, and  such  copartnersliip  shall 
become  insolvent,  that  then  tlie  debt 
of  the  creditor  firm,  or,  at  all  events, 
Ids  interest  in  sucli  debt,  must  be  post- 
poned. We  confess  that  we  do  not 
believe  the  legislature  so  intended, 
and  we  do  not  tliink  it  has  so  said. 
Had  the  statute  provided  that  tlie 
special  partner  should  not,  directly  or 
indirectly,    neither    individually     nor 


jointly',  become  a  creditor,  and,  if  he 
did,  tliat  then  any  debt  due  to  hira 
individually,  or  his  portion  of  a  debt 
due  jointly,  or  his  interest  in  any  debt 
due  to  any  other  person  or  persons, 
corporation  or  corporations,  or  to  any 
partnersliip,  whether  general  or  lim- 
ited, should  be  postponed,  the  case 
would  be  different.  As  it  now  is,  we 
consider  that  the  legislature  simply 
intended  to  put  the  special  partner,  so 
far  as  he  is  a  creditor,  upon  precisely 
the  same  footing  as  if  he  were  a  gen- 
eral partner."  It  was  further  held,  in 
this  case,  that  where  the  same  person 
is  a  general  partner  in  two  different 
firms,  one  of  which  becomes  insolvent, 
indebted  to  the  other,  the  latter  may 
recover  its  debt  or  dividend  from  the 
insolvent  or  bankrupt  firm.  Where 
one  general  partner  in  a  limited  part- 
nership made  an  assignment,  with  the 
consent  of  the  special  partner,  but 
without  the  consent  of  the  remaining 
general  partner,  the  assignment  was 
set  aside.  Hayes  v.  Heyer,  3  Sandf. 
293;  White  v.  Hackett,  24  Barb. 
(S.  C.)  290.  Held,  that,  prior  to  the 
amendment  in  the  New  York  statutes 
(ch.  414  of  18o7,  §  3),  when  a  special 
partnership  becomes  insolvent,  and 
application  is  made  by  creditors  for 
an  injunction  and  receiver,  a  special 
partner  is  entitled  to  come  in  and 
claim  as  a  creditor  of  the  partnership, 
and  to  receive  a  dividend,  out  of  the 
assets  thereof,  pro  rata  with  the  other 
creditors,  and  that  the  amendment  in 
the  statute  was  not  declaratory  of  the 
law  as  it  previously  existed.  But, 
reversing  this,  it  was  held,  in  s.  c. 
20  New  York,  178,  on  appeal,  that, 
irrespective  of  the  amendment  to  the 
act  authorizing  the  formation  of  lim- 
ited partnerships,  a  special  partner 
could  not,  in  case  of  the  firm's  insol- 
vency, claim  to  share  in  the  distribu- 
tion of  its  assets  for  the  reimburse- 
ment of  loans  or  advances  made  by 
him  over  and  above  the  capital  he 
contributed,  until  after  all  others  were 


582 


THE   LAW    OP   PARTNERSHIP. 


[CH.  XVII. 


eral  partners  by  some  non-compliance  with  the  require- 
ments of  law;  in  which  case,  they  may  be  joined  ;  and,  if  the 
plaintiff  seeks  to  hold  them  beyond  their  limited  liability,  he 
must  join  them,  (w)  As  the  statute  is  itself  exceptional,  it 
must  not  be  enlarged  by  construction  ;  and  the  special  partners 
are  general  partners  in  all  things,  excepting  those  as  to  which 
the  statute  expressly  limits  their  liability,  (o)  If  the  partner- 
ship is  renewed  after  its  expiration  by  its  original  limits,  there 
must  be  a  renewal  of  the  certificate,  publication,  and  rec- 
*  536    ord.  (^)    This  partnership  may  be  dissolved  by  its  *  own 


satisfied ;  and  that  the  amendment 
was  not  declaratory  of  the  existing 
law,  but  introduced  a  new  rule.  See 
Tanshawe  v.  Lane,  16  Abb.  Prac. 
71;  Van  Alstyne  v.  Cook,  25  N.  Y. 
489;  Ward  v.  Newell,  42  Barb.  482; 
Singer  v.  Kelly,  44  Penn.  145.  See,  as 
to  the  effect  of  the  attachment  of  the 
interest  of  the  special  partner,  Harris 
V.  Murray,  28  N.  Y.  574.  The  special 
partner  cannot  claim  as  a  creditor  of 
an  insolvent  firm  of  which  he  is  a 
member.  Dunning's  Appeal,  44  Penn. 
150.  [He  may  in  Conneclicut,  as  to 
loans  independent  of  his  special  capi- 
tal contributed.  Capp  v.  Lacey,  35 
Conn.  463.] 

{n)  Tlie  Artisans'  Bank  v.  Tread- 
well,  34  Barb.  (S.  C.)  553,  560  ;  Schul- 
ten  V.  Lord,  4  E.  D.  Smith,  20G. 
Held,  in  Louisiana,  that  the  fact  of 
there  liaving  existed  a  partnership 
in  commendam  between  the  parties 
does  not  prevent  the  plaintiff  from 
recovering  of  the  defendant  sums 
of  money  paid  for  the  use  of  the 
latter,  and  which  were  not  taken 
from  or  connected  witii  the  part- 
nersliip.  Battaille  v.  Battaille,  6  La. 
Ann.  682. 

(o)  Lachaise  v.  Marks,  4  E.  D. 
Smith,  610 ;  Hayes  v.  Bement,  3  Sandf. 
397.  In  Hogg  v.  Ellis,  8  How.  Pr.  473, 
Mitchell,  J.,  says  :  "  The  limited  part- 
ner is  a  partner  as  much  as  the  general 
partner;  and  there  is  nothing  to  pre- 
vent him,  even  during  the  continuance 
of  the  partnership,  from  taking  an 
active  part  in  its  concerns,  if  he 
chooses  to  bring  on  himself  the  statu- 


tory consequences  of  a  liability  as  a 
general  partner.  The  statute  is  for 
his  protection,  if  he  will  conform  to  it : 
it  is  not  any  part  of  its  policy  to  pre- 
vent him  from  acting  as  a  general 
partner,  if  he  is  willing  to  assume  the 
liabilities  that  follow ;  and,  if  he  is 
willing,  his  partners  have  no  ground 
of  complaint,  nor  the  creditors  of  the 
firm,  if  he  leave  their  rights  unim- 
paired. It  would  be  different  if  the 
general  partners,  by  their  articles, 
e.xcluded  the  limited  partner  from  a 
control ;  but  then  this  restriction  might 
cease  at  the  expiration  of  the  partner- 
ship. The  statute,  as  to  the  special 
partner,  is,  that  '  if  he  shall  interfere, 
contrary  to  these  provisions,  he  shall 
be  deemed  a  general  partner'  (1  R.  S. 
766,  §  17),  and  that  is  the  only 
penalty." 

(p)  Andrews  v.  Schott,  10  Barr 
(Penn.),  47, 53.  And,  if  this  is  not  done, 
the  partnership,  being  continued,  be- 
comes a  general  one.  Lacliaise  v. 
Marks,  4  E.  D.  Smith,  610,  620.  If 
any  alteration  be  made  in  the  capital 
or  shares,  and  the  partnership  be  in  any 
manner  thereafter  carried  on,  before 
the  publication  of  the  notice  of  dis- 
solution is  completed,  where  tlie  lim- 
ited partnership  is  dissolved  by  the 
agreement  of  the  parties  before  the 
period  fixed  for  its  termination  by  the 
original  certificate,  the  special  partner 
becomes  liable  as  a  general  partner. 
Beers  v.  Reynolds,  12  Barb.  (S.  C.) 
288,  and  s.  c.  on  appeal,  1  Kernan,  97. 
See  La  Chomette  v.  Thomas,  5  Rob. 
(La.)    172,    and    Gray    v.   Gibson,   6 


CH.  XVII.] 


OF   LIMITED    PARTNERSHIPS. 


683 


limitation,  by  the  death  of  a  partner,  (g-)  by  decree  of  court' 
by  bankruptcy  of  the  firm  or  of  a  partner,  in  the  same 
manner  as  a  general  partnership.  And  the  special  partners 
will  be  bound  after  a  dissolution,  unless  notice  is  given  ;  ex- 
cepting where  the  dissolution  comes  by  limitation  of  time  (and 
then  the  certificate  is  notice),  or  by  an  act  of  the  law.  (r) 


Mich.  300,  as  to  the  effect  of  not  re- 
cording an  agreement  for  the  formation 
of  a  limited  partnership.  The  parties 
designated  in  articles  or  a  will  to  con- 
tinue a  partnership,  or  to  he  interested 
in  it,  after  a  death,  should  be  obliged 
to  renew  the  formalities  of  the  statute, 
if  they  would  remain  special  partners, 
with  the  fund  alone  responsible ;  and 
if  they  continue  the  business  without 
this  form,  then  they  become  general 
partners,  liable  in  like  manner  as  all 
other  dormant  partners.  Jacquin  v. 
Buisson,  11  How.  Pr.  386. 

(7)  Troubat  on  Lim.  Part.  §  430 
( Phila.  1853),  makes  a  distinction  as  to 
the  death  of  a  special  partner,  citing 
Fierli,  &c.  But  this  distinction  is  not 
sustained  in  this  country.  See  Ames 
V.  Downing,  1  Brad.  321  (which  es- 
caped Mr.  Troubat's  notice),  citing 
several  French  authorities.  And  see 
also  Jacquin  v.  Buisson,  11  How.  Pr. 
385,  395,  in  which  is  the  following : 
"  Since  the  decision  of  this  motion,  1 
have  noticed  the  case  of  Ames  v. 
Downing.  The  Surrogate  of  New 
York,  in  a  very  able  and  learned 
opinion,  has  arrived  at  the  conclusion 
herein  stated,  tliat  the  death  of  a 
special  partner  dissolves  the  firm  ;  and 
has  gone  over  much  of  the  interesting 
ground  of  the  French  law  which  I 
have  explored.  I  find,  also,  that,  in 
Pennsylvania,  there  is  an  express  pro- 
vision in  the  statute  on  the  subject, 
for  the  continuance  of  the  capital  of 
the  special  partner  through  his  repre- 
sentatives, for  the  unexpired  term,  of 
a  sale  or  the  interest,  in  their  discre- 
tion. Purdon's  Digest  Laws,  Penn. 
544,  §  28."     See  ante,  *  528,  note  (/-)• 

(r)  Haggerty  v.  Taylor,  10  Paige, 
261 ;  Hogg  V.  Ellis,  8  How.  Pr.  473, 
per  Mitchell,  J.  :  "  The  partnership 
was  a  limited  one,  and  it  has  expired 


by  its  own  limitation.  In  ordinary 
partnerships,  it  is  a  matter  of  course 
on  a  bill  to  close  the  concern,  after 
the  dissolution,  to  appoint  a  receiver; 
and  the  same  rule  prevails  if  the 
proofs  show  tliat,  at  the  hearing,  a 
dissolution  will  be  granted,  although 
the  partnership  has  not  yet  expired." 
In  Beers  v.  Reynolds,  12  Barb.  (S.  C.) 
291,  1  Kernan,  97,  King,  J.,  says : 
"  The  statute  relative  to  limited  part- 
nerships (2  R.  S.  3d  ed.  p.  52,  §  24) 
is  in  these  words  :  '  No  dissolution 
of  such  partnership,  by  the  acts  of  the 
parties,  shall  take  place  previous  to 
the  time  specified  in  the  certificate  of 
its  formation,  or  in  the  certificate  of  its 
renewal,  until  a  notice  of  such  disso- 
lution shall  have  been  filed  and  re- 
corded in  the  clerk's  office  in  which 
the  original  certificate  was  recorded, 
and  published,  once  in  each  week  for 
four  weeks,  in  a  newspaper  printed  in 
each  of  the  counties  where  the  part- 
nership may  have  places  of  business, 
and  in  the  State  paper.'  It  seems  to 
me  that  this  statute  will  admit  of  but 
one  construction,  —  that,  in  the  case 
proposed,  of  a  dissolution,  by  act  of 
the  parties,  before  the  expiration  of  the 
term  for  which  the  partnership  was 
formed,  the  notice  must  not  only  have 
been  filed  and  recorded,  but  the  full 
period  of  publication  must  also  have 
elapsed,  before  the  partnership  can  be 
considered  to  be  dissolved ;  that  the 
partnership  continues  until  the  notice 
has  been  published  for  four  weeks. 
The  notice  thus  prescribed  is  similar 
in  its  nature  to  tliat  by  which  the 
special  partnership  may  be  created. 
The  period  for  which  the  partnership 
was  to  continue  has  been  made  known 
to  the  public  by  tlie  filing  of  the 
original  certificate  and  its  publication 
in  the  newspapers.     The  notice  thus 


584 


THE   LAW   OF   PARTNERSHIP. 


[CH.  XVII. 


*537  Whether  dissolution,  by  death,  *or  by  bankruptcy,  re- 
quires notice,  is  not  so  certain,  and  therefore  the  notice 
would  be  expedient.  If,  however,  after  a  dissolution  with 
notice,  or  a  dissolution  by  the  original  limitation  or  by  act  of 
the  law  without  notice,  the  general  partners  go  on  and  issue 
notes  bearing  the  old  name,  without  the  consent  or  permission, 
actual  or  constructive,  of  the  special  partners,  these  partners 
are  not  liable  thereon,  even  to  innocent  and  ignorant  holders, 
for  value.  And,  even  if  the  special  partners  had  made  them- 
selves liable,  the  holders  of  these  notes  cannot  come  in  and 
claim  against  the  joint  assets  equally  with  the  previous  cred- 
itors of  the  firm,  (s)  If,  however,  the  special  partners  have 
made  themselves  liable  on  such  notes,  by  permitting  their  issue 
in  that  way,  the  remedy  of  the  holders  is  by  suit,  against  all 
the  partners,  to  charge  them  personally.  Q} 


given,  the  statute  allows  the  parties  to 
retract  by  anotiier  notice  made  public 
in  a  similar  manner ;  and,  until  the  pro- 
visions of  the  statute  respecting  this 
second  notice  have  been  complied 
with,  the  public  are  authorized  to  rely 
upon  the  terms  of  the  first  notice." 
See  Marshall  v.  Lambeth,  7  Rob. 
(La.)  471;  Bulkley  t>.  Marks,  15  Abb. 
Pr.  454,  463;  Lachaise  v.  Marks, 
4  E.  D.  Smith,  610.  [Where  a  certifi- 
cate and  notice  of  dissolution  is  re- 
quired by  statute,  it  must  be  strictly 
complied  with,    /le  Terry,  5  Biss.  110.] 

(s)  Haggerty  v.  Taylor,  10  Paige, 
261 ;  Lachaise  v.  Marks,  4  E.  D.  Smith, 
610. 

(0  Haggerty  r.  Taylor,  10  Paige, 
261 ;  Scliulten  i-.  Lord,  4  E.  D.  Smith, 
206,  210.  In  Bradbury  v.  Smith,  21 
Me.  117,  where  a  partnership  was 
formed  between  A.  &  B.,  wherein  it 
was  stipulated  that  the  partnership 
should  be  special,  that  B.  should  be 
the  special  partner,  and  should  con- 
tribute a  certain  sum  "  as  capital  to 
the  common  stock  for  carrying  on  the 
business,"  which  was  to  be  conducted 
in  the  name  of  A.  &  Co. ;  and  the  sum 
was  paid  in  and  invested  in  goods,  and 
the  goods  were  sold,  and  other  goods 
purchased  in  their  place  with  the  pro- 
ceeds of  the  sales,  —  it  was  held,  that 


whether  tlie  partnership  was  to  be 
considered  as  a  special  one,  under  the 
statute,  or  as  a  general  one,  the  goods 
became  partnership  property  ;  the  part- 
nership becoming  debtor  to  the  part- 
ner advancing  the  capital,  to  the 
amount  advanced.  In  Louisiana,  the 
court  held,  that  a  partner  in  commendam 
is  responsible  to  the  creditors  of  the 
partnership  for  the  amoinit  of  the 
capital  he  was  bound  to  contribute  ; 
and,  where  his  portion  of  the  capital 
has  been  withdrawn,  the  creditors 
may  proceed  against  him  by  a  direct 
action.  La  Chomette  v.  Thomas,  1  La. 
Ann.  120.  Eustis,  C.  J.,  in  pronounc- 
ing the  judgment  of  the  court,  said  : 
"  We  have  recently  recognized  the 
rights  of  creditors  to  hold  partners 
in  commendam  responsible  for  the 
amount  of  the  capital  which  they  were 
bound  to  put  into  the  partnership  of 
which  they  were  members.  Civil 
Code,  art.  2813.  We  will  prevent  tiie 
creditors  from  obtaining  any  undue 
preference  over  each  other,  and,  in  all 
cases,  carry  into  effect  the  principle 
of  law  which  makes  the  commendam 
fund  a  common  pledge  for  the  cred- 
itors of  the  partnership  ;  but  we  will 
permit  no  obstacle  of  mere  form  to 
prevent  the  direct  recourse  of  the  cred- 
itor against  the  partner  in  commendam. 


CH.  XVII.] 


OF   LIMITED   PARTNERSHIPS. 


585 


*  Defects  in  the  certificate,  or  publication  or  record,  *538 
or  in  any  compliance  with  the  requirements  of  the  law, 
do  not  vitiate,  if  these  defects  are  merely  formal,  and  such  as 
cannot  injuriously  mislead  any  party.  But,  if  they  are  substan- 
tial, —  that  is,  if  they  can  be  injurious,  —  they  leave  all  the 
partners  lial)le  as  general  partners,  although  none  of  them  were 
in  fault,  (i^) 

Thus,  a  publication  that  the  partnership  would  begin  on 
the  16th  of  November,  when  it  actually  began  on  the  16th  of 
October,  was  held  not  to  bind  the  special  partners  as  general 
partners.  But  it  was  said  that  it  would  have  bound  them  if 
the  error  had  been  intentional,  or  if  the  debt  sued  had  been 
contracted  before  the  16th  of  November,  (v) 


■whenever  his  obligation  to  contribute 
to  the  partnership  debts  is  made  out. 
In  the  present  case,  the  partner  in 
commendam  has  not  only  withdrawn 
his  capital  on  the  dissolution  of  the 
partnership,  but  his  share  of  the 
profits ;  and  wliy  should  he  not  pay 
his  share  of  the  debts  1  "  See  further, 
as  to  the  liability  of  the  special  "part- 
ner, Pierce  v.  Bryant,  5  Allen,  91  ; 
Marshall  v.  Lambeth,  7  Rob.  (La.) 
471;  De  Lizardi  /•.  Gosset,  1  La.  Ann. 
138  ;  Beers  v.  Reynolds,  1  Kernan,  97. 
For  a  debt  owing  by  all  the  partners, 
general  and  special,  in  a  limited  part- 
nersliip,  a  suit  is  well  brought  against 
the  general  partners  alone.  And  a 
judgment  and  execution  in  such  suit, 
levied  upon  the  property  of  the  part- 
nership, will  bind  the  entire  interest 
of  all  the  partners.  The  provision  of 
the  statute,  that  suits  in  relation  to  the 
business  of  a  limited  partnership 
"  may  be  brought  and  conducted  by 
and  against  the  general  partners,  in 
the  same  manner  as  if  tliere  were  no 
special  partners,"  must  be  construed 
to  mean,  not  only  that  they  maj'  be 
thus  brought  "in  the  same  manner," 
but  "  with  the  same  effect."  The 
Artisans'  Bank  v.  Treadwell,  34  Barb. 
(S.  C.)  653.  And  see  Bulkley  v. 
Marks,  15  Abb.  Pr.  454,  s.  c.  nom. 
Buckley  v.  Bramhall,  24  How.  Pr.  455; 
Robinson  v.  Mcintosh,  3  E.  D.  Smith, 


221 ;  Hastings  v.  Hopkinson,  28  Vt. 
108,  117. 

[u)  Andrews  v.  Schott,  10  Barr 
(Penn.),  47  ;Bowen  v.  Argall,  24  Wend. 
496;  Smith  v.  Argall,  6  Hill,  479,  3 
Denio,  435 ;  Lachaise  v.  Marks,  4  E. 
D.  Smith,  610.  In  this  last  case, 
where  the  certificate  of  tlie  formation 
of  a  limited  partnership  declared  "  that 
all  the  general  partners  interested 
therein  are  A.  and  B.,  both  of  Brook- 
lyn, in  the  State  of  New  York,  and 
that  the  special  partner  interested 
therein  is  C.,  of  Jersey  City,  in  the 
State  of  New  Jersey,"  —  it  was  held, 
that  this  was  a  compliance  with  the 
statute  (2  N.  Y.  R.  S.  4th  ed.  p.  174, 
§  4,  subd.  3),  requiring  the  certificate 
to  contain  the  respective  places  of 
residence  of  the  general  and  special 
partners,  and  that  no  more  distinct 
averment  of  their  being  residents  of 
those  places  was  necessary'.  See  also 
Bulkley  v.  Marks,  15  Abb.  Pr.  454, 
s.  c.  nom.  Buckley  v.  Bramhall,  24 
How.  Pr.  455.  [If  the  firm  moves  its 
business  into  another  county  than  that 
where  the  certificate  lias  been  re- 
corded, they  become  general  partners 
till  the  certificate  is  newly  recorded. 
Riper  v.  Poppenhausen,  43  N.  Y.  68.] 

()•)  The  Madison  County  Bank  v. 
Gould,  5  Hill,  .309.  And  see  Bradbury 
V.  Smith,  21  Me.  117. 


586  THE  LAW  OF  PARTNERSHIP.        [CH.  XVII. 

So,  a  publication  of  the  certificate  was  held  to  have  been 
made  "  immediately  "  within  the  terms  of  the  statute,  when  it 
was  made  within  three  days  after  the  recording.  And  it  was 
held  sutficient,  if  made  once  in  each  of  the  succeeding  six 

weeks,  (w) 
*  539        *  Where  real  estate  was  purchased  by  the  general 

partners  for  the  firm,  and  paid  for  by  the  firm,  the  cir- 
cumstance that  the  title  to  the  land  was  taken  in  the  names 
of  all  the  partners  did  not  make  the  special  partners  liable 
as  general  partners.  Stress  was  laid  upon  the  fact  that  the 
special  partners  did  not  know  that  the  land  was  so  granted  to 
them.  But,  if  they  did  know  this  and  consent  to  it,  it  does  not 
seem  clear,  on  general  principles,  why  they  should  be  held  as 
general  partners,  provided  they  had  complied  in  all  things  with 
the  requirements  of  the  law.  Perhaps  they  should  be  so  held, 
however,  to  the  vendors,  for  the  price  of  the  land,  (a;) 

But  where  the  certificate  was  published  in  two  newspapers, 
and  in  one  of  them  the  sum  contributed  was  said  to  be  five 
thousand  dollars,  when  in  fact  it  was  but  two  thousand,  and 
the  mistake  was  made  by  the  printer,  it  was  held  that  the 
special  partners  were  liable  as  general  partners,  without  proof 
that  the  creditors  were  misled  by  the  mistake.  (?/) 

(w)  Bowen  v.  Argall,  24  Wend.  496.  of  the  capital  actually  paid  in  by  the 

An  aflSdavit  to   accompany   a   certifi-  special  partner  would  be  a  substantial 

eate   of  a  limited  partnership,  under  and   material    portion    of   the    terms, 

N.  Y.  Rev.  Sts.  (4th  ed.)  p.  174,  §  7,  cannot  be  doubted.     It  is  the  founda- 

need  not  follow  the  exact  words  of  the  tion  of   the  credit  to  be  given.      The 

statute.      If  it  clearly  establislies  the  duty  of  making  such  publication  is  by 

facts    required    by   the   statute,   it  is  the  statute  devolved   upon   the  part- 

sufScient.     Thus,  an  affidavit  that  the  ners  ;  and  it  is  one  tliat  the}'  must  see 

special  partner  has  "  actually  paid  in  "  to  at  their  peril.     If  they  fail  in  this, 

the  capital  contributed  by  him,  is  held  the   consequence  is  declared   in  plain 

equivalent  to  an  affidavit  that  he  has  terms  :     '  the     partnership     shall     be 

paid   it  "in   cash."     Johnson  v.   Mc-  deemed  general.'     In  this  the   courts 

Donald,  2  Abb.  Pr.  290.  have  no  discretion.     They  have  only 

(x)  The  Madison  County  Bank  v.  to  declare  the  will  of  the  legislature. 

Gould,  5  Hill,  309.  The  publication  of   different  '  terms  ' 

(y)  Argall  v.  Smith,  in  the  Court  of  in   two  papers,  in  one  of  which  they 

Errors,   3    Denio,   435,   per    Spencer,  are  untruly  stated,  can  be  no  better 

Senator  :  "  The  '  terms  '  must  be  truly  than  to  omit  a  publication  altogether." 

published  in  two  papers.     Not  to  pub-  See   the   same   case   in   the   Supreme 

lish  at  all  would  be  clearly  fatal ;  and  Court,  7iom.   Smith  v.  Argall,  6  Hill, 

it  would   be  equally  so  to  publish  in  479.    And   see   Bowen  v.    Argall,   24 

but  one   paper,  or  in   papers  in  any  Wend.  496. 
other  senate  district.    That  the  amount 


CH.  XVII.]  OF   LIMITED   PARTNERSHIPS.  687 

The  certificate,  being  duly  sworn  to,  acknowledged,  and  re- 
corded, is  2^rimd  facie  evidence  of  its  own  truth,  and  may  be 
offered  as  such  ;  but  lias  no  force  to  rebut  positive  testimony  of 
its  falsehood.  Thus  the  certificate  cannot  contradict,  as  evi- 
dence, testimony  going  to  show  that  the  sum  actually  paid  in 
was  less  than  that  stated.  (2) 

*  In  some  of  the  States,  there  seems  to  be  no  restric-  *  540 
tion  as  to  the  purposes  for  which  these  special  partner- 
ships may  be  formed.  In  others,  certain  objects  or  kinds  of 
business  are  enumerated,  which  they  may  carry  on.  In  others, 
some  are  excepted  ;  as  banking  and  insurance.  In  many  of  the 
States,  in  which  limited  partnerships  are  permitted,  banking 
is  prohibited,  except  by  corporations  expressly  authorized.  But 
the  business  of  insurance  is  generally  open  ;  and  we  see  no  rea- 
son, derivable  from  its  nature,  why  a  limited  partnership  might 
not  engage  in  it.  In  this  country,  the  whole  business  of  insur- 
ance is  now  so  entirely  in  the  hands  of  corporations,  —  mutual, 
or  stock  companies,  or  those  which  unite  both  characters, — 
that  there  is  no  probability  of  its  being  done  or  attempted  by 
individuals  or  mere  partnerships,  (a) 

(z)  The  Madison  County  Bank  v.  account  of  transactions  of  his  firm 
Gould,  5  Hill,  309,  315.  Held,  in  with  the  citizens  of  another  State. 
Michigan,  that  an  agreement  for  the  King  v.  Sawin,  14  N.  Y.  S.  C.  167. 
formation  of  a  limited  partnership,  See  also  Barrows  i'.  Downs,  9  R.  I. 
executed  under  the  laws  of  New  York,  446.  Where  one  who  has  given  credit 
but  not  recorded  so  as  to  become  ef-  to  a  partnership  which  he  believes  to 
fectual  for  the  purpose  designed,  has  be  a  limited  partnership,  and  wliich 
no  tendency  to  prove  an  actual  general  is  known  to  the  public  as  sucii,  after- 
partnership  between  the  parties  named  wards  seeks  to  charge  all  the  part- 
in  it,  in  the  absence  of  extrinsic  evi-  ners  as  general  partners,  the  burden  of 
dence  to  show  that  they  had  actually  proof  to  show  a  general  partnership  is 
entered  into  business  as  partners,  on  him.  Whilldin  v.  Bullock,  4  Weekly 
Gray  v.  Gibson,  6  Mich.  300.  [A  Notes  of  Cases,  234.] 
special  partner  of  a  firm  in  one  State  (a)  See  ante,  note  [d),  p.  *  527. 
is  exempt  from   general  liability  on 


588 


THE   LAW   OF    PARTNERSHIP. 


[CH.  XVIII. 


CHAPTER  XVIII. 


OF   JOINT-STOCK   COMPANIES. 


In  England,  where  incorporation  is  difficult  and  costly, 
joint-stock  companies  are  very  common,  and  are  regulated  by 
statute,  (a)  In  this  country,  where  incorporation  is  in  fact, 
though  not  in  form,  almost  at  the  pleasure  of  the  parties,  and 
limited  partnerships  protect  from  indefinite  loss,  joint-stock 
companies  are  less  frequently  found.  They  exist,  however,  in 
many  of  our  States,  and  have  given  rise  to  interesting  questions. 
In  general,  they  are  copartnerships,  and  are  subject  to  the 
whole  law  of  partnership.  (S)  They  are,  however,  partnerships 
of  a  very  peculiar  kind. 


(a)  The  Joint-Stock  Companies' 
Acts  are,  7  Wni.  4  and  I  Vict.  cli.  73  ; 
7  &8Vict.  ch.  110,  111;  Companies' 
Clauses  Consolidation  Act,  8  &  9  Vict, 
ch.  16  ;  Joint  Stock  Banks'  Acts,  7  Geo. 
4,  ch.  46,  and  1  &  2  Vict.  ch.  96  ;  5  &  6 
Vict.  ch.  85;  7  &  8  Vicfc.  ch.  113.  The 
later  acts  are,  9  &  10  Vict.  ch.  28,  75 ; 
10  &  11  Vict.  ch.  78 ;  11  &  12  Vict.  ch. 
45  ;  12  &  13  Vict.  ch.  108;  17  &  18  Vict, 
ch.  73 ;  18  &  19  Vict.  ch.  133 ;  19  &  20 
Vict.  ch.  3,  47,  100 ;  20  &  21  Vict.  ch. 
14,  49,  78;  21  &  22  Vict.  ch.  60,  91. 

(6)  In  Williams  v.  The  Bank  of  Mich- 
igan, 7  Wend.  542,  Walworth,  Ch., 
says  :  "  It  is  well-known,  tliat  tliere  are 
and  have  been  many  joint-stock,  and 
even  banking,  companies  which  are 
mere  partnersliips,  as  to  every  person 
except  their  own  stockliolders  ;  they 
never  having  been  legally  incorporated. 
Whatever  name  such  a  company  may 
assume  and  use  in  the  transaction  of 
its  business,  it  is  a  partnership,  and  not 
a  corporate,  designation ;  and  every  suit, 
upon  a  contract  with  the  company,  must 
be  brought  in  the  names  of  the  several 
persons    composing    the    firm."     See 


The  King  v.  Dodd,  9  East,  516; 
Holmes  v.  Higgins,  1  B.  •&,  C.  74 ; 
Hess  y.  Werts,  4  Serg.  &  R.  356 ;  Car- 
len  V.  Drury,  1  Ves.  &  B.  157 ;  Keesley 
V.  Cadd,  cited  in  Perring  v.  Hone,  2 
Car.  &  P.  401;  Vigers  v.  Sainet,  13 
La.  300 ;  Walburn  v.  Ingilby,  1  Mylne 
&  K.  61 ;  Gorman  v.  Russell,  18  Cal. 
688;  Robbins  v.  Butler,  24  111.  387; 
Tenney  v.  The  N.  E.  Protective  LTnion, 
37  Vt.  64.  [Where  such  associations 
fail  to  become  legally  constituted 
joint-stock  companies,  from  some  in- 
formality or  other,  they  constitute 
partnerships.  Whipple  o.  Parker,  29 
Mich.  370.  They  are  partnerships, 
except  as  otherwise  provided  by 
statute.  Moore  v.  Brink,  6  T.  &  C. 
(N.  Y.)  227  ;  Manning  v.  Gasharie,  27 
Ind.  399.  Stockholders  in  a  busi- 
ness corporation,  who,  after  expiration 
of  their  charter,  continue  business,  and 
authorize  contracts  to  be  made  in  the 
name  of  the  copartners,  are  partners. 
National  Bank  v.  Landon,  45  N.  Y. 
419.  As  to  when  the  partnership  of 
the  associates  in  a  joint-stock  com- 
pany,    unincorporated,     begins,     see 


CH.  XVIII.] 


OF   JOINT-STOCK   COMPANIES. 


589 


The  question  has  been  raised,  whether  they  were  not  illegal 
on  the  ground  thatthej  usurp  the  privileges  of  corporations,  (c) 
It  never  came  to  a  decision  ;  and  we  can  see  no  ground  for 
raising  such  a  question,  or  for  denying  to  copartners 
the  power  of*  regulating  their  own  business,  form,  name,  *  542 
and  rules  of  proceeding,  at  their  own  pleasure,  (c?) 

Sometimes,  in  our  joint-stock  companies,  all  the  property  is 
in  trustees,  who  alone  have  the  legal  title  ;  and  the  copartners, 
as  shareholders,  under  an  indenture  which  declares  the  trust, 
have  the  equitable  or  beneficial  estate.  In  law,  this  might 
make  some  important  differences  ;  but  much  less  in  equity,  (g) 

Universally  they  imitate,  more  or  less,  the  form  and  appear- 
ance of  corporations.  They  have  a  common  name,  which  is 
usually  descriptive  of  their  business,  like  that  of  a  corporation  ; 
and  does  not  contain  or  consist  of  the  names  of  persons,  like 
the  name  of  a  firm.  (/)     They  have  their  officers,  their  by- 


Hedge's  Appeal,  63  Penn.  St.  273. 
Members  of  a  corporation,  to  whom  a 
certificate  of  organization  lias  been 
duly  issued,  are  not  responsible  as 
partners,  as  to  liabilities  contracted 
before  tliey  had  complied  witii  the 
provision  of  the  statutes.  First  Nat. 
Bank,  &c.  v.  Almy,  119  Mass.  476.  The 
statutes  of  one  State,  having  no  extra- 
territorial efficacy,  joint  stockholders 
in  that  State  become  partners  in  an- 
other. Taft  V.  Ward,  106  Mass.  518. 
See  also  Gott  v.  Dinsmore,  111  Mass. 
45.  As  to  what  facts  would  authorize 
a  jury  to  find  a  partnership  in  such  a 
case,  see  Taft  v.  Ward,  111  Mass.  518.] 

(c)  Story  on  Part.  §  164;  Collyer 
on  Part.  615-624,  1st  ed.  And  see 
cases  cited  in  the  following  note. 

(d)  In  England,  the  Stat.  (3  Geo.  1 
ch.  18,  enacted  tiie  year  after  the  in- 
famous South  Sea  project  had  beg- 
gared many  persons,  made  it  highly 
penal  for  subscribers  to  public  under- 
takings to  "  presume  to  act  as  if  they 
were  corporate  bodies,  by  making  their 
shares  in  stock  transferable,"  &c.,  4 
Bl.  Comm.  117  ;  Duvergier  v.  Fellows, 
6  Bing.  248,  10  B.  &  C.  826  ;  Josephs 
V.  Pebrer,  3  B.  &  C.  639;  Blundell 
V.    Winsor,    8   Sim.   601 ;   Garrard   v. 


Hardey,  5  Man.  &  G.  471 ;  Harrison 
V.  Heathorn,  6  id.  81.  The  Stat.  6 
Geo.  1,  ch.  18,  was  in  part  repealed  by 
1  Vict.  ch.  73.  The  Act  of  7  &  8  Vict, 
ch.  110,  came  into  force  on  the  first  of 
November,  1844.  A  railway  company 
was  incorporated  bj'  an  act  before  that 
date.  Subsequently  thereto,  the  com- 
pany obtained  an  act  for  an  extension 
line  :  it  was  held  that  the  latter  under- 
taking was  not  a  partnership,  the 
formation  of  which  was  conanenced 
after  the  first  of  November,  1844, 
witliin  the  meaning  of  the  act.  Shaw 
V.  Holland,  15  M.  &  W.  136,  4  Railw. 
Cas.  150.  And  see  Baker  v.  Plaskitt, 
5  C.  B.  262,  5  Railw.  Cas.  117. 

(e)  An  act  under  which  tiie  prop- 
erty of  a  manufacturing  company,  in- 
cluding its  right  to  call  assessments 
and  the  liability  of  stockholders  for 
its  debts,  is  vested  in  trustees  for 
distribution  among  the  creditors,  is  a 
bar  to  a  suit  by  a  creditor  against  a 
stockholder,  under  an  act  making 
members  of  manufacturing  companies 
liable  for  their  debts.  Walker  v. 
Grain,  17  Barb.  119. 

(/')  In  Kegina  v.  Registrar  of  Joint- 
stock  Companies,  10  Q.  B.  839,  Lord 
Denman  held,  that  a  joint-stock  com- 


590 


THE   LAW   OF   PARTNERSHIP. 


[CH.  XVITI. 


*  543  laws,  (^)  and  their  *  rules  of  proceeding :  and  by  these 
they  regulate  the  election  of  officers,  the  transaction  of 
business,  the  transfer  of  shares,  and  the  like  ;  and,  generally,  in 
the  mode  of  transfer,  forms  are  used  like  those  of  incorporated 
companies,  —  as,  for  example,  certificates  (or  "scrip")  are 
issued,  transfers  are  recorded,  <fec.  They  do  not,  so  far  as  we 
know,  attempt  to  use  a  common  seal,  and  certainly  have  no 
power  to  do  this  ;  that  is,  in  law,  they  have  no  common  seal, 
and  therefore  cannot  make  a  deed  of  any  kind.  (A) 

We  repeat,  that  we  see  no  reason  why  they  may  not  legally 
and  innocently  do  all  the  things  they  usually  undertake  to  do ; 
nor  why  the  courts,  of  law  and  of  equity,  must  not  apply  to 
them  the  common  principles,  which,  in  the  first  place,  permit 
all  partners  to  agree  upon  what  terms  of  partnership  they  will  ; 
and,  in  the  second  place,  hold  these  terms  to  be  binding  upon  all 

pany  completely  registered  under  Stat. 
7  &  8  Vict.  ch.  110,  and  thereby  "  in- 
corporated," has  no  power  thereafter 
to  change  its  name.  He  said  :  "  The 
identity  of  name  is  the  principal  means 
for  eflecting  that  perpetuity  of  suc- 
cession, witii  members  frequently  chang- 
ing, which  is  an  important  purpose  of 
incorporation.  Tlie  statute  does  not 
express  any  intention  of  changing  this 
general  principle,  but,  by  section  25, 
incorporates  the  company  by  the  name 
set  forth  in  the  deed,  and  declares  that 
it  shall  continue  so  incorporated  until 
it  shall  be  dissolved."  It  was  con- 
tended, that,  as  partnerships  were  at 
liberty  to  change  their  style,  that 
joint-stock  companies  were  in  the 
nature  of  trading  partnerships ;  and 
that,  as  there  was  no  express  prohi- 
bition in  the  statute,  they  might  con- 
tinue to  do  so.  But  it  was  held,  that, 
when  the  company  became  incorpo- 
rated, its  power  to  change  its  name 
ceased.  See  2  Bac.  Abr.  tit.  "  Corpora- 
tions" (C.),l,  7th  ed.  A  joint-stock  com- 
pany has  no  right,  between  the  time  of 
provisional  and  complete  registration, 
to  change  its  name  ;  nor  has  a  provi- 
sionally registered  company  a  right  to 
assume  the  name  of  a  corporation. 
Eegina  v.  Whitmarsh,  19  L.  J.,  Q.  B. 
185. 

{g}  For  the  power  of  companies  to 


make  by-laws,  and  the  limitations  on 
this  power,  see  Calder  and  Hebble 
Nav.  Co.  V.  Pilling,  14  M.  &  W.  209, 
3  Railw.  Cas.  735 ;  Chilton  v.  London 
and  Croyden  R.  Co.,  16  M.  &  W.  212, 
5  Railw.  Cas.  4 ;  Child  v.  Hudson's 
Bay  Co.,  2  P.  Wms.  300;  Smith  v. 
Goldsworthy,  4  Q.  B.  480;  Ward  v. 
Society  of  Attorneys,  1  Coilyer,  379. 

(/i)  Gow  on  Part.  3.  In  England, 
it  has  been  held,  that,  notwithstanding 
their  statutes,  joint-stock  companies 
completely  registered  are  bound  by 
contracts  made  by  a  competent  board 
of  directors,  though  not  under  seal,  or 
made  in  compliance  with  the  statute, 
and  though  they  cannot  enforce  such 
contracts.  But  persons  seeking  to 
render  those  companies  liable  on  con- 
tracts made  with  the  directors,  must 
show  their  authority  to  bind  the  com- 
pany, either  by  the  provision  of  the 
registered  deed  of  settlement,  or  by 
proof  tliat  the  body  of  shareholders 
authorized  particular  individuals  to 
make  contracts  binding  on  the  com- 
pany. A  ratification  by  a  competent 
board  of  directors  will  bind  the  com- 
pany. Ridley  v.  Plymouth,  &c. 
Grinding  and  Baking  Co.,  2  Exch. 
711 ;  Forrester  v.  Bell,  10  Irish  Law, 
555.  See  Smith  v.  The  Hull  Glass 
Co.,  19  L.  J.,  C.  P.  123. 


CH.  XVIII.]  OP   JOINT-STOCK   COMPANIES.  691 

who  agree  to  them,  expressly  or  impliedly ;  and,  in  the  third 
place,  hold  them  to  be  binding  upon  no  other  persons,  (i)  It 
may  be  said,  however,  that  the  rule  already  repeatedly  men- 
tioned —  that  special  agreements  between  partners  affect  third 
parties  to  whom  they  are  known,  and  who  deal  with  the  part- 
nership with  that  knowledge  —  would  apply  to  joint-stock 
partnerships. 

It  seems  to  be  intimated  in  England,  that  a  partner  in  a 
joint-stock  company,  which  had  formed  certain  rules,  would 
not  in  any  case  be  liable,  beyond  them,  to  a  third  party  who 
had  traded  with  the  company  with  a  knowledge  of  these  rules. 
This  impression  (for  it  can  hardly  be  called  more)  seems  to  be  de- 
rived, in  some  measure,  from  the  statutory  existence  and 
regulation  of  *  joint-stock  companies  in  England,  (y)  *  544 
In  this  country,  we  know  neither  reason  nor  authority 
for  qualifying,  in  reference  to  these  companies,  the  general 
principles  of  partnership  on  this  point.  That  is,  we  do  not 
believe  that  a  joint-stock  company,  or  any  other  partnership, 
can  limit  its  own  liabilities,  and  become  a  corporation  or  limited 
partnership  by  its  own  act,  and  without  any  regard  to  the 
formalities  or  requirements  of  the  law ;  but  we  see  no  reason 
why  a  joint-stock  company  may  not  go  as  far  as  a  common 
partnership  in  this  direction.  (A;) 

((■)  See  Hess  v.  Werts,  4  Serg.  &  R.  tlie  special  facts  relating  to  the  articles 

361 ;    Skinner   v.    Dayton,    19   Johns,  of  association,  Duncan,  J.,  observed  : 

537;  Blundell  u.  Winsor,  8  Sim.  601;  "  Nor  would  I  have  any  ditficulty  were 

Walburn  v.  Ingilby,  1  Mylne  &  K.  61,  the   articles   of    association   more   ex- 

76;  /n  re  Sea,  F.  &  L.  Ass.  Soc,  6  De  plicit    than    they    are,   and    excluded 

Gex,  M.  &  G.  465,  23  Eng.  L.  &  Eq.  from    responsibility    the    associators, 

422 ;  In  re  Worcester  Corn  Ex.  Co.,  3  other  than  out  of  their  joint  funds  ; 

De  Gex,  M.  &  G.  180,  19  Eng.  L.  &  for  though   they   might,   as    between 

Eq.  627  ;  Hallett  v.  Dowdall,  18  Q.  B.  themselves,  stipulate  with  each  other 

2,  9  Eng.  L.  &  Eq.  347 ;  Penn.  Ins.  Co.  for  this  contracted  responsibility,  yet 

V.  Murphy,  5  Minn.  56;  Henry  v.  Jack-  as  to  the  rest  of  the  world,  it  is  clear, 

son,  37  Vt.  431.  that  each  partner  is  liable  to  the  whole 

(j)  Blundell  v.  Winsor,  8  Sim.  601 ;  amount  of  the  debts  contracted.    For 

Walburn   v.  lugilby,   1   Mylne   &   K.  partners  in  a  stock  divided  into  shares, 

51,  76.  and  transferable  (but  who  are  not  in- 

(k)  In  Hess  v.  Werts,  4  Serg.  &  R.  corporated),    are    responsible    beyond 

366,  which  is  a  highly  instructive  case  the   amount   of  the   shares   to   which 

on  this  question,  where  an  association  they  subscribe,  though  it  is  one  of  the 

gave  notes  promising  to  pay  certain  terms  of  the  association  tiiey  shall  not 

amounts  out  of  their  joint  funds,   it  be."     In   the   same    case,    Gibson,   J., 

was  held,  that  all  the  shareholders  were  said  :   "  By  the  terms  of  their  notes, 

personally  liable.      After  considering  the  defendants  engaged  to  pay  '  out 


592 


THE   LAW   OF   PARTNERSHIP. 


[CH.  XVIII. 


Excepting  so  far  as  the  liability  of  a  partner  in  one  of  these 
companies  is  so  qualified,  he  is  —  althougli  he  may  call  himself 
not  a  partner,  but  a  stockholder — liable  precisely  as  a  part- 
ner. (/) 


of  their  joint  funds,  according  to  their 
articles  of  association,'  and  it  is  made 
part  of  the  case  tliat  they  have  no 
joint  funds.  Siiall  they  be  compelled 
to  paj^  out  of  their  separate  estates  ? 
It  is  a  general  principle,  that  partners 
are  liable  to  third  persons  as  for  a 
personal  debt.  It  is  not  merely  tlie 
stock  they  bring  into  the  partnership 
that  is  hazarded ;  but  they  are  re- 
sponsible to  the  extent  of  their  individ- 
ual fortunes  ;  and  such  responsibility 
cannot  be  limited  by  any  proviso  in 
the  articles  of  partnership,  or  agree- 
ment between  themselves.  But  I  see 
no  reason  to  doubt  but  they  may 
limit  their  responsibility  by  an  ex- 
plicit stipulation  made  with  the  party 
with  whom  tliey  contract,  and  clearly 
understood  by  him  at  the  time."  King 
V.  Dodd,  y  East,  527.  And  see  Skin- 
ner V.  Dayton,  19  Johns.  537.  The 
directors  of  a  joint-stock  company, 
unless  restrained  by  act  of  Parliament 
or  the  deed  of  settlement,  would  seem 
to  have  all  the  authority  given  to  part- 
ners at  common  law ;  and,  therefore, 
where  parties  contract  with  the  di- 
rectors in  matters  relating  to  the  co- 
partnership business,  they  are  not 
bound,  when  seeking  to  enforce  such 
contracts,  to  show  that  the  directors 
were  authorized  by  the  deed  or  by- 
laws to  enter  into  them.  Smith  v. 
The  Hull  Glass  Co.,  19  L.  J.,  C.  P. 
123.  See  Thompson  v.  Wesleyan 
Newspaper  Association,  id.  114;  Tyr- 
rell V.  Washburn,  6  Allen,  406. 

(/)  See  ante,  p.  *  541,  note  (b) ;  Pipe 
V.  Bateman,  1  Iowa,  369  ;  Babb  v. 
Read,  5  Rawle,  151 ;  Attorney-General 
V.  Heelis,  2  Sim.  &  S.  07 ;  McGill  v. 
Brown,  Baldwin,  C.  C.  60;  Thomas 
V.  Elmaker,  1  Pars.  Sel.  Eq.  Cas.  lOS ; 
Lloyd  V.  Loaring,  6  Ves.  773 ;  CuUen 
V.  The  Duke  of  Queensbury,  1  Bro. 
Ch.  Cas.  103 ;  Pearce  v.  Piper,  17  Ves. 
1 ;  Cockburn  v.  Thompson,  16  id.  321 ; 
Beaumont  v.  Meredith,  2  Ves.  &  B. 


180;  Keasley  v.  Codd,  2  Car.  &  P. 
408,  note ;  Carlen  v.  Drury,  1  Ves. 
&  B.  154,  157 ;  Tappan  v.  Bailey, 
4  Mete.  535.  But  see,  for  a  limitation 
on  the  law  of  partnersiiip,  as  applied 
to  joint-stock  companies,  Cox  v.  Bod- 
fish, .35  Me.  302;  Livingston  v.  Lynch, 
4  Johns.  Ch.  573  ;  Irvine  v.  Forbes,  11 
Barb.  588.  Where,  by  an  act  of  Par- 
liament, a  company  was  to  apply  the 
first  moneys  received  under  the  act  in 
discharge  of  the  expenses  incurred 
in  obtaining  the  act,  it  was  held,  that 
the  plaintiff,  though  a  member  of  the 
company,  might  sue  them  for  his  time 
and  trouble  and  money  expended  in 
obtaining  the  act.  Garden  v.  The 
General  Cemetery  Co.,  5  Bing.  N.  C. 
253.  See  Tilson  v.  Warwick  Gas  Light 
Co.,  4  B.  &  C.  962.  A  member  of  a 
joint-stock  company,  like  a  member  of 
an  ordinary  partnership,  may  recover 
compensation  for  service  rendered  to 
the  company  previous  to  his  having 
become  a  member  of  it.  Lucas  v. 
Beach,  1  Man.  &  G.  417.  In  general, 
however,  an  action  cannot  be  main- 
tained by  a  member  against  the  com- 
pany, or  by  the  company  against  a 
member,  on  a  contract  between  him 
and  the  company.  Neale  v.  Turton, 
4  Bing.  149 ;  Wilson  v.  Curzon,  15  M. 
&  W.  632 ;  Holmes  v.  Higgins,  1  B.  & 
C.  74 ;  Goddard  v.  Hodges,  1  Cromp. 

6  M.  33,  3  Tyrw.  209;  Teague  v. 
Hubbard,  1  Man.  &  R.  369,  8  B.  &  C. 
345;  Chadwick  v.  Clarke,  1  C.  B.  700; 
Moneypenny  v.  Hartland,  1  Car.  &  P. 
352,  2  id.  378  ;  Parkin  v.  Fry,  id.  311 ; 
Milburn  v.  Codd,  1  Manning  &  R.  238, 

7  B.  &  C.  419;  Goddard  v.  Hudges, 
3  Tyrw.  209,  1  Cromp.  &  M.  33;  Per- 
ring  V.  Hare,  4  Bing.  28.  But  see 
Davies  v.  Hawkins,  3  Maule  &  S.  488. 
[The  stockholders  of  a  banking  asso- 
ciation doing  business  under  ordinary 
copartnership  articles  are  not  dormant 
partners,  ali'liough  only  the  name  of 
the   bank  is  disclosed  to  the  public. 


CH.  XVIII.] 


OF   JOINT-STOCK    COMPANIES. 


593 


*  There  is  one  difference  which  we  incline  to  think    *  545 
the  law  would  make  between  a  common  partnership  and 
a  joint-stock  company.     It  is  as  to  dissolution  by  change.     We 
have  already  remarked  that  it  is  very  possible,  that,  where  a 
stockholder  sold  and  transferred  his  share  or  interest  in  all 
respects  as  the  rules  required,  giving  up  his  certificate,  and  a 
new  one  was  made  to  his  transferee,  the  law  would  hold  that 
this  change  operated  no  dissolution,  but  that  the  new  partner 
or  stockholder  came  into  the  place  of  the  old  one,  and  the  part- 
nership or  company  went  on.  (w)     And  the  same  thing 
might  occur  in  a  case  of  a  change  by   death.     *  We    *  5-46 
should   say,  however,  with  much  confidence,  that   the 
company  were  still  a  partnership,  and  like  a  partnership  in  the 
following  respects  :  — 

First.  Any  stockholder  might  transfer  his  interest  in  any 
way  which  would  operate  a  transfer  at  common  law,  and  pay 
no  regard  to  the  rules  of  the  company,  and  yet  give  good  title 
to  the  transferee,  so  far  as  the  property  was  concerned,  (m) 

They    are   responsible    till   notice    of    consequence,  omitted  in  the  act;   nor 


retirement ;  and  a  new  stockholder  is 
not  liable  for  debts  contracted  before 
he  became  a  member  of  the  firm. 
Shamburg  i'.  Ruggles,  Sup.  Ct.  Penn., 
15  Alb.  L.  J.  107,  s.  c.  3  Weekly  Notes, 
p.  293.] 

(m)  Adams'  Eq.  (3d  Am.  ed.) 
544  ;  Young  v.  Keighly,  15  Ves.  577 ; 
Duvergier  v.  Fellows,  5  Bing.  248 ; 
Blundell  v.  Winsor,  8  Sim.  G05;  Harri- 
son V.  Heathorn,  6  Scott  N.  R.  735, 
12  L.  J.  C.  P.  282  ;  Pinkett  v.  Wright, 
2  Hare,  120,  130.  If  several  persons 
subscribe  an  agreement,  inter  se,  to 
promote  a  joint  undertaking,  one  of 
them  cannot  withdraw  his  name,  and 
discharge  himself  from  the  engage- 
ment, without  the  consent  of  the  rest. 
And  if  an  act  of  Parliament  pass  for 
effectuating  tlie  purpose  of  the  under- 
taking, by  which  certain  obligations 
are  created,  such  original  subscriber 
is  not  exonerated  from  tlie  liabilities 
imposed  by  the  act,  by  having,  during 
the  progress  of  the  bill,  renounced 
before  the  committee,  all  further  con- 
nection with  the  undertaking,  and 
desired   that  his  name   might   be,   in 


can  the  circumstance  of  his  name 
being  so  omitted  have  the  effect  of 
disengMging  him.  Kidwelly  Canal  Co. 
V.  Raby,  2  Price,  93.  See  Scott  v. 
Berkeley,  3  C.  B  925,  5  Railway  Cas. 
51;  Stimson  v.  Lewis,  36  Vt.  91. 

(h)  See  Pratt  v.  Hutchinson,  15 
East,  511;  Rex  v.  Webb,  14  id.  406 ; 
Joseplis  V.  Pebrer,  3  B.  &  C.  639  ;  Fox 
V.  Clifton,  9  Bing.  115,  6  id.  776. 
Wiiere  a  company  was  formed,  by 
act  of  Parliament,  for  the  purchase 
of  lands  to  make  a  canal,  and  the 
act  declared  that  the  shares  shall  lie 
deemed  personal  estate,  and  shall  be 
transmissible  as  such,  "  it  was  held, 
tliat,  tliough  the  profits  arose  out  of 
the  land,  the  shares  were  personal 
property,  passing,  as  such,  to  the  as- 
signees on  the  bankruptcy  of  a  pro- 
prietor." Ex  parte  Lancaster  Canal 
Co.,  1  Deac.  &  Ch.  411,  Mont.  116. 
See  Bradley  v.  Holdswortli,  3  M.  &  W. 
422;  Bligli  v.  Brent,  2  Younge  &  C. 
268.  Where  an  act  prescribes  certain 
forms  in  tlie  transfer  of  shares,  unless 
they  are  strictly  complied  with,  the 
sliares  remain  la  the  order  and  dispo- 


38 


694  THE   LAW    OF    PARTNERSHIP.  [CH.  XVIII. 

Secondly.  That  this  transferee  would  neither  be  a  partner  by 
such  irregular  transfer,  nor  have  any  claim  against  the  com- 
pany to  be  a  partner,  (o) 

Thirdly.  This  transferee,  cr  an  execution  creditor  of  a  co- 
partner, member,  or  stockholder,  might  require  an  account  and 
settlement,  so  far  as  to  ascertain  his  rights  and  the  value  of 
his  share  ;  but  would  have  no  right  to  any  particular  thing  in 
S2?erie,  nor  to  a  division  of  the  effects  ;  and  a  court  of  equity 
would  probal)ly  deny  him  a  sale  of  the  whole,  if  a  fair  equi- 
valent for  his  ascertained  share  were  offered  him  in  money.  (/?) 

Fourthly.  If  a  stockholder  transferred  his  share  agreeably 
to  all  the  rules  of  the  company,  the  company  might, 
*  547  nevertheless,  *  with  or  without  reason,  refuse  to  accept 
the  transferee  as  a  partner,  and  withhold  his  certificate. 
That  is,  they  might  do  so,  so  far  as  to  prevent  his  becoming  a 
copartner ;  for  we  should  say  that  the  company  was  still  so  far 
a  partnership  and  not  a  corporation,  that  without  the  assent  of 
the  members  no  person  could  become  a  partner.  If  the  «ew 
certificate  were  issued,  and  no  objection  made,  their  assent  would 
be  implied  ;  but,  if  it  were  expressly  withheld,  we  should  say  the 
transferee  did  not  become  a  partner.  He  was  still  a  transferee 
of  the  property,  and  this  he  might  realize  without  joining  the 
company.  So,  too,  if  the  company  were  willing  to  receive  him, 
and  the  transferee  were  not  willing  to  join  them,  we  should 
say  he  was  no  partner,  although  he  held  the  transferred 
interest,  (^q) 

sition  of  the  proprietor ;  the  ordinary  Mason  v.  ]\IcConnell,   1   Whart.  .381 ; 

mode  of  transferring  not  constituting  Putnam   v.    Wise,    1    Hill,    23i.      See 

an  equitable  mortgage.     Ex  parte  Lan-  Barnes  v.  Pennell,  2  H.  L.  Cas.  497. 

caster  Canal  Co.,  ante.  The  assignee  of  a   stockholder   in  an 

(o)  Bray  v.  Fromont,  6  Madd.  5;  insolvent   corporation  succeeds  to  the 

Jefferys  v.  Smith,  3  Russ.  158 ;  King-  same  rights  and  liabilities  as  attached 

man  v.   Spurr,  7  Pick.  235,  238 ;  Gil-  to   his  assignor.     James   r.  Woodruff, 

more  ?'.  Black,  2  Fairf.  488;   Putnam  2  Denio,  574.     And  see  Weald  of  Kent 

V.  Wise,  1  Hill,  234;  Murray  v.  Bogart,  Canal  Co.  v.  Robinson,  5  Taunt.  801  ; 

14  Johns.  318  ;  Marquand  f.  New  York  Blount  v.  Hipkins,  7  Sim.  51.     As  to 

Manuf.    Co.,   17  id.   535;    Griswold  t'.  tiie    power  of  a   bond    creditor   of    a 

Waddington,   15  id.  82  ;  Moddewell  v.  company  to   inspect    their   books,  see 

Keever,  8  Watts  &   S.  63.     See  Hare  Pontet   v.    Basingstoke    Canal    Co.,   2 

V.  Waring,  3  M.  &  W.  362 ;  Harper  v.  Scott,    543 ;    Hill    i-.    Manchester    and 

Raymond,  3   Bosw.   29,  7  Abb.  Prac.  Salford  Water  Works  Co.,  5  B.  &  Ad. 

142;    Pratt    v.   Hutchinson,    15   East,  866;  Clarke  r.  The  Imperial  Gas  Co., 

511.  7  Bing.  95,  4  B.  &  Ad.  315. 

(/*)  Kingman  v.  Spurr,  7  Pick.  235;  (5)  See  Jefferys  v.  Smith,  3  Russ. 


CH.  XVIII.]  OF   JOINT-STOCK  COMPANIES.  695 

It  would  always  be  possible  that  the  articles  of  agreement 
might  be  such  as  to  give  to  the  transferrer,  or  possibly  to  the 
transferee,  a  suit  at  law  for  damages,  or  at  equity  for  perform- 
ance, if  the  company  refused  to  receive  him.  But  still  their 
refusal  would  prevent  his  being  a  partner.  So,  too,  the  articles 
might  be  such  as  greatly  to  qualify  the  transferee's  right  to  hold 
or  realize  the  interest  consigned  to  him,  if  he  refused  to  become 
a  stockholder.  But  still  he  would  not  become  one,  by  the  mere 
transfer,  without  consent  on  his  part.  Possibly  the  rules  might 
be  such,  that  accepting  the  transfer  accepted  the  partnership ; 
but,  even  then,  an  execution  creditor  of  the  partner,  or  one 
buying  the  share  on  a  sale  by  the  officer,  would  take  the 
interest,  we  think,  and  not  be  a  partner  without  his  own  con- 
sent and  act.  (;•) 

In  some  parts  of  this  country,  there  are  partnerships  which, 
without  being  strictly  joint-stock  companies,  are  more  like  them 
in  their  articles  and  regulations  and  manner  of  conducting 
business  than  common  mercantile  copartnerships  ;  as,  for  ex- 
ample, the  mining  partnerships  of  California.  (7t) 

158;  Harper  v.  Raymond,  3  Bosw.  29;  (rr)  A  leading  case  on  this  subject 

Tatam    v.     Williams,    3    Hare,     347 ;  is  Settembre  v.  Putnam,  30  Cal.  490. 

NicoU  V.  Mumford,  4  Johns.  Ch.  522;  [Such  partnerships,  wlien  there  are  no 

Rodriguez    v.    Heffernan,    5    id.    417  ;  partnership  articles,  are  subject  to  the 

!Marquand  v.  The  New   York  Manuf.  ordinary  law  of  partnersliip,  except  so 

Co.  17  Johns.  525.  far  as   general   usages  of   persons  en- 

(r)  1  Pars,  on  Con.  (5th  ed.)  144;  gaged  in  similar  pursuits,  or  the  known 

Pratt  r.  Hutchinson,  15  East,  511  ;  Rex  practice   of    the    particular   company, 

,«.  Webb,  14  id.  406  ;  Josephs  r.  Pebrer,  has  established   a  different   rule;    tlie 

3  B.  &  C.  639  ;  Fox  v.  Clifton,  9  Bing.  only     differences     generally     existing 

115,  6  id.  776 ;    Young  v.  Keighly,  15  being  such  as  flow  from  the  fact  that 

Ves.   557;    Duvergier   i\    Fellows,    5  in  such  partnerships  there  is  no  f/e/ec^MS 

Bing.  248;  Blundell  v.  Winsor,  8  Sim.  personce.     Jones  v.  Clark,  42  Cal.  180; 

601  ;    Harrison   v.    Heathorn,  6    Scott  Taylor   v.    Castle,   id.  367.     See  also, 

N.  R.  725,  12  L.  J.  C.  P.  282  ;  Pinkett  McConnell  v.  Denvers,  35  Cal.  365.] 
V.    Wright,   120,   130 ;    Mathewsou   v. 
Clarke,  6  How.  (U.  S.)  122. 


596 


THE    LAW    OF    PARTNERSHIP. 


[CH.^XIX. 


CHAPTER    XIX. 


OF    PART-OWNERS    OF    SHIPS. 


SECTION    I. 


OF    THE    PECULIAR    NATURE    OF    PART-OWNERSHIP    OF    SHIPS. 


Joint-owners  are  either  joint-tenants,  or  tenants  in  common, 
or  partners  ;  the  difference  between  the  last  and  the  two  former 
has  ah'eady  been  considered.  Joint-tenancy  seldom  exists  now, 
excepting  as  to  land  ;  but  all  the  incidents  of  joint-tenancy  (as 
the  right  of  survivorship,  <fec.)  may  be  given  to  a  tenancy  in 
common,  by  agreement  of  the  parties.  For  there  is  nothing  to 
prevent  their  putting  to  their  ownership  whatever  limitations 
or  qualities  they  prefer,  (a) 

Of  the  common  rules  and  principles  in  relation  to  tenancy 

in  common,  it  seems  hardly  necessary  to  say  more  than 

*549    will  be  *  involved  in  what  we  have  to  offer  concern- 


fa)  The  cases  on  these  questions 
are  ver}^  numerous.  See  the  following, 
in  which  the  different  kinds  of  interest 
are  fully  considered :  Graves  v.  Saw- 
cer,  T.  Raym.  15 ;  Ex  parte  Young, 
2  Ves.  &  B.  242;  Ex  parte  Harrison, 
2  Rose,  76 ;  Owston  v.  Ogle,  13  East, 
538;  Helme  v.  Smith,  7  Bing.  709; 
Rex  V.  Collector  of  The  Customs,  2 
Maule  &  S.  223  ;  Green  v.  Briggs, 
6  Hare,  395  ;  Bulkley  v.  Barber,  6 
Exch.  164,  1  Eng.  L.  &  Eq.  506  ;  Mum- 
ford  V.  Nicoll,  20  Johns.  611 ;  Thorn- 
dike  V.  De  Wolf,  6  Pick.  120 ;  French 
V.  Price,  24  id.  13  ;  Jackson  v.  Robin- 
son, 3  Mason,  138  ;  Hopkins  v.  Forsyth, 
14  Penn.  38 ;  Lamb  v.  Durant,  12  Mass. 
54;  Merrill  v.  Bartlett,  6  Pick.  46; 
Harding  v.  Foxcroft,  6  Greenl.  76 ; 
Patterson  v.  Chalmers,  7  B.  Mon.  695, 
598;   Milburn  v.  Guyther,  8  Gill,  92; 


Macey  v.  De  Wolf,  3  Woodb.  &  M. 
193,  205  ;  Knox  v.  Campbell,  1  Penn. 
366 ;  Buddington  v.  Stewart,  14  Conn.  % 
404 ;  Revens  v.  Davis,  2  Paine  C. 
C.  202;  Doddington  v.  Hallett,  1  Ves. 
Sen.  497;  Wrigiit  v.  Hunter,  1  East, 
20  ;  Phillips  v.  Purington,  15  Me.  425  ; 
Seabrook  v.  Rose,  2  Hill  Ch.  553; 
Patterson  v.  Chalmers,  7  B.  Mon.  595 ; 
Hewitt  V.  Sturdevant,  4  B.  Mon. 
4.53  ;  De  Wolf  v.  Gardiner,  2  Paine 
C.  C.  356;  Rex  v.  Philip,  1  Moody 
C.  C.  274 ;  Luke  v.  Gibson,  1  Abr.  Eq. 
290;  Jefferys  v.  Small,  1  Vern.  217, 
3  P.  Wms.  158.  Part-owners  of  a 
ship  are  tenants  in  common  of  it,  but 
joint-owners  of  her  use  and  emploj-- 
ment.  Trower  on  Debt,  and  Cred. 
194,  citing  Smith  Merc.  Law,  199. 
See  Owens  v.  Davis,  15  La.  Ann.  22. 


CH.  XIX.]  OF   PART-OWNERS   OF   SHIPS.  597 

ing  the  joint-ownership  of  one  species  of  property,  very 
peculiar  in  itself,  and  of  which  the  common  law,  following 
or  rather  adopting  the  law-merchant,  has  acknowledged  the 
peculiarities.  We  refer  to  ships  ;  using  the  word  of  course 
in  the  ancient  and  large  sense,  as  including  all  water-borne 
vessels,  for  carriage  of  men  or  merchandise. 

The  part-owners  of  ships  are  more  than  ordinary  tenants  in 
common,  but  not  so  much  as  partners.  And  their  mutual 
rights,  obligations,  and  remedies,  and  their  relations  to  third 
parties,  are  determined  by  a  system  of  law  older  in  fact  than 
the  law  of  partnership,  but  not  yet  fully  adopted  by  the  com- 
mon law,  nor  perfectly  adapted  to  the  exigencies  of  modern 
commerce  ;  and,  therefore,  not  without  exhibiting  some  ques- 
tions of  moment  to  which  it  is  difficult,  if  not  impossible,  to 
find,  at  present,  a  definite  and  certain  answer.  The  whole  law 
of  part-owners  of  ships  is  the  law  of  shipping ;  a  subject 
vast  in  itself,  and  which  we  certainly  should  not  think  of  intro- 
ducing here  as  an  appendix  to  the  law  of  partnership.  But  a 
brief  and  condensed  statement  of  the  general  powers,  rights, 
and  duties  of  part-owners  of  ships,  we  shall  endeavor  to  make. 

The  several  owners  of  ships  owned  in  shares  are,  in  general, 
only  tenants  in  common  as  to  the  ship ;  but  they  may  be,  and 
often  are,  copartners  as  to  the  earnings  of  the  ship  in  any  voy- 
age on  which  it  is  sent,  (aa) 

A  ship  is  a  personal  chattel.  (6)  This  is  certain,  however 
peculiar  it  may  be ;  for  the  common  law  recognizes  only  the 
broad  distinction  between  personal  chattels  and  real  estate. 
And  a  ship,  certainly,  is  not  real  estate.  But  it  is  like  it  in 
some  important  respects :  and  some  things  would  be  gained, 
perhaps,  if  the  law  respecting  title  and  transfer  assimilated  the 

(aa)  Merritt  v.  Walsh,  32  N.  Y.  685.  parties."     And  in  Lamb  v.  Durant,  12 

(b)  In  Taggard  y.  Loring,  16  Mass.  Mass.  60  :  "  Occasion  for  selling  vessels 

339,  Parker,  C.  J.,   sa^'s :    "We  have  frequently  arises  in  the  course  of  busi- 

not  been  able  to  find  that  a  vessel  may  ness;    and,  notwithstanding   tiiey   are 

not  be   liired  for  a  voyage,  or  for  a  commonly  conveyed  by  an  instrument 

certain  time,  without  writing.     By  the  under  seal,  they  may  pass  by  delivery 

common  law,  the  whole  property  of  a  only,  as  well  as  any  other  chattel,  so 

chattel  may  be  transferred  by  parol,  far   as   respects    the   property    of   the 

accompanied  by  a  delivery.  .  .  .  With-  vessel."     And   see    Oliver   v.    Greene, 

out  doubt,  then,  by  the  common  law,  3   Mass.   133;    Bartlett  v.   Walter,   13 

a  ship  may  be  hired  by  a  parol  con-  Mass.  137  ;    Ogle  v.  Eagle  Ins.  Co.,  4 

tract,    so    as   to   be   binding   on   both  Mason,  390. 


598  THE    LAW    OF   PARTNERSHIP.  [CH.  XIX. 

ship  still  more  to  real  estate.  Our  statutes  of  registration, 
copying  the  English,  have  always  required  registration  before 
the  ship  becomes  entitled  to  the  privileges  of  an  American  ship. 
The  English  statutes  have  gone  farther,  and  required 
*  550  registration  to  make  the  transfer  valid.  And  quite  *  re- 
cently an  act  of  Congress  has  required  registration  of 
all  transfers  by  sale,  mortgage,  or  pledge,  (c)  Moreover,  it 
has  been  a  universal  opinion,  growing  out  of  a  universal  cus- 
tom, that  the  law-merchant  required  that  a  transfer  of  a  ship 
should  be  made  by  a  written  document.  Out  of  all  these  things 
there  has  grown  up  an  impression  in  this  country,  that  title 
to  a  ship  could  be  made  only  through  written  documents.  But 
the  law  is  not,  we  think,  so.  (fZ)  If  the  question  is  simply, 
who  is  the  owner  of  the  ship  ;  and  not  what  can  the  owner 
do  with  her ;  and  not  whether  the  recent  law  as  to  sales  and 
mortgages  of  ships  has  been  complied  with,  —  we  should  say, 
very  confidently,  that  the  sale  and  ownership  of  a  ship  are  regu- 
lated by  the  rules  and  principles  applicable  to  the  sale  of  any 
other  chattel. 

Part-owners  of  a  ship  may  have  built  it  jointly,  or  may  have 
purchased  it  jointly  ;  or  one  or  another  may  have  purchased 
his  interest  from  a  former  owner  of  a  whole  or  a  part.  But 
their  rights  and  relations  are  the  same,  whether  they  arise  in 
one  of  these  ways  or  in  another,  (e) 

They  are  not  partners ;  and  the  difference  between  the  re- 
lation of  partners  and  that  of  part-owners  will  be  illustrated  by 
whatever  we  have  to  say  of  these  last.     But,  although  part- 

(c)  See  1  Parsons  on  Sliipping  and  15  id.  298;  Thorn  v.  Hicks,  7  Cow. 
Admiralty,  ch.  2,  wliere  the  EngHsh  698.  But  see  Rolleston  v.  Hihbert, 
and  American  Registry  acts,  and  tlie  3  T.  R.  406;  The  Sisters,  5  Rob. 
various  questions  adjudicated  untler  155,  per  Lord  Stowell ;  £a:/)arte  Halket, 
them,  are  considered.  And  see  Hughes  19  Ves.  474,  per  Lord  Eidon  ;  Weston 
V.  Morris,  21  L.  J.  Ch.  761 ;  McCalmont  v.  Penniman,  1  Mason,  316,  317;  Oiil 
V.  Rankin,  8  Hare,  1,  20  L.  T.  Ch.  1 ;  v.  Eagle  Ins.  Co.,  4  Mason,  173;  Jacob- 
Boyson  v.  Gibson,  4  C.  B.  121;  Camp-  sen  Sea  Laws,  b.  1,  ch.  2,  pp.  17,  21. 
bell  V.  Thompson,  2  Hare,  140.  (e)  Abbott  on  Shipping,  pt.  1,  ch.  1, 

(d)  Lamb  v.  Durant,  12  Mass.  54;  p.  1,  §  1  (5th  ed.) ;  Jacobsen  Sea 
Taggard  i-.  Loring,  16  id.  3.36;  Atkin-  Laws  (ed.  1818),  pp.  36,  37;  Dodding- 
8on  V.  Maling,  2  T.  R.  462,  466 ;  Sut-  ton  v.  Hallett,  1  Ves.  Sen.  497  ;  NicoU 
ton  V.  Back,  2  Taunt.  301 ;  Bixby  v.  v.  Mumford,  4  Johns.  Ch.  522 ;  Mum- 
Whitney,  8  Pick.  86;  Vinal  i-.  Burrill,  ford  v.  Nicoll,  20  Johns.  611 ;  Ex  parte 
16  id.  401 ;   Wendover  v.  Hagebroom,  Young,  2  Ves.  &  B.  242,  243. 

7  Johns.  308;  Leonard  i;.  Huntington, 


CH.  XIX.]  OF   PART-OWNERS   OF   SHIPS.  599 

owners  are  not  necessarily  partners,  they  may  be  partners.  (/) 
This  means,  not  only  that  a  partnership  may  own  ships,  or 
a  ship,  or  a  part  of  a  ship,  as  a  part  of  their  joint 
property,  but  that  the  part  *  owners  of  a  ship,  who  own  *551 
nothing  else  in  common,  may  be  partners  as  to  that 
ship.  The  strong  probability  in  fact,  and,  as  we  think,  the 
strong  presumption  of  the  law,  would  be  against  such  partner- 
ship, because  but  little  would  be  gained  by  mere  part-owners  of 
a  ship  by  their  becoming  partners ;  and,  as  there  is  little  need 
of  it,  so  it  is  seldom,  if  ever,  done.  (</)  But  the  presumption 
might  be  overthrown  by  evidence,  provided  it  went  so  far  as  to 
show  not  merely  a  Joint-ownership  resembling  that  of  partner- 
ship in  many  respects,  —  for  that  is  true  of  all  joint-ownership 
of  ships,  —  but  an  actual  and  intended  partnership.  Then, 
those  partners  have  all  the  rights  and  powers,  and  come  under 
all  the  obligations  and  liabilities,  heretofore  stated,  which  be- 
long to  partners,  (/i) 

A  more  common  case  is  one  where  part-owners  of  a  ship 
join  in  an  adventure  or  enterprise  in  such  a  form,  or  way  and 
manner,  as  to  make  them  partners  as  to  that  adventure.  We 
have  seen  that  part-owners  of  ships  may  be  partners  as  to  her 
earnings  while  only  part-owners  as  to  the  ships,  {hh')  This 
may  happen,  and  still  leave  them  part-owners  of  the  ship  as 
before,  or  the  partnership  in  the  cargo  and  adventure  may 
involve  and  produce  a  partnership  in  the  ship  also;  and  this 
would  be  much  more  probable  than  for  a  partnership  to  exist 

(/)  Patterson  v.  Chalmers,  7  B.  24  id.  13,  18,  19 ;  Lamb  v.  Durant,  12 
Mon.  497,  595 ;  Doddington  v.  Hallett,  Mass.  56  ;  Knox  v.  Campbell,  1  Barr 
1  Yes.  Sen.;  Mumford  v.  Xicoll,  20  (Penn.),  366;  Atkinson  i-.  Foster,  1 
Johns.  611,  reversing  NicoU  v.  Mum-  Man.,  Gr.  &  S.  714  ;  Jackson  r.  Robin- 
ford,  4  Jolms.  Ch.  522  ;  Macy  v.  De  son,  3  Mason,  138.  [Though  a  ship, 
"Wolf,  3  Woodb.  &  M.  193;  Hewitt  v.  like  any  other  property,  may  be  a  part 
Sturdevant,  4  B.  Mon.  453;  Hinton  of  partnership  stock,  ownership  in 
V.  Law,  10  Mo.  701  ;  Gardner  v.  Cleve-  common  does  not  make  the  owners 
land,  9  Pick.  334.  See  Merritt  r.  Walsh,  partners,  even  tiiough  there  be  a  po 
32  X.  Y.  685.  rata  division  of   freight  and  earnings. 

(g)  Patterson    v.    Chalmers,    7    B.  Ward  v.  Bodeman,  1  Mo.  Ap.  272.] 
Mon.   595;    Watson    on    Part.    5,    6;  (h)  Holderness  v.  Shaekels,  8  B.  & 

Ersk.  Inst.  b.  3,    tit.    3,  §  18;   2  Bell  C.  612,  618;  King  v.  Lowry,  20  Barb. 

Comm.  655    (5th  ed.)  ;    Porter  v.  Mc-  532;    Hardy  v.   Sproule,  29  Me.  258. 

Clure,  15  Wend.  187  ;  Harding  v.  Fox-  And  see  next  page,  note  (k). 
croft,  6  Greenl.  77 ;  Thorndike  v.  De  (hh)  See  ante,  p.  *  569. 

Wolf,  6  Pick.  120;   French  v.  Price, 


600  the;  law  of  partnership.  [ch.  xix. 

in  the  ship  alone.  (Q  The  question  whether  part-owners  of 
ships  were  partners  under  such  circumstances  has  arisen  in 
many  cases,  and  presented  much  difficulty ;  but  it  was  a  dif- 
ficulty rather  of  fact,  or  of  the  application  of  known  rules  and 
pi-inciples  to  the  facts,  than  as  to  the  rules  themselves.  They 
are  the  same  as  have  been  already  stated  ;  and  when,  under 
these  rules,  it  is  found  that  the  part-owners  are  partners,  they 
have  all  the  powers  as  to  selling  or  disposing  of  the  common 
property,  or  binding  each  other  in  relation  to  it,  that  other 

paitners  have  over  their  partnership  stock.  (^ )  But  it 
*  552    may  *  be  said,  that  circumstantial  evidence,  which  would 

suffice  to  prove  partnership  as  to  all  other  property, 
might  not  suffice  to  prove  it  as  to  ships,  for  two  reasons :  one, 
that  so  many  of  the  incidents  of  part-ownership  of  ships  are 
quite  analogous  to  those  of  partnership ;  and  the  other,  — 
which  is,  indeed,  derived  from  the  first,  —  that  there  is  no 
necessity  of  implying  partnership  to  satisfy  certain  purposes  or 
certain  exigencies,  or  explain  certain  conduct  in  relation  to 
ships,  which  could  only  so  be  explained  in  relation  to  other 
property.  In  other  words,  we  shall  show,  as  we  go  on,  that 
mere  tenants  in  common  of  ordinary  chattels  do  not  possess 
certain  powers  and  rights,  unless  they  enter  into  })artnership  ; 
but  that  part-owners  of  ships  do  possess  some  of  these  powers 
and  rights  (but  certainly  not  all)  while  they  remain  part- 
owners  only.  Or,  to  repeat  the  same  thing,  in  yet  other 
words,  part-ownership  of  ships  is  something  between  mere 
tenancy  in  common  and  partnership.  (A;) 

(0  Doddington    v.    Hallett,    1   Ves.  (k)  See  Merrill  v.  Bartlett,  6  Pick. 

Sen.  497;  Mumford  V.  NicoU,  20  Jolins.  46;    Braden    v.    Gardner,   4   id.   456; 

611;   Macy  v.  De  Wolf,  3  Woodb.   &  Doddington  r.  Hallett,  1  Ves.  Sen.  497  ; 

M.  198;    Hewitt   v.   Sturdevant,   4   B.  Ex  ^jor^e  Young,  2  Ves.  &  B.  242  ;  Ex 

Mon.  453;  Hinton  v.  Law,  10  Mo.  701 ;  parte  Harrison,  2  Rose,  76;    Ex  parte 

Gardner   v.    Cleveland,   9    Pick.    334.  Parry,  5  Ves.  575 ;  Nicoll  r.  Mumford, 

And  see  Helme  v.  Smith.  7  Bing.  709;  4  Jolins.  Cli.  522,  reversed  in  Mumford 

Ex  jiarte   Young,    2    Rose,    78,   note;  v.  Nicoll,  20  Johns.  611;    The  Larch, 

Green  v.  Briggs,  6  Hare,  595.  2  Curtis,  C.  C.  427 ;  Sterling  v.  Han- 

( /)    VVriglit  V.  Hunter,  1  East,  20;  son,  1  Cal.  478;  Briggs  v.  Wilkinson, 

Harding   v.    Foxcrof  t,    6    Greenl.    76 ;  7   B.   &  C.   34 ;   Jennings  v.   Griffiths, 

Phillips   V.   Purington,    15    Me.    425 ;  R.    &   M.   43 ;    Young   i'.    Brander,   8 

Patterson    v.    Chalmers,    7    B.    Mon.  East,  10 ;  Frazer  r.  Marsh,  13  id.  2-38 ; 

595;    Lamb  v.   Durant,   12  Mass.  54;  Reeve  v.  Davis,  1  A.  &E.  .312;  Frost 

Seabrook  v.  Rose,  2  Hill,  Ch.  555,  556.  v.   Oliver,  22  L.  J.  Q.  B.  353;  Wilson 

And  see  cases  in  previous  note.  v.  Dickson,  2  B.  &  Aid.  2;   Helme  v. 


CH.  XIX.]  OP   PART-OWNERS   OF   SHIPS.  601 

It  may  be  well  to  remark,  in  this  connection,  that  the  latest 
statutes  and  registrations,  and  the  practice  under  the  former 
acts,  require  the  insertion  in  the  register,  not  only  of  the  names 
of  the  part-owners,  but  of  their  respective  shares.  But  where 
this  was  not  done,  and  there  was  no  good  evidence  as  to  the 
proportion  of  ownership,  it  was  and  is  the  presumption  of  law, 
that  they  own  equally  ;  in  this  respect,  following  the  law  of 
partnership.  (Z) 

SECTION    II. 

OF    TIIK    RIGHTS    AND    OBLIGATIONS    OF    PART-OWNERS    OF    SHIPS    tN 
RELATION    TO    EACH    OTHER. 

1.    Of  RejMirs,  Sale,  Insurance,  and  the  like. 

*  If  persons  be  partners  in  a  ship,  or  in  any  part  of  a  *  553 
ship,  neither  of  them  can  make  any  claim  against  the 
other  for  expenses  incurred  about  their  common  property,  unless 
upon  a  complete  settlement  of  the  whole  partnership  account. 
But  if  a  part-owner  makes  repairs,  or  incurs  other  expense, 
with  the  consent  of  the  other  part-owners,  he  has  an  immediate 
claim  against  each  of  the  others,  for  his  share  of  the  expense, 
at  law  ;  {in')  and,  probably,  if  a  part  only  are  solvent,  they  who 

Smith,     7    Bing.     715;     Williams    v.  {m)  Patterson   v.    Chalmers,    7    B. 

Thomas,     6    Esp.    18;     Robinson    v.  Mon.    595;    Sawyer    v.    Freeman,    35 

Gleadow,  2  Bing.  N.  C.  163;  Wedder-  Me.  542;  Gardners.  Cleveland,  9-Piek. 

bum   V.   Wedderburn,  4   Mylne  &  C.  334;  Gowan  r.  Foster,  3  B.  &  Ad.  507. 

41;  Jaggers  v.  Binnings,  1  Stark.  64;  See  also,  on   this   question,  Briggs   v. 

The  Jonge   Tobias,    1   C.   Rob.  Adm.  Wilkinson,  7  B.  &  C.  30,  per  Bayley, 

.329.  J. ;    Reeve  v.  Davis,   1  A.  &  E.  312  ; 

(I)  Alexander  v.  Dowie,  1  H.  &  N.  Jennings  v.  GriflBths,  Ryan  &  M.  43  ; 

152,37  Eng.  L.  &  Eq.  551;  Glover  y.  Young  v.  Brander,  8  East,   10;    Wes- 

Austin,  6  Pick.  221 ;  Ohl  i-.  Eagle  Ins.  terdell  v.  Dale,  7  T.  R.   306  ;    Annett 

Co.,  4  Mason,  172 ;   Gould   v.   Gould,  v.  Carstairs,  3    Camp.  354 ;    Ex   parte 

6  Wend.   263 ;    Honore   v.    Colmesnil,  Bland,  2  Rose,  92 ;  Brodie  v.  Howard, 

1  J.  J.  Marsh.  506  ;  Farrar  v.  Beswick,  17  C.  B.  109,  33  Eng.  L.  &  Eq.  146; 

1  Moody  &  Rob.  527  ;  Conwell  v.  San-  Revens  v.  Lewis,  2  Paine  C.  C.  202; 
didge,  5  Dana,  211;  In  re  Blanchard,  King  v.  Lowry,  20  Barb.  532;  Cox  v. 

2  B.  &  C.2U;  Ex  parte  Young,  2  Yes.  Reid,  1  Car.  &  P.  602;  Ex  parte 
&  B.  242.  But  see  the  act  of  1850,  Machell,  2  Yes.  &  B.  216.  In  Rich 
ch.  27,  §  5,  9  U.  S.  Stats,  at  Large,  v.  Coe,  Cowp.  639,  Lord  Mansfield 
441,  providing  for  the  insertion  in  the  said:  "Whoever  supplies  a  ship  with 
register  of  enrolment  of  tiie  part  or  necessaries  has  a  treble  security  :  1, 
proportion  of  the  vessel  belonging  to  the  person  of  the  master ;  2,  the  speci- 
each  owner.  fie  ship ;   3,  the  personal   security  of 


602 


THE   LAW    OF   PARTNERSHIP. 


[CH.  XIX. 


are  insolvent  would  not  be  considered  in  equity  in  determining 

their  share  or  contribution,  (n) 
*  554        *  What  the  rights  of  a  part-owner  are,  if  he  incurs  such 

expenses  without  the  consent  of  the  other  owners,  may 
not  be  so  certain.  If  the  repairs,  or  other  expenses,  were  rea- 
sonable and  expedient,  and,  still  more,  if  tliey  were  distinctly 
necessary  to  the  use  or  to  the  existence  of  the  ship,  their  con- 
sent might  be  implied  ;  and  certainly  would  be,  if  it  were  pos- 
sible, (o)  But  is  there  any  presumption  to  this  effect  which  is 
absolute,  and  incapable  of  rebuttal  ?  Thus,  if  they  had  pre- 
viously been  requested,  and  distinctly  refused  their  assent, — 
that  is,  if  the  facts  presented  precisely  this  issue,  are  the 
other  part-owners  liable  for  expenses  certainly  necessary,  but 
which  they  certainly  prohibited  ?  The  answer  must  be  in  the 
negative.  ( j^?)  Some  analogy  has  been  supposed  to  exist  between 

the  owners,  whether  they  know  of  the 
supply  or  not."  It  must  be  recollected, 
however,  that  if  this  observation  in- 
cludes mere  legal  owners,  the  later 
decisions  establish  that  they  are  not 
liable,  unless  the  contract  is  shown  to 
be  made  with  their  express  or  implied 
authority  ;  and,  further,  that  there  may 
be  cases  in  which  the  master,  acting 
as  agent  for  the  owners,  incurs  no 
personal  liability ;  as,  for  instance, 
where  no  credit  is  given  to  him,  or 
there  is  an  express  stipulation  that  he 
shall  not  be  personally  liable.  It  is 
perfectly  open  to  the  parties  to  con- 
tract so  as  to  confine  the  responsibility 
either  to  the  master  or  to  the  owners. 
Maude  &  P.  on  Shipping,  8.5,  note ; 
Hoskins  v.  Slayton,  Rep.  temp.  Hardw. 
360;  Farmer  v.  Davies,  1  T.  R.  108. 
And  see  the  observations  of  Lord 
Ellenborough,  C.  J.,  in  Hussey  v. 
Christie,  9  East,  432.  To  obtain  an 
adjustment  of  the  ship's  accounts,  pro- 
ceedings between  the  part-owners  may 
be  instituted  in  a  court  of  equity. 
Moffat  V.  Farquharson,  2  Bro.  Ch. 
338.  And  see  Owstou  i;.  Ogle,  13 
East,  538. 

(n)  2  Pars,  on  Cont.  269  (5th  ed.) ; 
1  Pars,  on  Shipping  and  Admiralty, 
ch.  4,  p.  119.  But,  in  Merrill  v.  Bart- 
lett,  6  Pick.  46,  it  was  held,  that  where 
two  persons  built  a  ship   together,  to 


be  armed  by  them  in  certain  propor- 
tions, and  one  advanced  more  tiian 
his  proportion  of  the  expenses,  he  had 
no  lien  on  the  ship  for  the  balance  due 
to  him  ;  but  the  interest  of  tiie  other 
in  the  ship,  at  least  to  the  extent  of 
his  advances,  was  liable  to  attachment 
at  the  suit  of  other  creditors.  And 
see  Thorndike  v.  De  Wolf,  6  Pick. 
120;  Doddington  v.  Hallett,  1  Ves. 
Sen.  497  ;  Ex  parte  Harrison,  2  Rose, 
76  ;  Ex  parte  Young,  2  Ves.  &  B.  242; 
Mumford  v.  NicoU,  20  Johns.  611;  Ex 
parte  Parry,  5  Ves.  575. 

(o)  Westerdell  v.  Dale,  7  T.  R. 
306 ;  Chapman  v.  Durant,  10  Mass. 
47;  James  v.  Bixby,  11  Mass.  34,  36; 
Schemerhorn  v.  Loines,  7  Jolms.  311 ; 
Muldon  V.  AVhitlock,  1  Cow.  290;  Har- 
dy V.  Sproule,  29  Me.  258  ;  Wright  v. 
Hunter,  1  East,  20  ;  Baldney  v.  Ritchie, 
1  Stark.  338;  Thompson  v.  Finder, 
4  Car.  &  P.  158 ;  Macy  v.  De  Wolf,  3 
Woodb.  &  M.  193,  204;  Gallatin  v. 
The  Pilot,  2  Wallace  C.  C.  592  ;  Scottin 
V.  Stanley,  1  Dall.  129  ;  King  v.  Lowry,  • 
20  Barb.  5.32 ;  Patterson  v.  Chalmers, 
7  B.  Mon.  595;  Sawyer  v.  Freeman, 
35  Me.  642. 

ip)  See  Brodie  v.  Howard,  33  Eng. 
L.  &  Eq.  146;  Hardy  i,'.  Sproule.  31 
Me.  71 ;  Davis  v.  Johnston,  4  Sim. 
539;  The  Jonge  Tobias,  1  C.  Rob. 
Adm.  329. 


CH.  XIX.]  OF   PART-OWNERS    OF   SHIPS.  603 

ships  and  houses  and  mills.  The  owners  of  these  last  were 
compellable,  at  common  law,  to  contribute  for  their  repair ; 
and  a  joint-tenant,  or  tenant  in  common,  might  have  his  writ 
"  de  7'eparatione  facienda  "  against  another.  (5-)  The  reason 
of  this  is  obvious  ;  and  it  might  seem  to  be  almost  equally 
desirable  to  maintain  ships  in  good  repair,  as  houses  or  mills. 
But  the  answer  is,  we  have  no  rule  of  law  to  this  effect.  In 
fact,  at  common  law,  while  any  part-owner  might  doubtless 
repair  the  ship  at  his  own  cost,  he  would  have  therefor  no 
claim  whatever  upon  the  other  part-owners,  unless  he  can 
found  it,  in  some  way  or  other,  upon  their  consent  and  promise, 
actual  or  constructive,  (r) 

*  Whether  he  has  such  a  claim  in  equity,  if  not  at  law,  *  555 
may  be  more  doubtful  ;  but  we  know  of  no  authority  for 
saying  that  he  would  have  relief  in  that  court,  in  this  country. 
We  have  another  court  with  us,  which,  reasoning  from  the 
analogy  of  such  cases  as  a  dissent  about  employment,  and  the 
like,  we  should  say,  possesses  here,  though  probably  not  at  this 
time  in  England,  full  power  in  the  premises ;  and  that  is  the 
Court  of  Admiralty :  but  that  it  would  be  open  to  a  part-owner 
so  circumstanced,  and  would  find  for  him  means  of  adequate 
and  appropriate  relief,  we  should  say,  if  at  all,  rather  from  a 
general  belief  that  our  admiralty  courts  possess  a  wide  and 

(7)  Carver  v.  Miller,  4  Mass.  559.  to  third  parties.    There  is  no  authority 

(;•)  Brodie  v.  Howard,   33  Eng.  L.  that   any   such   law   is    applicable    to 

&  Eq.    146;    Curling  v.    Robertson,    7  part-owners.     I  am  of  opinion,  there- 

Macn.  &  G.  336;  Mitcheson  l-.  Oliver,  fore,  that  the  only   question  here  is, 

19Jur.  901;   Hardy  »•.  Sproule,  31  Me.  whether,   in   point   of   fact,   that   pre- 

71;  Benson  v.  Thompson,  27  id.  470.  sumption    of    liability,    which     would 

The    distinctions   are    well    stated   by  have  arisen  as  part-owner,  is  rebutted 

Williams,    J.,    in    Brodie    v.    Howard,  by   the    circumstances;    and   I   think 

"  Part-owners  of  a  ship  are  not  in  the  that  there  is  here  ample  evidence  to 

situation  of  partners.     To  this  extent  rebut     such     presumption,    and    that 

they  resemble  partners,  namely,  that  there  is  nothing  in  point  of  law  or  of 

they  are  all  liable  for  repairs  and  such  fact  to  make  this  defendant  liable.    He 

other  necessary  expenses  for  the  ship  might  have  so   conducted  himself  by 

which  may  be  presumed  to  have  been  previous   dealings    with   the    plaintiff 

incurred   with  their  assent ;  but  they  as  to  have  made  himself  liable  in  the 

differ  from   partners    in   this   respect,  present  action  ;  but  there  is  no  evidence 

that  the  authority  of  one  part-owner  to  of    any   such    dealings,   and    there   is 

pledge  the  credit  of  the  other  does  not  nothing  here  to  show  that  he  ever  held 

exist,  as  in  the  case  of  partners,  unless  out   Lewis  (the  other  part-owner)   as 

such   authority   has   been    determined  his  agent." 
only  by  express  dissent,  communicated 


604  THE   LAW    OF   PARTNERSHIP.  [CH.  XIX. 

very  general  jurisdiction  over  the  rights  and  obligations  of  part- 
owners,  tlian  from  the  autliority  of  recorded  decisions.  And 
if  it  be  true,  as  is  said  emphatically  in  one  case,  that  admiralty 
has  no  jurisdiction  between  part-owners  in  cases  of  account, 
and  only  in  cases  of  contract,  it  would  seem  that  this  court 
could  not  find  a  remedy  in  the  supposed  case,  (s) 

Any  part-owner  may  sell  his  interest  or  siiare  at  any  time, 
to  any  person,  and  on  any  terms,  at  his  own  pleasure,  (i)  But, 
while  he  has  such  plenary  power  over  his  own  share,  he  has 
none  whatever  over  the  shares  of  other  owners,  and  can  sell 
them  only  when  he  has  an  authority  which  would  justify  his 
selling  any  chattel  interest  of  another  party,  (rt) 

*  556        *  It  has,  indeed,  been  doubted  whetlier,  even  in  case 

of  partnership  between  part-owners,  either  of  them  has, 
in  this  country,  the  right  of  sale  of  the  whole  ship,  (v)  But 
the  doubt  must  rest  only  on  the  necessity  of  registered  title  ; 
that  is,  on  the  same  ground  which  prevents  a  partner  from 
making  a  valid  conveyance  of  land  held  by  his  firm,  if  the  legal 
title  is  not  wholly  in  him.  But  as  we  doubt  whether  a  sale  of 
a  ship  may  not  be  made  like  that  of  any  chattel,  so  do  we 
whether  there  exists  this  restraint  upon  the  power  of  sale  of  a 
partner  as  to  the  joint  property  in  a  ship,  (w') 

If  a  part-owner  did  sell  the  whole  ship,  it  seems  that  the 
other  part-owners  might  look  on  this  as  the  constructive  de- 
struction of  the  ship,  and  so  bring  trover  against  the  seller,  as 

(s)  The  Steamboat  Orleans  v.  Phce-  (i-)  Where  the  members  of  a  trad- 

bus,    11    Pet.    175.      And   see  post,  p.     ing   partnersliip   are    interested    in   a 

*  561,  note  (i/).  sliip,   the   names   of    alt   the   partners 

(?)  Molloy,    De   Jur.    Mar.    222;    1  should  appear  on  the  ship's  register; 

Pars,  on  Shipping  and  Admiralty,  92.  and  a  ship  belonging  to   a  partnership 

And  see  Oviatt  i'.   Sage,  7  Conn.  95.  having  been  registered   as   belonging 

As  to  the  liability  of  the  assignee  of  to    two    partners    carrying    on    trade 

the  share  of  a  part-owner,  see  Doug-  under  a   particular  firm,   it  was   held, 

las  V.  Russell,  4  Sim.  533.  that  a  third  partner,  who  formed  one 

(u)  Weld  V.  Oliver,  21   Pick.  559  ;  of  the  firm,  but  whose  name  was  not 

White  V.  Osborn,  21  Wend.   72  ;  Hyde  on  tiie  register,  had  no  interest  in  the 

r.   Stone,  9   Cow.  230,  7  Wend.  354;  ship.     Slater  v.    Willis,    1   Beav.  361. 

Oviatt  V.  Sage,  7  Conn.  95  ;   Wilson  v.  See  also,  Curtis  v.  Perry,  6  Ves.  739 ; 

Eeed,  3  Johns.  175;  Thompson  i\  Cook,  Battersby   v.    Smyth,    3    Madd.    110; 

2    Southard,    580;    Farr   v.    Smith,    9  Thompson    v.    Leake,    1    id.   39;   The 

Wend.  338;  Barton  v.  Williams,  5  B.  Frances,  2  Dods.  423. 

&  Aid.  395;   Farrar  v.  Beswick,   1   M.  (w)  Lamb  r.  Durant,  12  Mass.  54; 

&  W.  682,  per  Parke,  B. ;  Mayhew  v.  Wright  v.  Hunter,  1  East,  20. 
Herrick,  7  C.  B.  229. 


CH.  XIX.]  OP   PART-OWNERS   OF   SHIPS.  605 

any  tenant  in  common  may  against  his  cotenant  for  the  destruc- 
tion of  the  cliattel.  (x)  On  the  same  ground,  the  other  owners 
may  have  trover  against  the  purchaser  of  a  ship,  if  he  also  sells 
it.  (y)  But,  at  common  law,  no  part-owner  can  wrest  the 
possession  of  the  ship  from  the  hands  of  another,  or  have 
trover  or  replevin  ;  (z)  and  for  all  purposes  of  this  kind  he  must 
go  into  admiralty,  as  we  shall  see  when  speaking  of  the  employ- 
ment of  the  ship. 

As  a  part-owner  cannot  sell  the  whole  ship,  so  neither  can  he 
transfer  the  property  in  the  whole  by  way  of  mortgage 
or  *  pledge,  (a)  But,  if  we  are  right  in  supposing  that  *  557 
a  valid  sale  of  a  ship  may  be  made  informally,  as  by  oral 
bargain  and  delivery,  it  would  follow  that  a  sale  or  mortgage 
made  in  this  way  without  consent  of  the  other  owners,  and 
therefore  void  as  to  their  interests,  might  be  informally  ratified 
by  them,  and  would  be  made  entirely  effectual  by  any  words  or 
conduct  of  theirs  which  amounted  to  ratification.  (6)  The 
recent  statute  of  the  United  States  regulating  transfers  of  ships 
by  sale  or  mortgage,  would,  however,  apply  to  this. 

A  part-owner  cannot  recover  damages  against  another,  for 
fraudulently  and  deceitfully  sending  a  ship  on  a  foreign  voyage, 
and  thereby  causing  her  loss  ;  nor  has  he  a  remedy  (c)  for 
this,  even  in  equity  ;  nor  for  careless  and  negligent  misman- 
agement, whereby  the  ship  was  destroyed  by  fire,  (c?) 

(x)  Chesley  v.  Thompson,  3  N.  H.  Taunt.    241  ;    Seldon    v.    Hickock,    2 

9;  Herrin  v.  Eaton,  13  Me.  193;  Mad-  Caines,  166;  Heath  v.  Hubbard,  4  East, 

dox  V.  Goddard,  15  id.  218;  Anders  v.  110;  Mayhew  v.  Herrick,  7  C  B.  229; 

Meredith,  4  Dev.  &  B.  199;  Barnadis-  Mersereau  v,  Norton,   15  Joiins.  179; 

ton  V.  Chapman,  4  East,  121;  Gilbert  Hyde  y.  Stone,  9   Cow.  230;  Hurd  v. 

V.  Dickerson,  7  Wend.  450.  Darling,    14    Vt.    214 ;    ^Yetherell   v. 

(y)   Weld  V.  Oliver,  21  Pick.  559;  Spencer,  3  Gibbs  (Mich.),  123;   Farr 

White  y.  Osborn,  21  Wend.  72 ;  Hyde  i--.    Smith,    9    Wend.    338;   Barnes   v. 

V.   Stone,  9  Cow.  230,  7  Wend.  354;  Bartlett,  15  Pick.  71. 

Wilson  I'.  Reed,  3  Johns.  175;  Thomp-  (</)  But     a     partner    maj'    do    so. 

son  V.  Cook,  2  Southard,  588  ;  Farr  v.  Patch  v.  Wheatland,  8  Allen,  102. 

Smith,  9  Wend.  338.     See  further,  on  (b)  Hagedorn  v.  Oliverson,  2  Maule 

this  question.  Barton  v.    Williams,   5  &   S.   485;    Routh    v.   Thompson,    13 

B.  &  Aid.  395;  Farrar  v.  Beswick,  1  East,  274;  Oviatt  v.  Sage,  7  Conn.  95; 
M.  &  W.  688,  per  Parke,  B. ;  Heath  Putnam  v.  Wise,  1  Hill,  234. 

V.  Hubbard,  4  East,  110;  Mayhew  i'.  (c)  Graves  v.  Sawcer,  T.  Raym.  15, 
Herrick,  7  C.  B.  229;  Barnadiston  v.  1  Keb.  38,  1  Lev.  29;  Strelly  v.  Win- 
Chapman,  C.  B.  1  Geo.  1,  before  King,  son,    1    Vern.    297,    Skin.    230.       See 

C.  J.,    cited  4   East,    121 ;    Graves   v,  Horn  v.  Gilpin,  Amb.  255. 
Sawcer,  1  Levinz,  29  T.  Rayra.  15.  {d)  Moody  v.  Buck,  1  Sandf.  804. 

(2)  Feuuiugs    V.    Ld.   Greuville,  1 


606  THE   LAW   OF   PARTNERSHIP.  [CH.  XIX. 

It  is  now  quite  well  settled,  that  a  part-owner  has  no  author- 
ity to  insure  the  interests  of  the  other  part-owners,  for  them, 
without  their  authority.  And  this  is  true  even  if  he  be  ship's 
husband,  (<')  (of  whose  general  powers  and  duties  we  sliall 
speak  hereafter).  And  by  the  law  of  agency  in  reference  to 
contracts  of  insurance,  this  authority,  if  not  absolutely  express, 
must  be  very  nearly  so.  It  is  true,  that  an  authority  to  insure 
may  be  inferred  from  circumstances ;  but  they  must  be  very 
strong.  (/)  And  there  is  no  reason,  that  we  are  aware  of,  for 
holding  that  the  authority  may  be  less  fully  and  distinctly 
made  out  in  the  case  of  a  part-owner  than  in  that  of  a  mere 
stranger.  The  relation  between  part-owners  affords  for  such 
authority  only  a  very  slight  foundation,  and  would  assist  but 
little  in  the  circumstantial  proof  of  that  authority. 

As  a  part-owner  may  sell  or  transfer  his  whole  interest,  at 
his  own  pleasure,  so  it  may  be  taken  from  him  by  a  creditor, 
and  passes  by  death  or  by  bankruptcy  to  his  representa- 
*  558  tives.  And  in  *  either  of  these  ways,  or  by  the  de- 
struction of  the  ship,  the  relation  of  part-ownership  is 
dissolved.  There  may  remain,  however,  in  the  managing  owner 
or  owners,  somewhat  of  the  same  power  and  duty  of  winding  up 
the  concern,  which  belongs  to  the  survivors  or  solvent  partners 
of  a  partnership.  (^) 

2.    Of  the  Employment  of  the  Ship. 

The  law  on  this  subject  has  advanced  somewhat  farther  than 
it  has  in  relation  to  repairs.  The  reasons  are  the  same,  and 
seem  to  be  equally  strong  ;  and  it  may  be  thought  that  they 

(e)  See/Jos^  p.  *570,  note  (c/).  And  his  own  name.  But  he  has  no  au- 
see  Peoria  M.  &  F.  Ins.  Co.  v.  Hall,  12  thority,  by  reason  of  tlie  joint  owner- 
Mich.  202.  s^hip,   to   insure    tlie  interests  of    tlie 

(/)  See  Hagedorn  v.  Oliverson,  2  otiier  part-owners;  and  such  insur- 
Maule  &  S.  485 ;  Kouth  v.  Tiiompson,  ance,  unless  sanctioned,  will  cover 
13  East,  274;  Hooper  v.  Lusby,  4  only  his  individual  interest.  If  sane- 
Camp.  66 ;  Robinson  v.  Gleadow,  2  tloned  by  them,  it  will  cover  the  in- 
Bing.  N.  C.  15(3.  [A  part-owner  of  a  terests  of  all.  Knight  v.  Eureka  Fire 
vessel,  in  whose  name  a  policy  of  in-  &  Mar.  Ins.  Co.,  26  Ohio  St.  G64.] 
surance  on  the  whole  vessel  for  ac-  (</)  As  to  the  rules  of  the  maritime 
count  of  the  owners  is  issued,  is  a  law,  see  Molloy,  b.  2,  ch.  1,  §  3,  Maude 
trustee  for  the  other  owners,  and,  in  &  P.  on  Shipp.  45. 
case  of  loss,  may  sue  on  the  policy  in 


CH.  XIX.] 


OF    PAUT-OWNERS    OF    SHIPS. 


607 


will  reach,  in  reference  to  repairs,  the  same  result  to  which  they 
have  arrived  in  reference  to  the  employment  of  the  ship  ;  but 
they  have  not  yet. 

If  part-owners  agree,  they  may  make  what  use  of  the  ship 
they  will,  or  no  use  at  all.  The  law  does  not  interfere  with 
them  in  the  slightest  degree.  But,  if  they  differ,  —  either  because 
a  part  wish  one  use,  and  others  another ;  or  because  some  wish 
to  employ  her,  and  others  to  let  her  rest,  —  the  law  now  inter- 
feres, and  determines  what  shall  be  done  with  her. 

Courts  of  common  law  cannot  do  this ;  (A)  and  it  is  now 
settled,  we  suppose,  in  England,  as  well  as  in  this  country,  that 
courts  of  equity  either  cannot  or  will  not.  (i)  The  question, 
therefore,  must  come  before  courts  of  admiralty.  They  have 
much  power  in  England,  in  the  premises.  (/ )  In  this 
country,  they  have  far  *  more,  {k}  And  since  a  de-  *  659 
cision  of  the  Supreme  Court  of  the  United  States 
has  extended  admiralty  jurisdiction  over  all  our  interior 
waters,  (^)  it  may  be  believed  that  its  prompt,  equitable,  and 
always  adequate  remedies,  will  be  sought  in  nearly  all  the  ques- 


(h)  Wliere,  however,  one  of  the 
part-owners,  wlio  acted  as  sliip's  hus- 
band, covenanted  with  tlie  otliers  to 
make  out  the  ship's  accounts,  and 
divide  tlie  profits  after  the  ship's 
return,  it  was  held,  that  the  other 
owners  might  sue  him  at  law  on  this 
covenant.  Owston  v.  Ogle,  13  East, 
638. 

(i)  See  as  to  tlie  jurisdiction  of 
equity  in  case  of  part-owners,  Crapster 
V.  Gritfith,  2  Bland,  5;  ]\liiburn  v. 
Guyther,  8  Gill,  92 ;  Brenan  v.  Preston, 
2  lie  Gex.  M.  &  G.  813 ;  10  Hare,  331 ; 
Haly  V.  Goodson,  2  Meriv.  77  ;  Christie 
V.  Craig,  id.  137  ;  Castelli  v.  Cook,  7 
Hare,  89.  The  jurisdiction  of  the 
court  of  chancery  is  undoubted,  wher- 
ever tliere  is  an  express  agreement  as 
to  the  employment  of  the  ship.  Darby 
V.  Baines,  9  Hare,  309.  See  also 
Brenan  v.  Preston,  2  De  Gex,  M.  &  G. 
813;  Adams's  Eq.  526,  n.,  as  to  tlie 
restraining  powers  of  courts  of  equity 
where  there  is  difficulty  in  the  relief 
in  admiralty.  Equity  has  jurisdiction 
in   matters    of   account    between    the 


part-owners  of  a  ship.  Moffiit  v.  Far- 
quharson,  2  Brown  Ch.  338;  Good  v. 
Blewitt,  13  Ves.  397. 

ij)  Maude  &  P.  on  Shipp.  47; 
Molloy,  b.  2,  ch.  1,  §  2  ;  Beawes,  107  ; 
In  re  Blanshard,  2  B.  &  C.  248.  But 
see  The  Apollo,  1  Hagg.  306,  in 
which  Lord  Stowell  said,  that  "  a  co- 
partner in  a  ship  could  not  originate 
in  the  court  of  admiralty  a  suit  for  ac- 
counts ;  nor  will  it  hang  jurisdiction 
on  such  accounts  upon  a  stipulation 
taken  in  a  case  between  part-owners." 
But  see  Tlie  Sisters,  4  Rob.  275  ;  The 
New  Draper,  id.  287  ;  The  Experiment, 
2  Dodson,  38 ;  The  John,  of  London, 

I  Hagg.  342 ;  The  Pitt,  id.  240  ;  The 
Margaret,  2  id.  276,  277. 

(k)  See  The  Vincennes,  decided  by 
Mr.  Justice  Ware,  in  1851,  cited  2 
Pars,  on  Cont.  (5th  ed.)  267,  and  2 
Pars,  on  Shipping  &  Admiralty,  343, 
426 ;  Davis  v.  Brig  Seneca,  18  Am. 
Jur.  486,  Gilpin,  10;  Skrine  v.  Sloop 
Hope,  Bee,  2. 

(/)  Steamboat   Orleans  v.  Phoebus, 

II  Pet.  175. 


608  THE   LAW    OP   PARTNERSHIP.  [CH.  XIX. 

tions  which  arise  under  the  law  of  sliippuig.  We  cannot  give 
here  even  an  outline  of  the  principles  or  practice  of  this  juris- 
diction. But,  in  reference  to  our  immediate  topic,  remark,  at 
the  outset,  that  the  court  always  asks  what  the  majority  de- 
sire, (w)  It  might  even  seem,  from  the  English  authorities, 
that  whatever  the  majority  agree  in  desiring,  that  the  courts  of 
admiralty  will  do,  only  protecting  the  interests  of  the  minor- 
ity, (w)  But  even  there  the  rule  would  require  some  qualifica- 
tion. The  foundation  of  the  whole  jurisdiction  in  relation  to 
the  employment  of  the  ship,  is,  that  public  policy  requires  the 
use  of  the  ship,  rather  than  that  she  should  decay  at  the  wharf. 
Hence,  if  all  the  owners  agree  to  use  her  in  any  way,  the  law 
never  interferes  ;  and,  if  a  majority  agree  to  use  her  in  any  way, 
the  court  would  permit  that  use,  only  requiring  that  they  should 
give  to  the  minority  adequate  security  for  the  return  of  the  ship. 
This  is,  undoubtedly,  the  general  rule  both  in  England 
*  560  and  here,  (o)  But,  if  it  were  understood  to  be  a  *  uni- 
versal and  peremptory  rule,  it  might  give  rise  to  much 
oppression.  Suppose  a  majority  wished  not  to  employ  the  ship 
at  all ;  if  the  court  would  then  permit  the  minority  to  direct  the 
employment,  they  giving  security,  might  not  the  majority 
accomplish  their  purpose  by  agreeing  upon  some  preposterous 
and  wasteful  voyage,  such  that  the  minority,  if  obliged  to  choose 
between  that  voyage  and  none,  would  prefer  none  ?  Or,  we 
may  suppose  an  actual  majority,  or  one  large  owner,  who,  by 
nominally  transferring  small  interests,  had  made  an  apparent 
majority,  desiring  a  voyage  unprofitable  or  dangerous  to  the 

{>»)  Tlie  John,  of  London,  1  Ilagg.  shard,  2  B.  &  C.  244,  248,  249  ;  Strelly 

342,   o46;    Tlie   Pitt,   id.    240;    In   re  i;.  Winson,  1  Vern.   297;  Anonymous, 

Blanshard,  2  B.  &  C.  248 ;  Tiie  Apollo,  2  Cas.  Ch.  36 ;  Buddington  v.  Stewart, 

1  Hagg.  306;  Haly  v.  Goodson,  2  14  Conn.  404;  Haly  v.  Goodson,  2 
Meriv.  77  ;  Willings  v.  Blight,  2  Pet.  Meriv.  77.  The  majority  in  such  case 
Adm.  288;  Steamboat  Orleans  v.  control  the  appointment  and  dismissal 
Phoebus,  II  Pet.  S.  C.  175.  of  the  officers  and  crew  of  the  ship; 

(«)  Adams's  Eq.  526 ;  Card  I'.  Hope,     and   the   dissentient   owners   bear    no 

2  B.  &  C.  661.  part  of  the  expense,  and  are  entitled 

(o)  See  last  note.     And  see  Gould  to  no  part  of  the  profit  of  the  voyage 

V.  Stanton,  16   Conn.  12 ;    Willings   v.  to  which  they  have  disagreed.     Gould 

Blight,   2    Pet.    Adm.    288;   The   Ma-  v.    Stanton,    16    Conn.    12;    Davis    v. 

rengo,   Sprague,    506 ;    The  Apollo,  1  Johnson,  4  Sim.  539 ;   The  Apollo,  1 

Hagg.    306  ;    Fox    v.    The    Lodemia,  Hagg.  306 ;  Card  v.  Hope,   2  B.  &  C. 

Cralibe,  271  ;  The  Steamboat  Orleans  661,  675. 
y.  Phoebus,  11  Pet.  175;  In  re    Blan- 


en.  XIX.]  OF   PART-OWNEES    OF   SHIPS.  609 

ship,  either  from  mere  folly  or  for  some  collateral  advantage : 
here  the  court  would  not  regard  the  wishes  of  a  majority. 
Practically,  the  rule  in  our  courts  may  be  said  to  be,  that  they 
will  direct  such  employment  of  every  ship  as  shall  seem  to  be 
most  advantageous  for  all  concerned ;  being,  in  all  cases,  greatly 
influenced  by  the  wishes  of  a  majority,  but  not  absolutely  bound 
by  them. 

They  who  prevail,  and  thus  get  control  of  the  ship,  must  give 
security  to  those  who  are  defeated  ;  and  this  security  might  be 
given  either  for  the  share  of  the  profits  of  the  voyage  contem- 
plated which  would  have  come  to  the  defeated  owners  if  they 
had  entered  into  the  voyage,  or  for  some  compensation  for  the 
use  of  the  vessel  by  the  prevailing  owners.  But  a  recent  de- 
cision would  seem  to  limit  the  action  of  the  court  to  requiring 
of  the  majority,  who  take  possession  of  the  ship,  security  for 
her  safe  return,  with  no  compensation  to  the  other  owners  for 
the  use  of  the  ship,  (g)  She  is  virtually  insured  for  the  min- 
ority, by  the  security  given  for  her  safe  return.  We  know  no 
case  in  which  the  security  required  extends  expressly  to  re- 
pairs ;  but  perhaps  this  also  is  included,  to  some  extent,  in  her 
safe  return  ;  and,  if  circumstances  distinctly  called  for  specific 
security  on  this  point,  the  court  might,  perhaps,  require  it.  (r) 

If  there  is  no  majority,  the   English  admiralty  would  not 
select  from  the  two  antagonist  desires  that  which  is 
thought  the  best,  (s)    *  And  it  seems  now  to  be  settled,    *  561 
that  they  would  not  decree  a  sale,  (f)     In  this  country, 

(q)  The   case  of  The  Marengo,   1  {t)  Adams's   Eq.    526;     Ouston    v. 

Amer.  Law  Review,  p.  88,  decided  by  Hebden,    1   Wils.   101 ;    The   Apollo, 

Judge  Lowell,  Dist.  Court  U.  S.  for  1   Hagg.   306;    The   Margaret,    2  id. 

Massachusetts,  April,  1866.  276,  per  Sir  C.  Robinson :  "  The  law 

(»•)  See,  for  the  general  principles  of  some  countries  has  gone  so  far  as 

which  have  regulated  the  action  of  ad-  to  endeavor  to  compromise  all  inter- 

miralty  on  this  subject,  2  Pars,  on  Ship-  ests,   by   compelling,  in  cases  of  dis- 

ping  &  Admiralty,  ch.  7,  sect.  1,  and  the  agreement,  a  sale,  either  of  the  shares 

cases  cited  in  the  notes  on  the  next  page,  of  the  minority  or  of  the  whole  ship, 

(s)  See   The  New   Draper,  4  Rob.  at  the  application  of  a  majority  of  tlie 

Adm.  287 ;  The  Egyptienne,  1  Hagg.  owners,    and    sometimes    even    of   a 

Adm.  346  ;  The  Elizabeth  and  Jane,  1  moiety   of  interests.      Such   attempts 

W.  Rob.  278 ;  The  Valiant,  id.  64,  67  ;  appear  to  have  been  made  also  in  this 

The  Windsor  Castle,  1  Notes  of  Cases,  country ;    but  the   justice   of  such   a 

118.     See  Adams's  Eq.   526  ;    Smith's  proceeding  may  be  questionable.    Dis- 

Merc.  Law,  174;  Davis  v.  Johnston,  4  agreements  may  be  fomented  by  it,  or 

Sim.  589.  a  forced  sale,  at  particular  times,  may 

39 


610  THE   LAW   OF   PARTNERSHIP.  [CH.  XIX. 

the  decided  weight  of  authority,  and,  as  we  think,  of  reason,  is 
in  favor  of  the  power  of  admiralty  to  decree  a  sale,  (m)  We 
have  no  doubt  that  the  court  would  do  this,  rather  than  have 
the  vessel  lost  by  disuse ;  and  in  most  cases,  perhaps  in  all, 
they  would  do  this  rather  than  select  between  two  proposed 
courses,  neither  of  which  was  desired  by  a  majority.  But  if 
the  majority  would  make  no  use  of  the  ship,  and  the  minority 
a  reasonable  use,  it  seems  that  the  minority  may  have  the  ship, 
giving  bonds,  <fec.,  as  before,  (v) 

Quite  frequently  in  this  country,  —  much  more  so  than  in 
England,  —  the  master  of  a  ship  is  a  part-owner.     And  this 

circumstance  affects  somewhat  the  otherwise  unqualified 
*  562    power  of  the  owners,  *to  appoint,  displace,  or  direct  the 

persons  employed  by  them.  If  all  the  owners  agree  in 
this,  nothing  limits  their  power.  If  they  do  not  agree,  a  ma- 
jority have  great  power,  but  would  not  be  permitted  to  oppress 
a  minority.  If  this  minority  consisted  of  the  master,  whom  all 
the  other  owners  wished  to  displace,  he  would  have  a  hearing 
in  court,  and  the  other  owners  must  show  some  reason  for  dis- 
placing him.  We  should  suppose  that,  if  there  were  two  equal 
owners,  and  one  were  master,  he  might  be  displaced  at  the  suit 

be  disadvantageous  or  ruinous  to   the  employ  the  ship  in  sucii  voyages  as 

minority.      The   law   of  England  has  they  may  please ;  giving  a  stipulation 

accordingly    restrained    the    Court   of  to  the  dissenting  owners  for  the  safe 

Admiralty   from    exercising    such    an  return  of  the  ship,  if  the  latter,  upon 

authority,  and  no  other  court  has  as-  a  proper  libel  filed  in   the  admiralty, 

sumed     it.      On     the     contrary,     the  require  it.     And  the  minority  of  the 

courts  of  common  law  and  of  chancery  owners  may  employ  the  ship  in  the 

have    declined    to    interfere    between  like  manner,  if  the  majority  decline  to 

joint   tenants   in   respect  to   the    pos-  employ  her  at  all.     So  the  law  is  laid 

session  of  their  ship."  down   in   Lord   Tenterden's  excellent 

(u)  Brooks  &  Davis  V.  The  Seneca,  treatise    on     Shipping."      Abbott    on 

18  Am.  Jur.  486,  490,  per  Mr.  Justice  Shipp,,  part  1,  ch.  3,  §  4  to  §  7  ;  3  Kent 

Washington,    reversing    s.   c.   Gilpin,  Comm.  211,  n ;  Maude  &  P.  on  Shipp. 

10 ;  Skrine  v.  The  Sloop  Hope,  Bee's  47,  n  ;  2  Parsons  on  Sliipping  &  Ad- 

Adm.    2 ;     Willings    v.    Blight,     Pet.  miralty,  242,  248.     If  the  interests  of 

Adm.   288;    Tunno    v.    The    Betsina,  the  owners  be  equal,  and  they  differ 

5  Am.  L.  Reg.  406  ;   Steamboat  Or-  about  the  employment  of  the  ship,  — 

leans  v.  Phoebus,  11  Pet.  183;  Adams's  one-half  being  in  favor  of  employing 

Eq.  526,  note  2 ;  Maude  &  P.  on  Shipp.  her,  and  the  other  half  opposed  to  it,  — 

48,  n. ;  3  Kent's  Comm.  211,  213  (9th  the  willing  owners  may,  upon  giving 

ed.);  Abbott  on  Shipp.  (6th  Am.  ed.)  the  usual  security,  have  the  ship  de- 

104,  n.  livered    to    them     for    employment. 

(i')  Steamboat  Orleans  v.  Phoebus,  Davis   v.   The  Brig  Seneca,    18   Am. 

11    Pet.    175,   per   Story,    J. :    "  The  Jur.  48G,  490. 
majority  of  the  owners  have  a  right  to 


CH.  XIX.]  OF   PAET-OWNERS   OP   SHIPS.  611 

of  the  other  in  admiralty,  or  a  sale  ordered,  but  only  when 
reasons  were  offered  of  sufficient,  that  is,  in  such  a  case,  of  very 
great,  strength  and  importance.  (^^) 

It  has  been  said  that  part-owners,  being  tenants  in  common, 
cannot  sue  each  other  for  injury  or  loss  to  the  common  property 
by  negligence,  unless  this  injury  amounts  to  destruction,  (a:;) 
We  doubt,  however,  whether  an  admiralty  court  would  always 
api)ly  this  technical  rule.  It  does  not  seem  consonant  with  the 
principles  of  the  law-merchant ;  nor  could  it  be  derived  from 
the  Roman  civil  law  ;  and  these  are  the  two  principal  sources 
of  admiralty  jurisprudence.  (^)  If  a  part-owner  detains  a  ship, 
and  prevents  a  voyage  toward  which  the  other  owners  have 
contributed  expenses  without  notice  of  dissent  from  him,  he  is 
liable  to  them  for  his  share.  Even  if  he  dissents,  but  does  not 
distinctly  object,  and,  the  voyage  being  undertaken,  the  ship  is 
lost,  it  has  been  said  that  he  is  still  liable  in  equity.  But  not 
so  if  he  expressly  dissent  and  object.  (2) 

*'  It  is  certain  that  part-owners  of  ships  are  held  to    *  563 
strict  honesty  in  their   mutual  dealings.     Each  must 
account  for  any  profits  received,  and  would  be  allowed  in  his 
account  no  credit  for  charges  or  expenses  which  were  not  rea- 
sonably necessary  and  free  from  all  suspicion  of  ill  faith. 

3.    Of  the  Lien  of  Part-owners  of  Ships. 

This  is  one  of  the  questions  upon  which  the  authorities  are 
in  irreconcilable  conflict.     It  seems  to  be  very  generally  agreed 

[w]  See  the  New  Draper,  4  Rob.  means  unprecedented  for  this  court  to 
Adm.  290;  The  See  Reuter,  1  Dods.  proceed  even  to  that  extent;  but  then 
22.  In  The  New  Draper,  Sir  Wil-  some  special  reason  is  commonly 
liam  Scott  said :  "  The  dispossession  stated  to  induce  the  court  to  inter- 
of  a  master  is  in  its  nature  not  an  pose."  In  the  case  of  a  foreign  sliip, 
uncommon  proceeding ;  all  that  tlie  as  a  general  thing  the  court  will  not 
court  requires  in  cases  where  the  mas-  interfere,  on  application  of  the  part- 
ter  is  not  an  owner,  is,  that  the  ma-  owners,  to  dispossess  a  captain  who  is 
jority  of  the  proprietors  should  declare  also  an  owner.  The  Johan  and  Sieg- 
their  disinclination  to  continue  him  in  mund,  Edw.  Adm.  242. 
possession.  In  the  case  of  a  master  {x)  See  Graves  r.  Sawcer,  T. 
and  part-owner,  something  more  is  re-  Raym.  15  Lev.  29,  1  Keble,  38. 
quired  before  the' court  will  proceed  to  (//)  1  Domat's  Civil  Law,  by 
dispossess  a  person  who  is  also  a  pro-  Strahan,  §  1489  (Cushing's  ed.)  p.  584. 
prietor  in  the  vessel,  and  whose  pos-  [z)  Anonymous,  Skinner,  2;;0 ; 
session,  therefore,  the  common  law  is  Strelly  v.  Winson,  1  Vern.  297;  Horn 
upon  general  principles  inclined  to  v.  Gilpin,  Ainb.  255 ;  Davis  v.  John- 
maintain.    It  is  not,  however,  by  any  ston,  4  Sim.  539. 


612  THE   LAW    OP    PARTNERSHIP.  [CH.  XIX. 

that  a  part-owner  who  is  in  advance  to  the  ship  or  cargo  on  a 
certain  voyage  or  adventure,  has  a  lien  on  the  ship  or  cargo  or 
proceeds  for  that  specific  balance,  (a)  So  if  part-owners  agree 
to  fit  out  and  load  a  vessel  jointly  for  a  certain  voyage,  and  one 
of  them  becomes  bankrupt  and  fails  to  advance  his  share  of  the 
expense,  it  seems  that  this  case  will  be  settled  on  the  principles 
of  partnership.  That  is,  the  solvent  part-owners  will  settle 
and  wind  up  the  adventure ;  charging  the  bankrupt  with  his 
share  of  the  advance  and  expense,  and  paying  to  the  assignees 
only  the  final  balance  due  him.  (J)  But  this  might  be  required 
by  the  common  principles  of  bankruptcy,  which  are  liberal  in 
the  allowance  of  set-off.  The  true  question  is,  whether  a  part- 
owner  has  a  lien  on  the  ship  or  its  proceeds  for  any  general 
balance  due  from  the  other  owners.     So  far  as  this  balance 

arises  from  accounts  or  transactions  entirely  independent 
*  564    of  the  ship,  he  has  not.  (c)     Nor  has  he  for  *  a  balance 

arising  from  charges  for  the  ship  itself  in  former  voy- 
ages, unless  part-ownership  be  deemed  in  this  respect  a  kind 
of  partnership.  (cZ)  We  have  high  authority  for  this  view. 
Hardwicke,  sitting  in  equity,  held  it.  (e)  Afterwards,  it  seemed 
to  be  doubted  and  perhaps  overthrown  in  England.  (/)     Story 

(a)  Holderness    v.    Shackles,   8  B.  242;   Ex  parte  Harrison,  2  Rose,   76 »' 

&  C.  612 ;  Gould  v.  Stanton,  16  Conn.  Ex  parte  Gribble,  3  Deac.  &  Ch.  339  ; 

12,  23 ;   Macy  v.  Be  Wolf,  3  Woodb.  Sims  v.  Bond.  5  B.  &  Ad.  .389. 
&  M.  193,  210;  Doddington  v.  Hallett,  (c)  Merrill  v.  Bartlett,  6  Pick.  46  ; 

1  Ves.  Sen.  497 ;  Mumford  v.  Nicoll,  20  Braden  v.  Gardner,  4  Pick.  456  ;  Dod- 

Johns.  611,  625;  Hewitt  v.  Sturdevant,  dington  v.  Hallett,  1  Ves.  Sen.  497  ;  Ex 

4  B.  Mon.  453,  466  ;  Gardner  v.  Cleve-  parte  Young,  2  Ves.  &  B.  242  ;  Ex  parte 

land,  9  Pick.  334.     The  same  rule  ap-  Harrison,  2  Rose,  76 ;  Ex  parte  Parry, 

plies  to  the  expenses  of  repairs  to  the  5  Ves.   575 ;    Mumford   v.   Nicoll,   20 

hull  of  the  ship,   where  such  repairs  Johns.   611 ;    Thorndike    v.  De  Wolf, 

are  done  with  a  view  to  the  particular  6  Pick.  120;   Patton  v.  The  Schooner 

adventure  in  which  the  earnings  are  Randolph,    Gilpin,    457  ;    Seabrook   v. 

made,    and   without    which    that    ad-  Rose,  2  Hill,  Ch.  553 ;    The  Larch,  2 

venture  could  not  have  been  under-  Curtis  C.  C.  427;  Sterling  v.  Hanson, 

taken ;    and   it  would  seem   that  the  1  Cal.  478. 

circumstance  that  such  repairs  are  not  (d)  1  Parsons  on  Shipping  and  Ad- 
exhausted  in  the  adventure  does   not  miralty,  111,  114.     And  see  cases  cited 
create    any    exception    to    the    rule,  in  the  last  note. 
Green  v.  Briggs,  6  Hare,  395.  (c)  In  Doddington  v.  Hallett,  1  Ves. 

(6)  Holderness  i'.  Shackles,  8  B.  &  Sen.  497. 
C.  612  ;  Pearson  v.  Skelton,  1  Tyrwh.  (/)  By  Lord  Eldon.     See  Ex  parte, 

&  G.  848,  1  M.  &  W.  504 ;    Green  v.  Young,    2  Ves.   &  B.  242 ;    Ex  parte 

Briggs,  6  Hare,  395.    See  also,  jEJar  parte  Harrison,  2  Rose,  76  ;  Green  i-.  Briggs, 

Young,  2  Rose,  78,  note,  2  Ves.  &  B.  6  Hare,  395.     See  also,  Buxton  v.  Snee, 


CH.  XIX.]  OF   PART-OWNERS    OP    SHIPS.  613 

inclined  to  it  here ;  and  there  is  much  in  the  nature  of  the  case 
and  in  the  principles  of  the  law-merchant  which  would  lead  to 
this  conclusion.  (</)  But  we  apprehend  the  law  is  not  quite  so. 
If  an  insolvent  part-owner  has  the  proceeds  of  the  ship  in  his 
hands,  he  may  certainly  deduct  from  them  whatever  is  due  to 
him  from  a  bankrupt  part-owner.  But  if  the  question  be 
whether  he  could  charge  that  bankrupt's  share  in  the  ship,  with 
his  whole  claim  against  him  on  the  ground  of  a  lien  on  their 
common  property,  we  think  the  answer  must  be  in  the  nega- 
tive. (Ji)  In  this  country,  one  of  two  part-owners  who  built 
and  owned  a  ship  together  has  been  denied  his  lien  on  the 
ship  for  his  advances  towards  her  cost,  if) 


SECTION    III. 

OF    THE     RIGHTS    AND     OBLIGATIONS    OF     PART-OWNERS   OF   SHIPS   AS   TO 
THIRD    PARTIES. 

1.    Of  the  Power  of  a  Part-owner  to  Represent  the  Owners. 

This  is  not  the  same  with  that  of  partners,  but  is  not  without 
some  resemblance  thereto.  A  partner,  as  we  have  seen,  has  a 
power  to  represent  his  copartners,  and  bind  them  by  his 
acts  *  or  promises,  to  any  extent,  if  only  they  are  within  *  b^b 
the  scope  of  the  business  and  are  not  tainted  with  fraud. 
The  power  of  a  part-owner,  certainly, is  not  carried  so  far  as  this. 
It  is  said,  however,  that  a  part-owner,  if  the  others  are  absent 
and  distant,  has  the  power  of  making  contracts  for  the  repair 
and  furnishing  of  the  ship,  for  the  other  owners  as  well  as  for 
himself,  (j)     This  rule  must  rest  partly  on  public  policy,  which 

1  Ves.  Sen.  154 ;  Brent  v.  Hay,  Belt's  Harrison,  2  Rose,  76.     And,  for  a  full 

Supp.  to  Ves.  Sen.  85.  examination  of  the  cases,  see  Green  v. 

[g]  See  Story  on  Part.  §§  441,  444;  Briggs,  6  Hare,  395;   3  Kent  Comm. 

Mumford  v.  NicoU,  20  Johns.  611,  re-  {9th  ed.)  43;  Ex  parte  Parry,  5  Ves. 

versing  NicoU  v.   Mumford,  4  Johns.  575. 

Ch.  522;   Hewitt  v.  Sturdevant,  4  B.  [i)  Merrill  r.  Bartlett,  6  Pick.  46. 

Mon.  458,  459.  (,/)  Abbott  on  Shipp.  105 ;  Wright 

(/()  Braden  v.  Gardner,  4  Pick.  456;  v.  Hunter,  1  East,  20;  Ex  parte  Bland, 

Merrill  v.  Bartlett,  6  id.  56  ;  Thorndike  2  Rose,   93  ;    Bickham   i-.    Kniglit,    5 

V.   De  Wolf,  id.  120;    Patton    v.   The  Scott,  629;    Thompson   v.   Finden,   4 

Schooner  Randolph,  Gilpin,  457  ;    Ex  Car.  &  P.  158 ;  Stewart  v.  Hall,  2  Dow 

parte  Young,  2  Ves.  &  B.  242;  Ex  parte  P.  C.  29.     In  the  following  cases,  the 


614  THE   LAW   OF   PAETNERSHIP.  [CH.  XIX. 

would  not  permit  a  vessel  to  lie  useless  and  decay  for  want  of 
repair,  unless  all  the  owners  could  be  convened,  or  were  repre- 
sented by  agents  clothed  technically  with  authority.  In  part, 
however,  it  finds  its  foundation  in  the  law  of  agency ;  of  that 
implied  agency  which  is  frequently  recognized  by  the  law. 
This  law  supposes  a  part-owner  to  have  authority  to  protect 
and  preserve  the  common  property,  at  the  common  expense. 
But  the  implication  and  the  authority  go  no  farther  than  the 
reason.  Hence,  if  all  the  partners  are  present  and  within 
reach,  there  is  no  such  necessity;  for  all  may  be  consulted  by 
the  part-owner  who  acts,  and  the  third  party  applied  to  for 
repairs  may  ascertain  whether  they  have  given  authority.  (¥) 
If,  however,  the  owners  are  not  known,  it  may  be  said  that  they 
are  not  within  reach  or  accessible  for  any  practical  purpose. 
This  is  true  if  they  are  not  known,  and  cannot  be  ascertained.  (V) 
But  in  a  home  port  they  always  can  be  learned  from  the  cus- 
tom-house, if  the  names  are  registered.  If  not  registered,  this 
is  the  fault  of  the  parties.  And  we  should  say  that  parties 
supplying  or  repairing  a  ship  in  a  home  port  could  not  look  on 
those  whose  names  were  registered,  and  who  resided  there,  as 
distant  in  this  sense  ;  but  that  the  law  would  regard 
*  566  owners  whose  names  were  *  neither  known  to  them  nor 
registered,  as  not  accessible  by  them,  (jii) 
The  liability  of  other  owners  very  frequently  depends  upon 
the  question  to  whom  credit  was  given.  If  exclusively  to  the 
owner  dealing  with  the  party,  of  course  no  others  are  holden.  (n) 

repairs  were  ordered  by  the  ship's  (/)  Tliompson  v.  Davenport,  9  B.  & 
husband,  and  the  other  partners  were  C.  78.  But  see  Thompson  v.  Finden, 
held  liable:  Chapman  v.  Durant,  10  4  Car.  &  P.  158.  See  also  James  v. 
Mass.  47;  SchemerhOrn  v.  Loines,  7  Bixby,  11  Mass.  34;  Leonard  y.  Hunt- 
Johns.  311 ;  Muldon  v.  Whitlock,  ington,  15  Johns.  298 ;  Marquand  v. 
1  Cow.  290 ;  Thompson  v.  Finden,  4  Webb,  16  Johns.  89 ;  Muldon  v.  Whit- 
Car.  &  P.  158.  See  also  Hardy  v.  lock,  1  Cow.  290;  Wilkins  v.  Reed, 
Sproule,  29  Me.  258;  Scotlin  v.  Stan-  BGreenl.  220;  Paterson  y.  Gandasequi, 
ley,  1  Dallas,  129 ;  Patterson  v.  Clial-  15  East,  62. 
mers,  7  B.  Mon.  595.  (w)  See  Jennings  v.  Griffiths,  Ryan 

(A.)  Benson   v.    Thompson,   27    Me.  &  Moody  N.  P.  42,  per  Abbott,  C.  J. 
470;  Hardy  v.  Sproule,  31  id.  71.     In  (n)  Hussey  v.  Allen,  6  Mass.  163; 

Mitcheson  v.  Oliver,  5  Ellis  &  B.  419,  James  v.  Bixby,  11  id.  34;  Muldon  v. 

32  Eng.  L.  &  Eq.  219,  236,  the  question  AVliitlock,  1  Cow.  290 ;  Ex  parte  Bland, 

arose  whether  a  master  had  authority  2  Rose,  91  ;   Stewart  v.  Hall,  2  Dow, 

in  a  home  port  to  make  repairs,  and  29 ;    Cox   v.   Reid,   1  Car.  &  P.  602 ; 

was  considered  by  the  court  an  open  Reed    v.    White,    5    Esp.    122.      But 

question.  Parke,  B.,  in   Mitcheson  v.  Oliver,  5 


CH.  XIX.] 


OP   PART-OWNERS   OF   SHIPS. 


615 


And  we  apprehend,  that,  where  a  party  makes  his  charges  against 
one  part-owner  alone,  this  would  raise  a  strong  presumption 
that  he  credited  him  alone,  (o)  But  the  presumption  arising 
from  this  charge,  or  from  dealing  and  accounting  with  him 
alone,  or  receiving  money  from  him,  would  be  open  to  rebutter. 
If  he  could  show  that  there  were  other  owners,  that  he  did  not 
know  them,  and  the  owner  dealing  with  him  had  their  authority, 
actual  or  constructive,  he  would  hold  them,  (j?)     If,  as  is  very 

common,  the  charge  is  made  to  "  ship and  owners,"  this 

would  be  conclusive  as  to  the  intention,  (^q)  If  the  creditor 
received  payment  from  the  owner  dealing  with  him,  in 
his  negotiable  notes  or  bills,  *  this  would  raise  a  strong  *  567 
presumption,  perhaps  of  a  personal  and  exclusive  dealing 
with  him  ;  and,  if  the  paper  were  dishonored,  it  might  be  said, 
on  this  ground,  that  he  could  not  look  to  the  other  owners ; 
but  the  leading  authorities,  and,  as  it  seems  to  us,  the  reason 
of   the  case,  would  lead  to  the  opposite    conclusion,  (r)     In 


Ellis  &  B.  419,  32  Eng.  L.  &  Eq.  219, 
232,  says  :  "  We  liave  often  said  tlie 
expression,  '  Upon  wliose  credit  tlie 
worli  was  done,  or  the  goods  were 
supplied,'  is  an  incorrect  expression, 
and  likely  to  mislead  the  jury  ;  the 
correct  mode  of  leaving  the  question 
to  the  jury  is,  '  Who  was  the  contract- 
ing party  ? '  "  See  also,  Myers  r. 
Willis,  17  C.  B.  77,  33  Eng.  L.  &  Eq. 
204,  affirmed  18  C.  B.  886,  36  Eng.  L. 
&  Eq.  350;  Brodie  v.  Howard,  17  C.  B. 
109,  33  Eng.  L.  &  Eq.  146 ;  Mackenzie 
V.  Pooley,  11  Exch.  638,  34  Eng.  L.  & 
Eq.  486. 

(o)  See  Ex  parte  Bland,  2  Rose,  91 ; 
Baldney  v.  Ritchie,  1  Stark.  338; 
Stewart  v.  Hall,  2  Dow,  29 ;  Thomp- 
son V.  Finden,  4  Car.  &  P.  158 ;  Hussey 
V.  Allen,  6  Mass.  163  ;  James  v.  Bixby, 
11  id.  34;  Muldon  v.  Whitlock,  1  Cow. 
290;  Cox  V.  Reid,  1  Car.  &  P.  602; 
Reed  v.  White,  5  Esp.  122  ;  Chapman 
V.  Durant,  10  Mass.  47 ;  Schemerhorn 
V.  Loines,  7  Johns.  311 ;  Wyatt  v.  Mar- 
quis of  Hertford,  3  East,  147. 

(p)  Thompson  v.  Davenport,  9  B. 
&  C.  78;  Taber  v.  Cannon,  8  Mete. 
456.  It  will  not  discharge  the  owners 
merely  to  charge  the  debt  to  the  mas- 


ter, or  ship's  husband,  or  other  agent. 
Teed  v.  Baring,  cited  Abbott  on  Sliipp. 
(5th  ed.)  pp.  83,  84;  Ex  parte  Bland, 
2  Rose,  91 ;  Stewart  v.  Hall,  2  Dow, 
29;  James  v.  Bixby,  11  Mass.  34; 
Leonard  v.  Harrington,  15  Johns.  298  ; 
Marquand  v.  Webb,  16  id.  89  ;  Thomp- 
son V.  Einden,  4  Car.  &  P.  158.  If  a 
credit  has  been  given  to  an  agent,  as  a 
ship's  husband,  and  the  agent  has  been 
thereby  enabled  to  settle  witli  Iiis 
principal,  and  to  receive  advances 
upon  the  faith  of  an  exclusive  liability 
of  the  agent,  the  owners  will  be  dis- 
charged. Reed  v.  White,  5  Esp.  122  ; 
Wyatt  V.  Marquis  of  Hertford,  3  East, 
147  ;  Cheever  v.  Smith,  15  Jolins.  276  ; 
Muldon  V.  Whitlock,  1  Cow.  290; 
Stewart  v.  Hall,  2  Dow,  29. 

(q)  Jones  v.  Blum,  2  Rich.  Law, 
475;  Miln  v.  Spinola,  4  Hill,  177; 
Scottin  V.  Stanley,  1  Dall.  129;  Hen- 
derson V.  Mayhew,  2  Gill,  393. 

(r)  In  a  nisi  prius  case.  Reed  v. 
White  and  others,  5  Esp.  122,  —  which 
was  an  action  for  cordage  sold,  against 
the  defendants,  as  owners  of  a  ship,  — 
the  defendant.  White,  was  the  manag- 
ing owner,  whose  bill,  taken  by  the 
plaintiff  for  the  cordage,  was   dishon- 


616 


THE   LAW   OF  PARTNERSHIP. 


[CH.  XIX. 


the  States  where  negotiable  paper  is  primd  facie  payment 
(Massachusetts  and  Maine),  this  presumption  would  be  still 
stronger,  (s)  But  everywhere  it  would  be  overcome  by  proof 
that  there  was  no  intention  tc  charge  him  alone,  and  not  to 
charge  other  part-owners ;  and  this  proof  might  be  in  this 

case,  also,  indirect   and  circumstantial,  (t}     Where   a 
*  568    part-owner  actually  dissented  from  any  act  *  or  contract 

of  another  owner,  of  course  he  would  not  be  bound  by 
such  act  or  contract,  (w) 

There  is  another  limitation  to  the  implied  authority  of  a  part- 
owner,  derivable  from  reason  and  authority.     It  is,  that  he 


ored ;  renewed,  and  again  dishonored. 
Lord  Eilenborough,  in  charging  the 
jury,  said :  "  If  tlie  plaintiff,  dealing 
with  Wliite  separately,  has  adopted 
him,  he  has  discharged  the  others,  and 
must  have  a  verdict  against  him.  It 
was  not  necessary  that  there  should 
have  been  a  receipt.  If  lie  has  ad- 
justed accounts  with  him  on  tliat  foot- 
ing, tlie  otlier  defendants  are  entitled 
to  the  benefit  of  it.  The  first  renewed 
bill  is  expressed  to  be  for  cordage 
found  for  the  Princess  Mary,  and 
drawn  only  on  White.  If  this  was 
drawn  on  him,  as  for  himself  and  as 
agent  for  his  partners,  it  was  a  pro- 
longation of  time  as  to  all.  The 
question  is,  Whether  it  was  intended 
as  a  settlement  with  him  alone,  and 
adopting  iiira  as  the  single  debtor "?  "  A 
very  respectable  full  special  jury  of 
merchants  found  for  the  defendants. 
An  important  element,  however,  in 
this  case,  and  which  brings  it  in  har- 
mony with  the  other  cases  cited  atite, 
notes  (o)  and  (p),  is  that  urged  for  the 
defendants,  that  the  plaintiff  had  dis- 
charged the  other  owners,  because 
that  tiiey,  ignorant  of  the  mode  of 
dealing  between  the  plaintiff  and 
White,  had  suffered  him  to  receive 
large  sums  of  the  East  India  Company 
for  freight,  which  they  would  other- 
wise have  detained.  But  see,  on  the 
main  question,  Higgins  v.  Packard, 
2  Hall  {N.  Y.),  547;  Scliemerhorn  v. 
Loines,  7  Johns.  311 ;  Muldon  v.  Whit- 
lock,  1  Cowen,  290,  303;   Cheever  v. 


Smith,  15  Johns.  276  ;  King  v.  Lowry, 
20  Barb.  532 ;  Patterson  v.  Chalmers, 
7  B.  Mon.  595;  Wyatt  v.  The  Marquis 
of  Hertford,  3  East,  147.  See  Ray- 
burn  V.  Day,  27  111.  46. 

(s)  Chapman  v.  Durant,  10  Mass. 
47 ;  French  v.  Price,  24  Pick.  13,  20 ; 
Wilkins  v.  Reed,  6  Greenl.  220 ;  Des- 
cadillas  v.  Harris,  8  id.  298 ;  Newell  v. 
Hussey,  18  Me.  249 ;  Thacher  v.  Dins- 
more,  5  Mass.  299;  Maneely  v.  M'Gee, 
6  id.  143;  Goodenow  v.  Tyler,  7  id. 
36 ;  Whitcomb  v.  Williams,  4  Pick. 
228;  Reed  v.  Upton,  10  id.  522;  Wat- 
kins  V.  Hill,  8  id.  522 ;  Wood  v.  Bod- 
well,  12  id.  268;  Ilsley  v.  Jewett,  2 
Mete.  168;  Butts  v.  Dean,  id.  76; 
Curtis  V.  Hubbard,  9  id.  322,  328; 
Thurston  v.  Blanchard,  22  Pick.  18; 
Melledge  v.  Boston  Iron  Co.,  5  Cush. 
158  ;  Varner  v.  Nobleborough,  2 
Greenl.  121;  Bangor  v.  Warren,  34 
Me.  324;  Fowler  v.  Ludwig,  id.  455; 
Shumway  v.  Reed,  id.  560;  Gilmore 
V.  Bussey,  3  Fairf.  418 ;  Comstock  v. 
Smith,  23  Me.  202. 

(t)  See  2  Parsons  on  Ccm.  (5th  ed.) 
624;  Butts  v.  Dean,  2  Mete.  76; 
Curtis  V.  Hubbard,  9  id.  328 ;  Thurston 
V.  Blanchard,  22  Pick.  18 ;  Melledge  v. 
Boston  Iron  Co.,  5  Cush.  158 ;  Wilkins 
V.  Reed,  6  Greenl.  220.  And  see  Teed 
V.  Baring,  Abbott  on  Shipp.  (6th  Am. 
ed.)  116;  Ex  parte  Bland,  2  Rose,  91  ; 
Fitch  V.  Sutton,  5  East,  230 ;  Wright 
V.  Hunter,  1  id.  20. 

(u)  Horn  v.  Gilpin,  Ambler,  255.      — 


CH.  XIX.]  OF   PART-OWNERS    OF    SHIPS.  617 

cannot  bind  the  other  owners  by  any  act,  or  to  any  expenditure, 
which  does  not  rest  on  some  necessity  or  obvious  and  certain 
expediency.  If  the  supplies  are  extravagant  and  wholly  un- 
necessary, or  if  the  expenses  were  wanton  and  excessive,  the 
other  owners  would  not  be  bound  by  any  thing  less  than  their 
express  authority  or  assent.  It  is  not,  however,  a  strict  neces- 
sity which  is  required  to  raise  this  implication ;  but  only  such 
reasonableness  of  expenditure  as  carries  with  it  a  probability 
that  reasonable  men  would  concur  in  or  approve  of  it  in  relation 
to  their  own  property,  (r) 

In  some  of  our  States,  laws  have  been  passed  —  and,  as 
experience  showed  objections,  they  have  been  met  by  acts  in 
amendment  —  authorizing  actions  to  be  brought  by  a  vessel  or 
against  a  vessel,  in  the  name  of  the  vessel,  in  the  same  man- 
ner as  if  it  were  a  corporation,  or  a  legal  person.  We  have 
not  yet  sufficient  adjudication  under  these  statutes  to  under- 
stand fully  their  operation ;  but  they  are  obviously  intended  to 
meet  those  cases  in  which  injustice  might  be  done  or  suffered 
through  an  ignorance  of  the  owners'  names,  or  by  reason  of 
their  absence.  (?^)  And  these  laws  have  beAi  held  by  the 
Supreme  Court  of  the  United  States  to  be  unconstitutional,  in 
that  the  right  to  bring  an  action  in  rem  against  a  ship  is 
exclusively  an  admiralty  right,  and  therefore  confined  by  the 
Constitution  to  the  courts  of  the  United  States,  (ww') 

For  the  same  reason,  a  rule  of  the  maritime  law,  which  has 
come  down  from  a  remote  antiquity,  gives  to  "  material-men," 
as  they  are  called, —  meaning  thereby  men  who  repair  a  for- 
eign ship  or  furnish  her  with  supplies,  —  a  lien  against  the 
ship  itself,  for  the  amount  due  for  such  repairs  or  supplies ; 
and  in  this  respect  our  States  are  foreign  to  each  other,  (x) 

(y)  Webster  v.   Seekamp,  4  B.  &  6  Eng.  L.  &  Eq.  473  ;  Leddo  v.  Hughes, 

Aid.  352;  The  Vihlia,  1  Wm.  Rob.  1,  15  111.  41. 

10;  The  Sophie,  id.  368  ;  Mackintosh  (w)  See  Merrick  u.  Avery,  14  Ark. 

V.  Mitcheson,  4  Exch.  175  ;  The  Ship  370.     And  see  1  Parsons  on  Shipping 

Fortitude,  3  Sumn.  228,  233;   United  and   Admiralty,    119-124,    for    a    full 

Ins.  Co.  V.  Scott,  1  Johns.   106,   111  ;  examination  of  these  statutes  and  the 

Pratt  V.  Tunno,  2  Brev.   449  ;    Wain-  questions  adjudicated  under  them. 
Wright  V.  Crawford,  3  Yeates,  181,  4  {ww)  The  Hine  v.  Trevor,  4  Wall. 

Dall.  225  ;  Merwin  v.  Shailer,  16  Conn.  555. 
489 ;  Philips  v.  Ledley,  1  Wash.  C.  C.  {x)  See  the  next  note. 

226  ;  Beldon  v.  Campbell,  6  Exch.  886, 


618  THE   LAW   OF   PARTNERSHIP.  [CH.  XIX. 

The  statutes  of  many  of  our  States  extend  this  lien  to  ships  in 
their  home  ports.  (?/) 

2.    Of  the  Shijy's  Husband. 

*  569  *  It  has  always  been  common  for  the  owners  of  ships 
to  agree  upon  some  one  who  should  be  their  general 
agent,  and,  as  such,  liave  the  management  and  control  of  the 
ship.  He  has  been  called,  from  ancient  times,  "  ship's  hus- 
band." In  our  national  statutes,  he  is  called  "  the  managing 
owner."  Usually,  and  almost  always  in  practice,  he  is  an 
owner  ;  but  this  is  not  strictly  necessary,  unless  so  far  as  the 
statutes  require  it.  His  duties  and  his  powers,  when  not 
determined  by  express  instructions  or  agreements,  are  such  as 
the  nature  of  his  agency  and  the  long  usage  of  merchants  point 
out.  (z)  If  he  be  not  a  part-owner,  all  who  are,  are  responsi- 
ble to  him  m  solido  for  his  charges,  within  the  scope  of  his 
authority,  on  the  general  principles  of  agency.  If  he  be  a 
part-owner,  then  it  seems  that  each  owner  is  liable  to  him  only 
for  his  share,  (a)  But,  perhaps,  in  equity,  or  in  admiralty, 
solvent  part-owners  would  share  the  loss  arising  from  the 
bankruptcy  of  one  of  them,  and  his  consequent  indebtedness  to 

(!/)  The  Jerusalem,  2  Gallis.  345 ;  2  P.  Wms.  367.     For  the  Scotch  law, 

The   Brig   President,   4  Wash.  C.   C.  see  Wood  v.  Creditors  of  Weir,  1  Bell's 

453  ;  The  Gen'l  Smith,  4  Wheat.  438 ;  Comm.  527. 

The  Schooner  Marion,   1    Story,   68;  (z)  1  Bell's  Comm.   (4th  ed.)  410, 

Peyrouxr.  Howard,  7  Pet.  324;    The  §  428;    id.  p.  504   (5th  ed.)  ;    Sims  v. 

St.   Jago    de    Cuba,   9     Wheat.   409 ;  Brittain,  4  B.  &  Ad.  538 ;    Benson  v. 

Musson  V.  Tales,  16  Mass.  3-32.     For  Heathorn,  1  Younge  &  C.  326 ;  Turner 

the   purposes   of   the   lien,   as   in   the  v.  Burrows,  8  Wend.  144,  151 ;  Gould 

general   application    of    the    law-mer-  v.  Stanton,  16  Conn.   12,  23.     Where 

chant,   our   States   are   considered    as  the  ship  is  under  the  management  of 

foreign  to  each  other.     Pratt  v.  Reed,  the  master,  and  the  owners  divide  the 

19   How.   359 ;    The    Brig    Nestor,    1  profits,  the  master  is,  with  respect  to 

Sumn.    73 ;    The    General    Smith,    4  her  concerns,  prima  facie    agent   for 

Wheat.   438.      In    P^ngland   the    rule,  them  all.     Briggs  v.  Wilkinson,  7  B.  & 

differing  from  the  American  rule,  is,  C.  34  ;  Jennings  v.  Griffitlis,  Russ.  &  M. 

that  the  lien  continues  only  so  long  as  43  ;    Young  v.    Brander,   8   East,   10 ; 

the  "  material-man  "  retains  the   pos-  Frazer  v.  Marsh,  13  id.  238  ;  Reeve  v. 

session,  as  in  the  general  law.     Hoare  Davis,    1    Adol.    &   E.    312 ;    Frost   v. 

V.    Clement,   2    Show.    338 ;    Justin  v.  Oliver,  22  L.  J.  Q.  B.  353. 
Ballam,   1   Salk.  34 ;   Ex  parte  Bland,  (a)  Helme  v.    Smith,  7  Bing.  709. 

2  Rose,  91 ;   Franklin  v.  Hosier,  4  B.  See  also,  Brown  v.  Tapscott,  G  M.  &  W. 

&  Aid.  341;   Buxton  v.  Snee,  1  Ves.  119. 
Sen.  154 ;   Watkinson  v.  Bernadiston, 


CH.  XIX.]  OF   PART-OWNERS    OF   SHIPS.  619 

the  ship's  husband,  agreeably  to  the  rule  in  equity  in  cases  of 
contribution.  (J) 

A  ship's  husband  should  collect,  with  proper  prompti- 
tude, the  *  amount  due  to  him  from  each  part-owner,  *  570 
and  may  sue  one  who  refuses  or  neglects  to  pay  his 
share.  And  we  should  say  that  he  had  a  lien,  for  all  his  actual 
expenses  for  the  ship,  and  for  indemnity  upon  all  his  lawful 
obligations  for  the  ship,  on  the  proceeds  of  the  ship,  if  sold  ; 
or  on  her  earnings,  or  on  her  documents  of  title,  if  these,  or 
any  of  them,  come  into  his  actual  possession.  But  even  this 
lien  seems  to  be  his  rather  as  a  part-owner  than  as  only  a 
ship's  husband.  And  it  does  not  seem  to  extend  to  the  ship 
itself,  (c) 

His  appointment  may  be  inferred  from  his  acting  as  ship's 
husband  with  the  knowledge  and  consent,  or  knowledge  and 
silence,  of  the  other  owners.  It  does  not  seem  to  be  usually 
in  writing.  It  is  his  duty  to  see  to  the  complete  equipment 
and  entire  sea-worthiness  of  the  ship  ;  and,  therefore,  to  have 
the  charge  of  her  in  port,  to  make  all  proper  repairs,  to  fur- 
nish her  with  proper  supplies,  and  see  that  she  has  all  proper 
documents,  and  to  ship  and  provide  for  her  crew.  He  may 
appoint  her  master  and  officers ;  but,  on  this  point,  it  is  usual 
and  proper  to  consult  expressly  the  other  owners.  He  makes 
the  contracts  for  freight,  and  may  make  a  bargain  for  a  charter 
of  the  vessel ;  but  here,  also,  all  the  owners  generally  act,  and 
would  sign  the  charter-party.  He  cannot  insure ;  (cZ)  nor  give 
up  their  lien  of  the  ship  on  the  cargo  for  the  freight ;  nor  buy 
a  cargo  ;  nor  borrow  money  ;  nor  delegate  his  authority  ;  nor, 
perhaps,  begin  and  prosecute  an  action  at  law,  without  express 
authority,  (e) 

I  (6)  Cowell  y.  Edwards,  2  Bos.  &  P.  said   that   a  ship's   husband,   as  such, 

268 ;  McKenna  v.  George,  2  Eich.  Eq.  has  no   lien  for   his  advances  on  the 

15.     This   rule   has   been   apphed    by  vessel,  or  on  the  proceeds  of  it.     The 

courts  of  law,  as  in  Mills  v.  Hyde,  19  Larch,   2  Curtis  C.   C.  427 ;  Ex  parte 

Vt.  59,  and  in  Henderson  v.  McDuffie,  Young,  2  Ves.  &  B.  242 ;  Smith  v.  De 

5  N.  H.  38.  Silva,  Cowp.  469. 

(c)  Tlie   lien   of  a   ship's   husband  (d)  French  v.  Backhouse,  5  Burr, 

has  been  frequently  considered,  and  is  2727  ;  Bell  v.  Humphries,  2  Stark.  345. 

not  yet  quite  determined.    See  1  Pars.  (e)  As  to  the  limits  to   his  powers, 

on   Shipping  and   Admiralty,    11-];   2  see  Campbell  v.   Stein,   6   Dow,  135; 

Pars,  on  Cent.  (.5th  ed.)  2(j'.J ;  Collyer  Ogle  ;•.  Wraugham,  Abbott  on  Shipp. 

on  Part.  (Perkins's  ed.)  999.    But  it  is  107 ;  Turner  v.  Burrows,  5  Wend.  541 ; 


620  THE    LAW    OF   PARTNERSHIP.  [CH.  XIX. 


3.   Of  Mortgagees,  Mortgagors,  and  Charterers. 

It  is  sometimes  a  question  who  is  an  owner  of  a  ship, 
*  571  in  such  a  *  sense  as  to  make  him  liable  as  a  part-owner, 
for  repairs  or  supplies.  A  mortgagor  retains  an  equita- 
ble title  ;  a  mortgagee  has  the  legal  title  ;  a  hirer  of  the  vessel 
by  charter  has  possession  of  her  in  some  degree ;  and,  as  to  all 
these,  the  question  may  arise  as  to  their  liability.  In  general, 
this  must  be  determined  by  ascertaining,  first,  who  has  the 
benefit  of  the  repairs  and  supplies  ;  and,  secondly,  4o  whom, 
and  on  whose  credit,  are  they  given.  Various  circumstances 
answer  these  questions  differently,  in  different  cases.  But  the 
most  general  answer  is  given  by  the  possession  of  the  vessel. 
Thus,  it  seems  to  be  a  common  rule  in  case  of  a  mortgage,  that 
the  party  who  has  the  actual  and  visible  possession  and  control 
of  the  ship,  whether  mortgagor  or  mortgagee,  is  the  owner  for 
this  time  and  purpose.  (/)  So,  if  the  charterer  hires  only  the 
burthen  of  the  ship,  leaving  her  within  the  control  and  man- 
agement and  possession  of  the  owner,  the  liability  for  repairs 
or  supplies  is  not  transferred  by  the  charter  from  the  owner  to 
the  charterer  ;  but  it  is  so  transferred  when  the  charterer  hires 
the  ship  bodily,  and  mans  and  supplies  and  sails  her  himself. 

If,  however,  a  mortgage  is  not  recorded,  or  known,  or  a 
charter-party  made  known,  it  cannot  be  permitted  to  affect  a 
third  party,  under  the  same  principle  as  that  repeatedly  stated 
in  this  work,  that  no  arrangements  by  and  between  copartners 
can  impair  the  rights  of  third  persons  dealing  with  them  with- 
out knowledge  of  such  arrangements.  But  questions  of  this 
kind  do  not  occur  so  often  between  part-owners,  or  in  refer- 
ence to  their  several  interests  or  obligations,  as  between 
partners.  (^) 

8  id.   144;   Patterson  v.   Chalmers,  7  son,  2   Maule    &    S.    485;    Routh  v. 

B.  Men.  595  ;  Foster  v.  U.  S.  Ins.  Co.,  Thompson,  13  East,  274. 

11  Pick.  85;   Robinson  v.  Gleadow,  2  (/)  Miln  v.  Spinola,  4  Hill  (N.  Y.), 

Bing.  N.  C.  156;  Hewett  v.  Buck,   17  177;    Hodgsdon  v.   Butts,    3   Cranch, 

Me.  147  ;   Sawyer  v.  Freeman,  35  id.  140 ;    Tucker  v.   BufEngton,  15  Mass. 

542 ;  Sims  r.  Brittain,  4  B.  &  Ad.  375.  477.     See,  however,    Myers  v.  Willis, 

But,  under  the  general  law  of  agency,  17  C.  B.  77,  affirmed  in  18  id.  886. 

if  any  of  these  acts   are   ratified    by  {g)  For  cases  bearing  on  the  rights 

the    other   part-owners,    they   will   be  and  liabilities  of  persons  who  are  quasi 

bound  by  them.     Hagedorn  v.  Oliver-  part-owners,   by   mortgage    or    other- 


CH.  XIX.] 


OF   PART-OWNERS    OF   SHIPS. 


621 


4.  How  far  Part-oivners  are  hound  for  the  Torts  of  each  other, 
or  of  their  Servants. 

As  each  part-owner  is,  to  some  extent,  the  agent  of 
the  others,  *  and  as  the  master,  officers,  and  crew  of  the    *  572 
ship  are  the  agents  or  servants  of  all  the  owners,  we 
must  look  to  the  law  of  agency  for  their  liability  for  torts,  other 
than  those  of  tlieir  own  direct  action. 

The  rule  would  seem  to  be  this :  All  the  owners  are  liable 
for  the  consequences  of  a  wrongful  act  of  a  person  employed 
by  them,  or  of  one  part-owner,  so  far  as  he  is  acting  as  the 
agent  and  representative  of  the  others,  if  this  tort  be  committed 
in  obedience  to  positive  direction,  or  while  in  the  actual  dis- 
charge of  a  duty  committed  to  him,  or  as  a  part  of  a  service 
committed  to  him  ;  and  this  rule  extends  to  all  cases  of  mere 
negligence,  however  gross.  But  if  the  tort  were  an  act  of 
personal  malice,  intentionally  done,  it  does  not  affect  with  a 
liability  for  its  consequences  any  but  those  who  are  participants 
in  the  malice  and  intention,  or  by  whose  express  orders  the  act 
was  done.  (Ji) 

wise,  see  Ex  parte  Matthews,  2  Ves. 
Sen.  272 ;  Atkinson  v.  Maling,  2  T.  R. 
462;  Mair  v.  Glennie,  4  Maule  &  S. 
240;  Hay  v.  Fairbairn,  2  B.  &  Aid. 
193  ;  Portland  Bank  v.  Stubbs,  6  Mass. 
422  ;  Tucker  v.  Buffington,  15  id.  477 ; 
Badlam  v.  Tucker,  1  Pick.  389  ;  The 
Romp,  Olcott's  Adm.  196 ;  Dean  v. 
McGhie,  4  Bing.  45;  Fisher  v.  Willing, 
8  Serg.  &  R.  118;  Champlin  v.  Butler, 
18  Joiins.  169. 

(h)  Beawes,  Lex  Mercatoria,  54; 
Stinson  v.  Wynian,  Daveis,  172;  The 
"Waldo,  id.  161 ;  Dusar  v.  Murgatroyd, 
1  Wash.  C.  C.  13,  17.  In  Sherwood  v. 
Hall,  3  Sumner,  127,  and  in  Walcott  v. 
Willcutt,  U.  S.  D.  C.  Mass.,  "  Boston 
Courier,"  May  29,  1858,  it  was  held, 
that  the  owners  of  a  fishing  vessel 
were  liable  for  damages  for  the  ab- 
duction of  a  minor  by  the  captain, 
although  they  had  no  personal  knowl- 
edge of  the  fact,  the  act  being  held  to 
be  within  the  scope  of  the  authority 
of  the  master    as   the   agent    of    the 


owners.  Boucher  v.  Lawson,  Cases 
temp.  Hardw.  78,  183;  The  San  Juan 
Baptista,  5  Rob.  Adm.  33;  The 
Thames,  id.  345 ;  Stone  v.  Ketland,  1 
Wash.  C.  C.  142;  The  Karasan,  id. 
291 ;  Die  Fire  Damer,  id.  357  ;  Kostra 
Signora  de  los  Dolores,  1  Dods.  290 ; 
LTnvincible,  1  Wheat.  238;  The 
Anna  Maria,  2  id.  327  ;  The  Amiable 
Nancy,  1  Paine  C.  C.  Ill,  3  Wheat. 
546;  Talbot  v.  The  Commanders  of 
Three  Brigs,  1  Dallas,  95;  Del  Col  v. 
Arnold,  3  id.  333 ;  Arnold  v.  Del  Col, 
Bee  Adm.  5;  Gibbs  v.  The  Two 
Friends,  id.  416  ;  The  Zenobia,  Abbott 
Adm.  80,  93 ;  The  Aberfoyle,  id.  242, 
1  Blatchf.  C.  C.  360;  The  Druid,  1 
W.  Rob.  391  ;  Richmond  Turnpike  Co. 
V.  Vanderbilt,  1  Hill,  4b0,  2  Comst. 
479;  The  State  Rights,  Crabbe,  22, 
24;  Duggins  v.  Watson,  15  Ark.  118; 
Penn.  &  Reading  R.  Co.  v.  Derby,  14 
How.  468 ;  The  Brig  Casco,  Daveis, 
184  ;  The  Phebe,  Ware,  203 ;  Reynolds 
V.  Toppan,  15  Mass.  370;  Dios  v.  The 


622 


THE   LAW   OP   PARTNERSHIP. 


[CH.  XIX. 


Owners  of  the  Eevengc,  3  Wash.  C.  C. 
262;  Tlie  Dundee,  1  Hagg.  Ailm.  109, 
113,  120.  [The  rule  of  law  now 
seems  to  be,  that  the  master  is  respon- 
sible for  the  wilful  acts  of  his  servant, 
if  done  in  the  course  of  his  employ- 
ment ;  not  otiierwise.  Limpus  v. 
London  Omnibus  Co.,  1  H.  &  C.  524 ; 
Weed  V.  Panama  R.  R.  Co.,  17  N.  Y. 
362;  Caswell  v.  Cross,  120  Miss.  545; 
Hanson  i\  E.  &  N.  R.  R.  Co.,  62  Me.  84.] 
In  England,  in  an  action  against  sev- 
eral defendants  (under  Stat.  53  Geo. 
3,  ch.  159),  as  ship-owners,  for  damage 
sustained  by  the  loss  of  goods  laden  on 
board  their  ship,  it  was  held,  that  they 
were  not  liable  in  that  character  be- 
yond the  value  of  the  ship  and  freight, 
due  or  to  grow  due,  although  the  loss 
was  occasioned  by  the  misconduct  of 
one  of  the  defendants,  who  was  both 
master    and    part-owner.     Wilson    v. 


Dickson,  2  B.  &  Aid.  2.  See  Brown 
V.  Wilkinson,  15  M.  &  W.  391,  per 
Parke,  B. ;  Cannan  v.  Meaburn,  1 
Bing.  465;  The  Volant,  1  Rob.  385. 
The  part-owner,  through  wliose  mis- 
conduct the  loss  occurred  in  Wilson  v. 
Dickson,  finte,  would  not  be  protected. 
See  The  Tribune,  3  Hagg.  114.  [The 
negligence  of  a  compulsory  pilot  is 
not  the  negligence  of  the  master  or 
owner  of  the  vessel.  Marshall  v.  Mo- 
ran,  L.  R.  3  P.  C.  Cas.  205.  If  a  ship, 
through  the  master's  negligence,  gets 
aground,  and  is  then  driven  by  the 
wind  and  tide  upon  a  sea-wall,  to  the 
injury  of  the  wall,  the  owners  will  be 
liable,  if  he  do  not  break  up  the  ship, 
after  the  lapse  of  a  reasonable  time 
within  which  to  get  out  the  cargo. 
Bailiffs  of  Rumney  Marsh  v.  Trinity 
House,  L.  R.  5  Ex.  204  ;  s.  c.  affirmed 
L.  R.  7  Exch.  247.] 


INDEX. 


INDEX. 


THE  PAGES  REFEKKED  TO  ARE  THE  STAR  PAGES. 


A. 

ABROAD.     (See  Foreigx  Firm.) 
ACCEPTANCE.     (See  Bills  of  Exchange.) 

PAGE 

ACCOUNT,  Ch.  XVI 508 

when  an,  will  be  ordered  (Sec.  I.) 508 

right  to  demand,  peculiar  to  partners  and  their  representatives 

in  interest 508 

every  partner  has  a  right  to  an 92,  508 

right  of  an,  may  be  transferred  by  a  partner  to  his  representa- 
tives   508 

every  person  who  has  acquired  a  partner's  interest  in  the  joint 

fund  may  call  for  an 509 

courts  of  equity  have  power  to  grant  any  partner  or  his  repre- 
sentatives an,  for  cause 510 

rulings  on  this  subject  in  tlie  different  States      ....     510n.(fZ) 

a  decree  for,  and  reasons 299 

cannot  be  demanded  by  one  partner  in  respect  of  particular 

items 299  n.  (5) 

may  be  rendered  unnecessary  by  agreement  between  partners 

or  their  representatives 511 

in  case  of  dissolution  must  be  an,  if  demanded  by  a  party  in  in- 
terest       299,  511 

may  be  decreed  without  a  prayer  for  dissolution 512 

in  a  suit  in  equity  for  a  dissolution  and  an,  alleging  that  divi- 
dends of  profits  were  to  be  made  at  stated  periods,  the 
court  may  decree  the  payment  of  the  sum  due  before  the 

distribution  of  assets 512  n.  (k) 

•when  it  may  be  opened  for  error  (Sec.  II.) 513 

parties  may  agree  that  an,  shall  not  be  opened  for  error .     .     .     513 
a  suit  to  impeach  an  account  must  be  brought  within  a  reason- 
able time 514  n.  (n) 

but  if  fraud  be  shown,  courts  will  open  the  account  after  any 

length  of  time 514 

40 


626  INDEX. 

ACCOUNT  —  co7ifhmed. 

where  the  bill  praying  for  the  opening  of  an  account  does  not 
allege  fraud,  but  in  the  opinion  of  the  courts  the  facts  stated 

imply  fraud,  it  will  be  granted 515 

courts  of  equity  may  infer,  judicially,  a  fraudulent  purpose  from 

suspicious  circumstances 515  n.  (r) 

how  it  should  be  taken  (Sec.  III.) 519 

parties  may  regulate  their  manner  of  taking  account  by  their 

agreement 519 

an  agreement  may  be  inferred  from  their  having  settled  their 

accounts  for  a  length  of  time  in  a  certain  way      ....     519 
need  not  be  signed  by  the  parties  if  there  be  other  evidence  of 

acquiescence 519 

a  party  not  objecting  to  an  account  for  a  long  time  will  be  deemed 

to  acquiesce  in  it 619 

the  terms  of  an  account  are  not  conclusive,  where  fraud  or  ex- 
treme injury  can  be  shown 521 

manner  of  proceeding  when  a  decree  for  an  account  issues   .     .     521 
must  be  continued  until  the  day  on  which  it  is  made,  or  until  a 

previous  dissolution 523 

a  rule  prescribing  the  method  of  making  up  an  account  •     .     .     524 
may  be  decreed  when  a  dissolution  is  not  necessary    ....     800 

where  agreed  upon  by  the  parties 301 

implied  intention  of  parties  as  to,  regarded  by  equity      .     .     .     302 
having  been  once  admitted  by  a  party  to  be  correct,  he  cannot 
afterwards  file  a  bill  to  have  one  taken  in  equity  without 
charging  specific  acts  of  fraud  against  the  defendant     515  n.  (r) 
a  party  seeking  to  open  must  specify  the  errors  particularly      .     516 
will  be  opened  at  any  time  for  fraud  or  mistakes  so  far  proved 

that  the  court  is  satisfied  they  ought  to  be  corrected     516  n.  (s) 
will  not  be  opened  where  it  has  been  signed  or  security  taken  on 
the  foot  of,  unless  the  whole  transaction  appear  fraudu- 
lent     516  n.  (s) 

if  the  plaintiff  show  an  omission  has  been  made  of  a  credit  due, 

he  will  be  permitted  to  add  it 516 

the  plaintiff  may  be  permitted  to  remove  a  wrong  charge  stated 

in  the  account 517 

the  practice  in  England,  when  a  partner  owing  a  private  debt 

to  the  partnership  petitions  for  an 517 

ACCOUNT   STATED, 

demand  of  partner  against  partner  founded  upon  a  balance  of  .  278 

general  rule  as  to 278 

agreed  upon  between  a  surviving  partner  and  the  representative 

of  a  deceased  one,  effect  of 278  n.  (z) 

as  a  final  balance 279 

an  express  promise  to  pay  balance  of  one  is  not  necessary   .     .  280 

not  necessarily  a  final  balance 281 

all  the  partners  must  be  bound  by 281 


INDEX.  627 

ACCOUNT  STATED  — continued. 

not  necessarily  a  general  balance 282 

law  as  to,  in  Vermont 282  n.  (g) 

law  as  to,  in  Illinois 282  n.  {g) 

effect  of,  whether  settlement  obtained  by  consent,  by  law,  or  by 

arbitration 283 

■where  it  did  not  embrace  all  the  debts,  effect  of 284 

declared  on,  action  not  sustained  by  a  balance  struck  by  one 

partner  without  the  consent  of  his  copartner 284 

outstanding  debts  of  themselves  will  not  necessarily  defeat  an 

action  upon 284 

where  there  is  a  mistake  in  one 284 

where  expenses  are  incurred  by  some  of  the  partners  on  account 

of  the  old  firm,  subsequently  to  declaring  an  .     .     .  284  n.  (m) 
where  after  settlement  and  dissolution,  one  partner  is  obliged  to 

pay  a  claim  not  included  in  settlement,  he  may  recover  in 

assumpsit  against  copartner 284  n.  (m) 

where  one  partner  covenants  with  another  that  he  will  account.     285 

assumpsit  will  lie  between  partners  for  an 510  n.  (a) 

retained  by  a  partner  without  objection,  assent  and  promise  will 

be  implied 510  n.  ( 

ACCOUNTS, 

of  the  firm  should  be  kept,  how 228 

may  be  examined  at  the  pleasure  of  each  partner 228 

provisions  as  to 242 

where  contained  in  articles 242 

when  the  articles  may  provide  a  method  of  closing      ....  243 

ACKNOWLEDGMENT, 

before  acknowledgment  of  a  partner  as  to  a  debt  can  be  received 

to  bind  others,  joint  debt  must  be  proved  aliunde     .    184  n.  (?i) 
(See  Power  of  Partners.) 
statute  concerning,  Mass.  Gen.  Sts.,  ch.  155,  §  14     ...     .     184 

ACT  OF  BANKRUPTCY.     (See  Bankruptcy.) 

ACTION, 

cannot  be  brought  by  that  partner  alone  in  whose  name  the 

partnership  business  Is  transacted 128 

all  actual  partners  must  be  made  co-plaintiffs 128 

one  suing  a  firm  not  obliged  to  add  the  name  of  a  person,  only 

because  he  is  held  out  as  a  partner 135 

ACTIONS, 

against  a  firm  must  be  brought  against  all  the  partners,  byname 

including  the  bankrupt,  unless  he  has  been  discharged  .     .     475 

for  the  recovery  of  debts  due  to  the  firm  in  case  of  bankruptcy  of 
a  partner,  are  brought  by  solvent  partners  and  the  assignees 
of  the  bankrupt 475 

do  not  abate  bj^  the  bankruptcy  of  the  plaintiflf     .     .     .    475  n.  (a) 


628  INDEX. 

ACTIONS   AGAINST  PARTNERS, 

non-joInJer  of  a  dormant  partner 290   n.  (^) 

(See  Ok  the   Rkmediks   of   Third   Persons  against  the 

Partnership  and  against  Partners,  Ch.  X.)         , 
(-See  Of  Remedies  by  Partners  against  Third  Parties, 
Ch.  IX.) 

ACTIONS  BETWEEN  FIRMS  HAVING  A  COMMON   MEMBER, 

cannot  be  maintained  at  law 288 

an  indorsee  of  one  of  the  firms  may  maintain  an  action  against 

the  other 289  n.  (u) 

after  the  death  of  the  common  member 290 

in  case  of  a  dormant  or  secret  partner 290 

ACTIONS   BETWEEN   PARTNERS, 

on  contracts  arising  before  the  partnersliip 271 

on  contracts  arising  after  the  termination  of  the  partnership     .     271 
may  be  brought  for  causes  originating  in  the  relations  of  part- 
ners to  third  parties  after  dissolution 272  n.  (_j) 

where  transactions  are  separated  from  partnership  affairs  .  .  273 
where  the  transaction  is  entered  upon  the  partnership  books  .  275 
■where  there  has  been  a  breach  of  an  express  stipulation  between 

partners 276 

■where  a  partner  gives  his  copartner  a  sum  of  money  for  a  spe- 
cific purpose 277 

for  contribution 285 

for  contribution  in  a  transaction  separate  from  the  accounts  of 

the  firm, 287  n.  (s) 

contribution  cannot  be  claimed  by  one  partner  for  payment  for 

a  tort 287  n.  (5) 

{See  Of  The  Rights  and  Duties  of  Partners  between 
themselves,  Ch.  VII.) 

ACTIONS   BY  PARTNERS, 

names  of  all  the  partners  must  be  set  forth 289 

non-joinder  of  a  dormant  partner 291 

where  both  ostensible  and   secret  sue   on   a  partnership  con- 
tract     291  n.  (a) 

all  who  are  partners  at  the  time  a  debt  was  contracted  must  join 

to  recover  it 399 

as  to  partners  who  leave  the  firm 331 

as  to  new  partners 331 

where  one  member  of  the  firm  is  an  alien 327 

where  the  cause  of  action  arises  during  war  ....  327  n.  (J") 
where  one  of  the  partners  resided  in  the  enemy's  country  during 

the  war 397 

where  by  the  law  of  a  foreign  country  a  husband  and  wife  may 

be  members  of  a  firm     . 327 


INDEX.  629 

ACTUAL  PARTNER, 

when  a  per.son  is  liable  as  one 66 

if  a  person  is  partner  in  relation  to  others  who  are  copartners, 

be  is  so  in  relation  to  third  persons 66 

an  indirect  interest  in  profits  will  not  render  a  person  liable  as  an       67 

where  a  person  stipulates  for  an  interest  in  the  profits  of  a  busi- 
ness as  a  reward  of  labor,  instead  of  a  certain  sum  of  money 
proportioned  to  those  profits,  he  is  not  a  partner  .     .     .     67,  68 

where  a  trader  makes  an  arrangement  with  a  third  person  in  re- 
gard to  a  transaction,  whereby  he  becomes  interested  in  the 
profits  as  j)rofits 70 

a  payment  or  promise  to  pay  money  out  of  the  profits  as  a  spe- 
cific proportion  of  profits  does  not  of  itself  make  payee  a 
partner 70 

the  nature  and  character  of  the  interest  in  profits  always  to  be 

inquired  into 71 

where  one  by  his  bargain  acquires  interest  in  and  control  over 

profits  while  undivided,  he  is  a  partner 71 

same  principle  governs  whether  a  party  puts  in  labor  or  prop- 
erty; law  in  both  cases  summed  up 71  n.  (Z) 

where  parties  make  a  contract  for  a  joint  aetion,  which  does  not 
produce  that  community  of  profit  which  would  make  them 
partners,  and  also  declare  they  are  not  to  be  partners    .     .       82 

intentions  as  expressed,  and  as  they  may  be  inferred  from  the 

bargain,  prevail 85 

where  parties  enter  into  such  an  agreement  as  constitutes  them 
partners,  and  say  nothing  about  partnership,  they  are  part- 
ners    86 

where  parties  declare  their  intention  not  to  be  partners,  after 
having  made  such  an  agreement  as  constitutes  partnership, 
they  are  nevertheless  partners 86 

law  gathers  the  intentions  from  all  the  words  and  all  the  acts  of 

parties 87 

where  one  intention  distinctly  implied  by  their  acts,  and  another 

asserted  in  words,  the  first  prevails 87 

ADMINISTRATORS, 

of  a  deceased  partner  putting  assets  they  have  in  their  own  hands 
into  the  hands  of  the  surviving  partners  to  trade  with,  are 
responsible  for  any  loss  occurring 505 

ADMIRALTY,  COURTS   OF, 

power  of,  in  the  employment  of  a  ship,  when  the  part-owners 

disagree 58 

where  the  owners  disagree,  will  direct  the  employment  of  a  ship 

as  shall  seem  most  advantageous  for  all  concerned    .     .     .     560 

where  the  owners  of  a  ship  disagree  as  to  the  employment,  and 
the  court  directs  it,  those  who  get  possession  will  be  required 
to  give  security  to  those  who  are  defeated 560 


630  INDEX. 

ADMIRALTY,    COURTS   OF  —  continued. 

rule  in  the  English  court  of  admiralty 560 

may  decree  a  sale  of  the  ship  in  this  country 661 

in  case  of  a  foreign  ship,  will  not  interfere  to  displace  a  master 

who  is  a  part-owner 562  n.  (w) 

(^See  Part-owners  of  Ships.) 

ADMIRALTY,  ENGLISH,  COURT   OF, 

as  to  seizure  and  restoration  of  partnership  property  ....     504 

ADMISSIONS.     (See  Representations.) 

ADOPTION.     (See  Partners,  Representations  and  Admissions. 
Joint  Debt.     Incoming  Partner.) 

ADVANCES   BY  A  PARTNER, 

provisions  for,  in  articles,  effect  of 240 

ADVENTURE.     (See  Partnership.) 

AFFAIRS   OF   PARTNERSHIP, 

partners  may  sue  each  other  on  affairs  not  connected  with  the 

partnership 270 

AFFIDAVIT.     (See  Limited  Partnership.) 

AGENCY.     (See  Agent,  and  Authority  of  Partners.) 

AGENT, 

may  be  a  partner  as  to  third  persons 51 

as  to  his  principal  has  only  the  rights  which  spring  from  his 

employment 51 

AGREEMENT  BETWEEN   PARTNERS, 

that  one  shall  not  engage  in  the  same  business  on  his  own  ac- 
count        244 

where  a  partner  violates  such  agreement 244 

under  seal • 275 

to  exempt  a  retiring  partner  from  liability,  effect  of   ...     .  421 

where  creditors  become  parties  to,  for  consideration  ....  421 
as  to  what  property  shall  belong  to  one  or  another,  in  case  of 

dissolution,  will  be  valid 421 

AGREEMENT  TO  ENTER  INTO  PARTNERSHIP, 

a  specific  performance  of,  decreed  in  equity 235 

ALIEN, 

can  be  a  partner  if  a  friend 27 

when  the  property  is  real  estate 27 

cases  in  which  equity  interferes,  in  a  country  where  an  alien 

could  not  hold  land 27 

if  one  of  many  partners  hold  the  title  and  there  were  no  aliens  27 

otherwise  as  to  alien  enemies 27 

war  suspends  a  partnership  with  an  alien  friend 27 


INDEX.  631 

ALIEX  —  continued. 

in  what  cases  peace  revives  the  partnership  .    ■ 27 

cannot  bring  an  action  in  a  court  of  a  hostile  country  ...  28 
citizens  resident  in  a  foreign  country,  when  considered  aliens  .  28 
a  firm  consisting  wholly  of  aliens  may  bring  personal  actions  in 

this  country  by  means  of  an  agent 28 

partnership  formed  by  husband  and  wife  in  a  foreign  country  in 

which  it  could  exist,  effect  of  here 28 

ALLOWANCE.     {See  Rights  of  Partners,  Surviving  Partners, 
AND  Compensation.) 

ALTERATIONS.     {See  Articles  of  Partnership,  and  Change 
IN  THE  Partnership.) 

ANNUITY.     {See  Partners.) 

APPOINTEE, 

of  a  partner  under  a  power  of  appointment  must  assume  that 

relation  by  his  own  act 452 

and  consent  will  not,  generally,  be  assumed  from  mere  silence  452 
a  rule  in  equity  that  he  has  a  right  to  inspect  the  books  and 

accounts  of  the  partnership  before  making  his  election  .     .     453 

APPROPRIATION   OF  PAYMENT, 

when  the  right  of  debtors 427 

when  the  right  of  creditors 427 

when  the  act  of  law 427 

by  the  creditor  is  not  conclusively  exercised  by  entries   in  his 

book,  if  not  communicated  to  the  other  party      ....     428 

a  retiring  partner  not  bound  by  a  fraudulent 429 

fraudulent  exercise  of 429 

when  it  becomes  a  matter  of  law 430 

when  the  new  firm  for  adequate  business  causes  appropriate  the 

funds  of  the  old  firm  to  the  payment  of  new  debts  .      .     .     430 

when  the  paying  party  makes  no  appropriation 430 

where  made  by  the  creditor  in  expectation  of  the  insolvency  of 

the  new  firm 430 

where  not  made  by  the  creditor  until  he  had  heard  of  the  insol- 
vency of  the  new  firm,  and  then   made   so  as  to  hold  the 

retiring  partner 430 

no  person  allowed  to  change,  for  his  own  benefit,  an  appropri- 
ation once  made  by  him 430 

when,  may  be  implied  from  the  payments  themselves  ....     431 

when  the  right  of  election  as  to,  applies 432 

when  a  person  has  an  account  with  a  banking  firm  which  is  dis- 
solved, and  his  account  continues  as  before 432 

the  doctrine  of  appropriation  applies  oidy  where  the  debts  and 
accounts  are  distinct  in  themselves  and  so  regarded  by  the 
parties 432 


632  INDEX. 

APPROPRIATION  OF   VAYME^T  — continued. 

■when  payment  is  not  applied  to  the  earliest  items  in  an  ac- 
count       432  n.  (v) 

•when  debtors  commit  a  breach  of  trust  in  respect  to  certain 
property,  and  afterwards  make  payment  generally  on  ac- 
count of  their  creditor,  who  is  ignorant  of  the  breach  of 
trust 433 

must  be  to  legal  and  not  illegal  demands 433 

APPROPRIATION  OF  PROPERTY  TO  A  PARTNER, 

provisions  for 252 

where  agreed  that  certain  property  used  by  the  firm  shall  belong 

to  one  partner 252 

with  reference  to  the  creditors  of  the  firm 252 

of  property  held  forth  as  partnership  property 254 

ARBITRATION, 

one  partner  cannot  bind  the  partnership  by  an  agreement  to 

refer 176 

where  all  the  partners  agreed  to  submit  a  question,  and  after- 
wards refused,  there  might  be  a  remedy  either  in  equity  or 
at  law 177 

submission  by  unsealed  agreement  of  one  partner  held  in  some 

States  to  be  valid 178  n.  (/) 

ARBITRATORS, 

appointed  to  arbitrate  on  a  certain  measure  regarded  by  two 
partners  as  a  dissolution,  not  bound  to  direct  the  dissolu- 
tion   467  n.  (0 

ARTICLES, 

bill  in  equity  for  specific  performance  of 234 

where  the  act  required  is  a  legal  obligation  created  by  law  .     .  235 

provisions  in,  that  have  never  been  acted  upon 238 

■waiver  of  provisions  in 238 

construed  strictly  in  relation  to  any  material  change  in  the  busi- 
ness    • 238 

where  they  provide  a  method  of  closing  accounts,  effect  of .     .  242 

■where  they  exclude  some  specific  business 243 

ARTICLES   OF   COPARTNERSHIP, 

of  the  (Ch.  VIL  Sec.  VII.) 231 

general  principles  of  the  construction 231,  232 

and  effect  of 233 

■where  the  partners  have  none 231 

not  any  difference,  whether  spoken  or  written,  in  their  effect 

and  operation 232 

third  parties  not  affected  by  them  until  notice 233 

■when  courts  of  equity  will  refuse  to  carry  into  effect  minor  stip- 
ulations in 233  n.  (t) 


INDEX.  633 

ARTICLES   OF   COPARTNERSHIP  — con^umfi. 

when  silent  on  points  established  by  law 234: 

when  under  seal 275 

(See  Partnership.) 

ASSIGNEE   OF        FOREIGN  FIRM, 

possession  by,  would  prevent  an  attachment  or  levy  on  the  prop- 
erty of  the  firm  in  this  country 474 

ASSIGNEES, 

may  lose  their  claim  against  a  retiring  partner  for  debts  due  from 

the  firm,  by  making  themselves  responsible 478 

under  a  commission  of  bankruptcy,  employing  an  agent  to  re- 
ceive money,  if  he  embezzle  it,  may  be  liable  to  make  it 
good,  unless  he  consulted  the  body  of  the  creditors  in  the 
appointment 478  n.  (h) 

of   a    bankrupt  partner    take    only   his    interest  in  the  joint 

property 483 

of  a  firm  take  both  the  firm  property  and  the  several  property 

of  the  partners 483 

of  a  bankrupt  partner  may  claim  unpaid  instalments  due  from 

a  solvent  partner  for  his  admission  into  the  firm  ....     503 

under  a  separate  commission  take  only  such  undivided  interest 
as  the  bankrupt  himself  had,  and  in  the  same  manner  as  he 
held  it 503 

of  a   stockholder  in  an  insolvent   corporation  succeed  to  the 

rights  of  their  assignor 54(J  n.  (p) 

ASSIGNEES   OF   A   BANKRUPT  PARTNER, 

do  not  become  partners  in  his  stead 471 

become  tenants  in  common  with  the  other  partners  ....  471 
may  claim  an  account,  and  require  a  settlement  of  the  concern  .  472 
cannot  take  the  business  in  their  own  hands  and  settle  it  .  .  472 
have  much  the  same  rights  and  remedies  as  the  representatives 

of  a  deceased  partner 472 

cannot  bring  trover  against  the   partners   for  the  partnership 

effects 472 

may  hold  the  partnership  effects  as  well  as  the  solvent  partners, 

all  being  equally  entitled  to  possession 473 

ASSIGNING  PROPERTY, 

must  be  done  in  the  regular  business  of  the  firm 163 

that  a  partner  has  not  power  to  assign  property  of  the  firm  in 

any  unusual  way 164 

the  firm  being  insolvent,  may  a  partner  assign  all  the  property  in 

trust  to  pay  creditors 165 

ASSIGNMENT, 

effect  of,  by  a  partner  of  his  interest  in  a  copartnership  .  .  .  160 
gives  the  assignee  a  right  to  insist  on  an  account    .     .     .     160  n.  (e) 

{See  DiLEcrus  Personakum.) 
by  one  partner  of  all  his  interest,  effect  of 400 


634  INDEX. 

ASSIGNMENT  OF  DEBT, 

if  a  debt  due  to  the  firm  be  assigned  by  one  partner  to  his  co- 
partner, notice  shall  be  given  to  the  debtors    .     .     .    329  n.  (o) 

ASSIGNMENT    OF  PROPERTY   OF  FIRM, 

rioht  of  (Ch.  VII.  Sec.  II.) 162 

right  of  every  partner  to  assign  in  the  regular  business  of  the 

partnership  absolute 162 

ASSUMPSIT, 

action  of,  will  lie  between  partners  where  a  balance  of  accounts 

is  struck 510  n.  (</) 

ATTACHMENT, 

by  a  creditor  of  a  partner  of  his  interest  in  the  firm  property  .     352 

of  a  partner's  interest  suspended  by  bankruptcy 474 

would  not  be  suspended  where  a  foreign  firm  went  into  bank- 
ruptcy abroad,  and  a  creditor  of  one  of  the  partners  at- 
tached his  interest  in  this  country 474 

would  be  prevented  if  the  foreign  assignee  had  taken  possession 

of  the  property 474 

AUTHORITY, 

of  the  firm  to  one  partner  to  use  the  partnership  name  outside 
the  business  of  the  partnership  may  be  express  or  inferred 
from  acts 112 

AWARD   OF   ARBITRATORS, 

cannot  of  itself  effect  a  dissolution 467 


B. 

BALANCE  OF  ACCOUNT.     {See  Account.) 
BANKERS.     {See  Joint-stock  Companies.) 

BANKRUPT  PARTNER, 

discharge  of,  does  not  affect  indebtedness  of  other  partners,  ex- 
cepting as  to  the  sum  which  the  creditor  takes  by  way  of 
dividend 475 

where  made  defendant  in  an  action  against  the  firm  after  his  dis- 
charge, may  have  judgment  against  the  plaintiff  ....     475 

taking  up  (he  notes  of  the  firm  after  getting  his  certificate  is  per- 
mitted to  prove  against  the  joint  estate 476  n.  (x) 

assignees  of,  take  only  his  interest  in  the  joint  property  .     .     .     483 

BANKRUPTCY,  Ch.  XV. 

when  and  how  it  dissolves  a  partnership  (Sec.  I.) 469 

in  England,  dissolution  does  not  take  place  until  bankruptcy  has 

been  declared  by  competent  authority 469 

in  this  country  dissolution  takes  place  when  the  assets  are  vested 

in  the  hands  of  the  assignee 469 


INDEX.  635 

BANKRUPTCY  —  continued. 

where  there  are  no  statutes  of  insolvency,  inability  and  refusal 

to  pay  debts  does  not  of  itself  operate  a  dissolution      .     .     470 

acts   upon  a  partnership  in   many  respects  like  death  of  the 

partners 471 

foreign,  would  not  suspend  the  attachment  or  levy  on  the  inter- 
est of  the  partnership  property,  found  and  attached  here, 
before  possession  taken  by  foreign  assignee 474 

where  all  the  partners  of  a  firm  become  bankrupt,  the  discharge 

of  one  affei'ts  only  himself 475 

of  a  plaintiff,  iiis  assignees  may  continue  an  action  in  his  name      475 

where  actions  for  the  recovery  of  debts  due  to  the  firm  are 
brought  by  the  solvent  partners  and  the  assignees  of  the 
bankrupt 475 

operates  a  discharge  of  an  execution  against  the  partnership     .     476 

a  decree  of,  in  England,  goes  back  by  relation  and  makes  the 

bankruptcy  effectual  from  the  first  act  of 476 

in  this  country,  generally,  a  decree  of,  takes  effect  only  from  its 

own  time 476 

of  a  partnership  in  case  of,  joint  property  forms  a  fund  for  joint 
creditors,  and  separate  property  of  each  partner  a  several 
fund  for  the  private  creditors  of  each 480 

of  a  partnership,  all  the  firm  property  and  all  the  several  prop- 
erty of  the  partners  goes  to  the  assignees 438 

a  creditor  of  the  firm  taking  several  notes  from  the  partners  has 

no  rights  as  a  partnership  creditor 485 

where  a  partner  takes  property  from  the  firm,  and  bankruptcy 
ensues,  the  property  so  taken  will  be  held  to  satisfy  any 
balance  due  from  the  partner  to  the  firm 491 

rule  of  appropriation  of  funds  where  the  firm  and  all  the  part- 
ners are  bankrupt 493 

in  case  of,  where  property  appears  either  in  the  separate  estate 
of  a  partner  or  the  joint  estate  of  the  firm  to  have  been 
abstracted  from  the  other,  it  must  be  restored      ....     494 

where  the  joint  estate  is  larger  at  time  of,  on  account  of  any 
fraudulent  act  against  one  of  the  partners,  his  several  cred- 
itors may  proceed  against  it  for  that  amount 500 

if  any  contracts  or  enterprises  are  outstanding  at  the  time  of, 
the  assignees  must  wait  until  they  are  adjusted,  and  take 
the  share  of  the  bankrupt  in  the  result 503 

sale  of  the  effects  in,  usual  course  adopted  by  assignees  .     •     .     506 

BANKRUPTCY   OF   A   PARTNER, 

where  other  partners  are  solvent,  effect  of,  on  the  solvent  partners     471 
property  rights  and  interests  of  a  bankrupt  partner  pass  to  his 

assignees 471 

where  there  is  a  provision  in  the  articles  tiiat,  in  case  of,  the 
others  shall  take  his  share  at  a  valuation  and  continue  the 
business,  effect  of 473 


636  INDEX. 

BANKRUPTCY  OF  A  T AT&T'S ER  — continued. 

notice  of,  not  necessary  to  prevent  the  partner  from  being  bound 

by  new  debts 473 

■when  it  operates  a  dissolution 473 

annuls  any  attachment  or  execution  of  his  interest  in  the  firm    .     474 

BILL  IN  EQUITY.     (See  Equity.) 

BILLS   OF   EXCHANGE, 

drawing  and  indorsing  of,  by  partners 199  n.  (a) 

drawn  or  accepted  fraudulently 211 

of  a  partner  or  partners,  where  equity  will  restrain  its  negotia- 
tion     212  n.  (Z) 

drawn  in  blank  and  filled  or  indorsed,  but  not  delivered  or  nego- 
tiated before  dissolution  of  the  firm 390 

BOND, 

where  taken  of  one  partner  for  a  simple  debt  of  the  partner- 
ship   107  n.  (i) 

given  for  a  simple  contract  debt  operates  as  a  release  of  that 

debt 107  n.  (0 

taken  from  an  ostensible  partner  for  partnership  debt  extin- 
guishes claim  against  secret  partner  afterwards  dis- 
covered   108  n.  (s) 

(See  Partners.) 

BOOKS  OF  ACCOUNT.     (See  Account,  Equity,  and  Rights 
AND  Duties  of  Partners.) 

BROKERS.  (See  Agent  and  Partners  as  to  Third  Parties.)  47,  50,  145 


c. 

CAPITAL.     (See  Partnership  and  Partnership  Property.) 
CAPTAIN   OF  A   SHIP.     (See  Part-owners  op  a  Ship.) 
CARE   AND   SKILL   AND   TIME, 

provisions  for  giving,  to  the  partnership 243 

(See  Partnership.) 

CERTIFICATE   OF  LIMITED   PARTNERSHIP.     (See  Limited 

Partnership.) 
CESTUI   QUE  TRUST.     (See  Trustees.) 

CHANGE  IN  THE  PARTNERSHIP,  Ch.  XIII.  (See  Partnership.) 

effect  of  (Sec.  I.) 406 

by  the  retirement  of  a  partner 406 

causes  dissolution 407 

by  the  death  of  a  partner 407 

discharges  bonds  and  other  contracts 332,  333 

CHARTERER, 

when  liable  for  the  repairs  and  supplies  of  the  ship      ....     571 
(See  Part-owners  of  Ships.) 


INDEX.  637 

CLUBS.     (See  Partnership.) 
COMMANDITE.     (See  Limited  Partnership.) 

COMMON   CARRIERS, 

partners,  one  of  whom  lost  property  intrusted  to  them,  firm  liable    156 
action  against,  not  in  tort,  unless  special  contract  stated      .     .     158 

COMMON  LAW, 

right  of  action  between  partners 277 

COMMUNITY   OF  INTEREST,     (See  Partners,  Partnership.) 
must  exist  in  the  i)roperty  or  proceeds  resulting  from  joint- 
doing,  to  make  that  partnership  property 44 

may  be  in  profits  only,  and  not  in  property 48 

COMPANY.     (See  JoiNt-STOCK  Companies.) 

COMPENSATION, 

of  a  partner's  right  to  extra 229 

after  dissolution,  partners  who  close  up  the  affairs  of  the  con- 
cern, in  general,  not  entitled  to 230  n.  (c) 

where  provided  for  by  the  articles 230 

where  one  partner  is  exempted  by  the  articles  from  rendering 

his  services  to  the  joint  business 230  n.  (z) 

CONDUCT, 

which  partners  may  require  of  each  other 222 

CONSIDERATION, 

where  no  new  consideration  is  given  for  a  new  promise  to  pay  a 

debt 110 

debt  of  one  partner  sufficient  to  sustain  a  promise  of  partnership 

to  pay  it 215 

where  a  creditor  agrees  with  a  firm  to  discharge  a  retiring  part- 
ner, the  mere  inadequacy  of  the,  cannot  be  inquired  into    .     422 

a  new  partner  is  not  liable  for  old  debts  of  the  firm,  unless  he 

assumes  them  for 433 

admission  into  the  firm  sufficient,  to  bind  a  new  partner  for  the 
old  debts  of  the  firm,  to  those  from  whom  the  consideration 
comes 434 

must  be  shown  for  a  creditor  giving  up  a  claim  on  the  firm  and 

accepting  a  claim  on  one  partner 487 

CONTINUATION  OF  PARTNERSHIP.     (See  Articles  of  Part- 
nership.) 

CONTRACT  OF  PARTNERSHIP.     (See  Partnership.) 

CONTRACTS, 

between  partners  arising  before  the  partnership 271 

between  partners  arising  after  the  partnership 271 

of  partners  under  seal 333 

where  a  deed  is  substituted  for  a  simple  contract 333 

made  with  one  partner  for  the  benefit  of  the  firm 334 


638  INDEX. 

CONTRACTS  —  coniinued. 

when  the  partner  entering  into  the  contract  may  sue  alone  .     .     335 

by  a  partnership  for  insurance 335 

with  a  firm  may  be  exchanged  for  another,  only  by  consent  of  all 

parties 336 

between  the  new  partner  and  the  old  firm  that  the  new  partner 
shall  become  responsible  for  the  old  debts  of  the  firm,  valid 
between  the  partners,  but  not  valid  as  to  the  creditors  .     .     434: 

CONTRIBUTION, 

demand  for 285 

professional  partnership  not   distinguished  here  from   trading 

partnership 286  n.  (r) 

when  claimed  for  some  transaction  separate  from  the  partnership 

accounts 287  n.  (s) 

can  be  claimed  only  for  an  actual  payment  of  a  joint  debt,  287  n.  (s) 

cannot  be  maintained  by  one  partner  against  his  copartner  for 

payment  of  judgment  founded  on  a  tort 287 

CONVERSION.     {See  Tiiovek.) 

COPYRIGHTS, 

held  by  partnership 265 

CORPORATIONS, 

may  incur  the  liability  of  a  partner  as  to  third  persons     ...       29 
how  far  they  may  enter  partnership  as  partners  therein    .     29  n.  (Jc) 

COSURETY.     {See  Surety.) 

COURTS  OF  EQUITY, 

will  interfere  in  case  of  dissolution,  when  and  how      ....     394 
(See  Equity.) 
COVENANT, 

with  one  partner  not  to  sue  him  will  not  discharge  his  copart- 
ners   172  n.  (lo) 

COVENANT,   ACTION   OF, 

when  it  will  lie  between  partners 275  n.  (w) 

CREDIT, 

when  given  to  one  partner  only 103 

where  partners  agree  that  one  shall  purchase  goods,  and  then  let 

the  others  into  an  interest  in  them 104  n.  {d) 

where  there  is  no  evidence  to  show  to  whom  credit  was  given  .     104 

where,  for  money  borrowed,   a  partner  gives  his  own  bill  or 

note 105  n.  (/) 

where  the  creditor  sold  goods  or  loaned  money  to  the  several 

partners  on  their  several  credit 105 

to  exonerate  other  partners,  must  be  given  knowingly  and  vol- 
untarily to  one  or  more  exclusively 105 

where  given  to  one  partner  only,  same  rule  applies  to  all  simple 

contracts,  whether  oral  or  written 105 


INDEX.  639 

CREDIT  —  continued. 

question  as  to  whom  given,  one  of  fact  for  a  jury  .     .     .     105  n.  (/«) 
where  a  creditor  accepts  the  individual  security  of  a  partner 

instead  of  the  debt  of  the  firm 106 

where  a  partner  uses  the  credit  of  the  firm  for  his  personal  ad- 
vantage, without  authority Ill 

CREDITOR, 

may  sue  all  the  firm,  notwithstanding  stipulations  between  the 

partners  exempting  some     .         102 

who  became  one  without  knowledge  of  agreement  to  exempt 

may  levy  execution  on  goods  of  partner  exempted    .     .      .     102 

taking  from  one  partner  of  a  firm  security  of  a  higher  nature 

than  the  debts,  when  it  discharges  the  firm 109 

whether  intended  to  accept  the  sole  liability  of  a  partner  in  dis- 
charge of  a  joint  r'ebt  of  the  firm,  for  a  jury  to  decide  110  n.  (p) 

where  security  of  same  class  with  joint  security  is  accepted  by  .     110 

of  a  firm  entitled  to  the  assets  of  the  firm  until  his  debt  is  paid  .     253 

agreement  of,  to  discharge  some  members  of  a  firm     ....     396 

may  lose  his  claim  against  a  retiring  partner  for  firm  debts  by 

the  assignees  making  themselves  responsible 478 

of  one  or  more  partners  may  have  the  liability  of  the  firm  as 

security  for  the  debt 485 

in  case  of  insolvency  of  his  debtor  may  give  up  his  security  and 
prove  his  whole  debt,  or  obtain  what  he  can  from  his  secu- 
rity and  prove  the  balance 488 

where  the  liability  of  the  firm  and  that  of  the  partners  is  concur- 
rent, the  creditor  is  bound  to  elect  which  he  will  ta!-e  .     .     489 

has  no  direct  lien  on  the  partnership  funds  for  his  debts  .     502  n.  Q) 

cannot  file  a  bill  to  stop  a  partnership  and  wind  up  its  con- 
cerns   512  n.  (k) 

where  he  receives  payment  from  the  part-owner  dealing  with,  in 

his  negotiable  bills  or  notes 566 

(See  Bankruptcy.) 

CREDITOR  OF   A   FIRM, 

rights  of,  as  to  retiring  partners 421 

(See  Retiring  Partners.) 
transfer  by  one,  of  an  account  against  a  firm,  to  the  private  ac- 
count of  one  partner,  without  the  knowledge  of  the  firm     .     423 
accepting  paper  of  the  new  firm  for  a  debt  of  the  old,  with  knowl- 
edge of  the  retirement  of  a  partner 423 

what  consideration  necessary  for  a  release  to  a  retiring  partner     424 

taking  new  security  and  retaining  the  old 424 

where  he  gives  the  evidence  of  his  debt  to  one  of  the  partners, 

that  he  may  collect  it  from  the  others 425 

retaining  expressly  all  his  rights  against  the  retiring  partner     .     425 
must  bring  their  actions  only  against  the  surviving  partners      .     447 
creditors  of  a  firm  and  of  separate  partners,  how  lunds  are  dis- 
tributed among 347,  480 


640  INDEX. 

CREDITOR  OF  A  YIRM  —  continued. 

rights  of,  not  affected  by  any  disposition  of  Lis  property  by  a 

deceased  partner 454 

when  delay  on  the  part  of,  will  be  considered  as  a  confirmation 

of  the  provisions  of  a  deceased  partner 454 

have  no  claim  on  the  assets  of  a  deceased  partner  for  any  debts 
contracted  after  his  death,  except  what  he  expressly  places 
in  the  new  partnership 454 

dealing  with  the  firm  after  the  death  of  a  partner,  have  only  secu- 
rity on  the  property  of  the  deceased  partner  for  the  amount 

he  places  in  the  new  firm 454 

*  may  have  the  partnership  security,  and  also  several  securities  of 

the  partners,  as  sureties  for  the  debt 485 

CREDITORS  OF  THE  FIRM,  RIGHT  OF,  AS  TO  ITS  REAL 
ESTATE.  (See  Real  Estate  of  Pautnership,  how  treated 
IN  Equity.) 

CUSTOM-HOUSE   BONDS, 

Act  of  Congress,  March  1,  1823,  Stat.  2,  ch.  21,  §  25     .     178  n.  (g) 


D. 

DAMAGES, 

may  be  recovered  for  a  breach  of  contract  to  enter  into  partner- 
ship   237 

from  misconduct  of  a  partner,  provisions  for  in  articles    .     .     .     250 

liquidated 250 

where  in  fact  a  penalty 250 

(/See  Liquidated  Damages  and  Penalty.) 

DEATH, 

causes  necessarily  a  dissolution 307 

DEATH   OF   A  PARTNER, 

who  was  a  member  of  two  firms ;  whether  the  bar  to  an  action 

between  them  is  removed 326 

a  dissolution  of  partnership 397,438,453 

where  provision  is  made,  that  it  shall  not  operate  as  a  dissolution     439 

DEBT   OF   A  FIRM, 

may  become  barred  as  to  partners  in  the  State,  and  not  as  to 

those  out  of  it 184  n.  (n) 

(See  Limitations,  Statute  of.) 

DEBT   OF   ONE   PARTNER, 

incurred  for  the  partnership,  but  before  its  formation,  is  not  the 

debt  of  the  i)artnership 215 

is  sufficient  consideration  to  sustain  a  promise  of  the  partnership, 

to  pay  it 215 


INDEX.  G41 

DEBT   OF   SEPARATE   PARTNER, 

the  property  of  the  firm  cannot  be  taken  for 343 

DEBTS, 

may  be  changed  from  one  debtor  to  another  without  any  change 

in  the  partnership 148 

adoption  of  debt  due  from  a  single  partner,  by  the  partnership, 

may  be  implied 148 

change  of,  must  be  done  by  consent  of  all  the  partners,  and  for 

a  good  consideration 148 

how  the  funds  are  appropriated  to 480 

what  are  joint  and  wliat  are  several 484 

when  originally  joint  or  only  several,  and  the  creditor  can  show 
indebtedness  of  the  other  kind  for  the  same  cause,  whether 
it  discharges  the  old  debt  or  is  only  collateral  security  .     .     485 

whether  a,  originally  joint,  has  become  several 485 

whether  a,  originally  several,  has  become  joint 485 

originally  joint,  afterwards  becoming  several,  and  consent  of  the 
creditor  to  give  up  all  and  retain  only  one,  a  consideration 

for  the  consent  must  be  proved 487 

where  there  is  a  new  and  old  for  the  same  cause,  and  it  is  not 
presumed  tliat  the  new  has  paid  the  old,  both  co-exist,  and 

the  new  is  considered  security  for  the  old 488 

secured  by  the  specialty  cf  one  partner,  when  regarded  as   a 

simple  contract  debt  and  all  the  partners  bound  by  it,  510  n.  (d) 

DEBTS  DUE   BY   THE   PARTNERSHIP, 

appropriation  of  the  property  to 342 

DECEASED   PARTNER, 

right  of  the  representatives  of,  to  have  an  account  taken  .     .     .     446 

settlement  of  tbe  estate  of  a 447 

estate  of,  settled  entirely  on  equitable  principles 447 

whether  a  creditor  may  proceed  at  once  against  the  estate  of  the     448 
the  claims  of  the  several  creditors  of,  and  joint  creditors  of  the 

firm,  are  kept  distinct 448 

where  there  is  no  joint  fund  and  the  surviving  partner  is  insol- 
vent, the  joint  creditors  of  the  firm  take  of  the  estate  of  the 
deceased  psLrtnttr  pari  passu  with  his  separate  creditors      •     449 
when  the  estate  of  a,  is  discharged  by  payment  of  the  debt  .     .     449 

or  by  a  transfer  of  the  account 449 

notice  of  a  dissolution  by  death  never  necessary  to  protect  the 
estate  of  the  deceased  partner  from  the  future  debts  of  the 

firm 449 

may  limit  the    amount  or  proportion  of   his  estate  that   shall 

remain  in  the  partnership 454 

where  insolvent,  and  the  administrators  permitted  to  sell  the 
stock  in  the  usuul  course  of  trade  for  business  benefit,  and 

a  loss  occurred,  they  were  not  responsible 505 

(See  Death.) 
41 


642  INDEX. 

DECLARATIOX.     (See  Partners,  Admissions  and  Representa- 
tions   OF.) 

DECREE, 

for  dissolution  of  partnership  may  declare  that  the  partnership 

never  existed 457 

(See  Equity.) 

DECREE  OF  DISSOLUTION"  FOR  MISCONDUCT  OF  A  PART- 
NER        457 

■will  be  granted  when  the  conduct  is  of  such  a  nature  as  to  expose 

the  other  partners  to  important  injury 458 

•will  not  be  made  for  slight  reasons 458 

cases  in  which  it  would  be  granted 458  n.  (e) 

where  the  niischi.f  complained  of  is  specific  and  a  habit,  the  court 

may  grant  an  injunction  instead  of  a  dissolution  ....  459 

cases  of 460 

DECREE  OF  DISSOLUTION  WHERE  MISCONDUCT  IS  NOT 

CHAR(iED 460 

for  bankruptcy  or  insolvency 460 

for  any  cause  which  takes  from  a  partner  all  his  ownership  .     .  461 

DEEDS, 

where  made  to  the  partnership  by  the  name  of  the  firm    .     .     .  333 

where  substituted  for  a  simple  contract  with  the  same  parties    .  333 

by  a  partner  for  the  firm 109 

DETERMINATION   OF  DIFFERENCES  BY  ARBITRATION, 

provisions  for 247 

DEVISEE, 

of  a  partner,  where  it  is  a  condition  that  he  is  to  become  a  part-  ■ 
ner  in  the  firm,  he  irust  submit  to  the  condition  and  offer 
himself  as  partner 452 

DILECTUS  FERSONARUM, 

effect  of,  on  representatives  or  assignees  of  a  partner  .      .     11  n.  (/c) 

great  respect  paid  by  courts  to,  in  reference  to  transfer  and 

incoming  partners 13 

must  always  exist,  both  as  to  original  partnership  and  reception 

of  a  new  partner 159 

a  partner  cannot  transfer  his  relation  of  partner 159 

if  a  partner  bequeathes  his  interest  in  a  firm,  legatee  not  a  part- 
ner      160 

assignees  of  a  bankrupt  partner  not  partners  with  the  other 

members  of  the  firm 160  n.  (c?) 

not  a  right  of  the  old  partners  only,  but  of  the  proposed  new 

one 161 

■where  the  interest  of  one  partner  was  sold  on  execution  .     .     .     355 

DIRECTORS.     (See  Joint-stock  Companies,  and  Notice.) 


INDEX.  6-i3 

DISCHARGE.     {See  Bankuuptcy,  Bankrupt  Partner,  and  Cov- 
enant.) 

DISHONOR.     (See  Notice.) 

DISSENT.     (See  Partners,  Rights  and  Duties  of.) 

DISSOLUTION, 

provisions  for 244 

of  a  decree  for  a 299 

power  of  equity  to  grant 301 

by  a  sale  of  goods  under  execution 357  n.  (b) 

by  a  provision  in  the  articles 380 

power  of  equity  to  decree  dissolution 381 

where  the  articles  omit  all  reference  to 382 

where  the  agreements  are  only  oral,  or  they  simply  agree  to  be 

partners 382 

where  the  partnership  entered  into  long  contracts  of  business  .  383 
where  one  of  several  partners  agrees  with  a  stranger  for  a  sub- 
partnership      383 

where  formed  for  a  single  adventure 384 

where  formed  for  dealing  in  a  subject-matter  certain  to  expire 

at  a  certain  time 384 

by  the  will  of  all  the  partners     . 384 

where  contract  of  copartner.-hip  is  under  seal 384 

consent  to  dissolution  may  be  inferred 385 

where  there  is  an  incorporation  of  the  partners  for  the  same 

business 385 

general  effects  of 386 

effects  of,  on  the  interests  and  rights  of  partners 386 

no  effect  on  property  of  partners 386 

each  partner,  in  absence  of  a  special  agreement,  may  compel  a 

final  ."-cttlement 386 

each  partner  is  still  liable  for  the  debt 386 

poAver  of  each  partner  to  demand  and  receive  payment  of  debts  387 

(See  New  York  Statute,  April  18.  1838,  ch.  257)    387  n.  (a) 
without  a  special  agreement  leaves  all  the  partners    equal  in 

rijhts  and  obligations 387 

winding  up  the  concern 388 

powers  of  each  partner  in  case  of  a  dissolution  .      .     .    888,  390,  396 

where  power  of  a  partner  passes  to  his  administrator  .     .     .     .  388 

where  there  is  an  agreement  that  one  shall  wind  up  the  business  388 
settlement  by  a  partner  in  fraud  of  the  firm  valid  as  to  innocent 

stranger 388 

duty  and  power  of  settling  partners 390,392 

rule  as  to,  in  Pennsylvania 390 

authority  given  to  contiiming  partners 392 

■where  equity  will  interfere 394 

no  partner  may  claim  payment  for  his  services  in  case  of     .     .  394 


644  INDEX. 

DISSOLUTION  —  continued. 

effect  of,  upon  third  parties 394 

agreements  between  partners  upon 395 

where  the  interest  in  the  partnership  has  been  transferred  to  an 

assignee 396 

where  the  creditors  consent  to  an  agreement  between  partners 

after 396 

notice  of 397 

by  death  of  a  partner 397 

actions  and  remedies  after 398 

effect  of,  on  an  interest  held  on  condition  that  the  partnership 

exists 398 

effect  of  on  a  lease  held  by  the  partnership  from  one  of  the  part- 
ners      899 

what  acts  dissolve  a  pai-tnership 399 

for  outlawry 399 

by  a  conviction  for  felony 399 

by  the  act  of  a  part  of  tlie  firm  only 399 

by  the  marriage  of  a  female  partner 399 

by  an  assignment  by  one  partner  of  all  his  interest     ....  400 
where  the  assignee  continues  to  act  as  partner  ....     400  n.  (o) 

by  sale  on  execution  of  the  interest  of  a  partner 400 

by  a  partner  by  his  own  will •    .     .  401 

at  what  time  and  in  what  manner  a  partner  may  cause  a  .     .     .  40  L 

by  one  partner,  notice  of,  must  be  given  to  the  other  partners  .  403 

may  be  made  prospectively 403 

notice  of,  at  will  of  a  partner,  need  not  be  in  writing      .     .     .  404 

by  retirement  of  a  partner 406 

by  any  change  in  the  partnership 407 

after,  one  partner  dealing  with  a  person  having  no  notice  of, 
can  bind  liis  copartner,  but  only  in  transactions  in  the  usual 

course  of  the  firm's  business 420 

by  death  of  a  partner 438 

by  death  of  a  partner,  notice  of  not  necessary 449 

where  one  of  the  surviving  partners  is  executor  to  the  deceased 

partner,  notice  of  dissolution  should  be  given      .      .  449  n.  (/) 

of  a  dissolution  by  decree 457 

what  such  a  decree  may  provide 457 

for  any  cause  which  takes  from  a  partner  all  his  ownership   .     .  461 
caused  by  a  levy  of  execution  on  a  partner's  interest  and  subse- 
quent sale 461 

by  a  sale  by  one  partner  of  all  his  interest  to  his  capartner,  461  n.  (j) 
an  attachment  on  a  mesne  process  would  not  cause  a  .     .     .     .  462 
not  caused  until  actual  transfei*,  if  the  partner  retains  posses- 
sion      462 

caused  by  the  marriage  of  a  partner  who  is  a  single  woman       .  462 

caused  by  a  partner  passing  under  guardianship 462 

caused  by  one  of  the  partners  being  convicted  of  treason,  or 

absconding  for  debt  or  felony 463 


INDEX.  645 

DISSOLUTION  —  continned. 

intianity  itself  does  not  operate  a 466 

but  if  insanity  were  determined  by  due  inquest,  and  public  no- 
tice given,  it  would  be  held  to  operate  a 466 

because  the  continuance  of  the  partnership  has  become  imprac- 
ticable      467 

caused  by  bankruptcy 469 

(See  Bankruptcy.) 

where  there  are  no  statutes  of  insolvency,  Inability  and  refusal 

to  pay  debts  do  not  operate  a 470 

absconding  does  not  operate  a 470 

simple  insolvency,  without  an  assignment  or  any  judicial  pro- 
cess, does  not  work  a 470  n.  (e) 

appointment  of  a  receiver,  in  certain  cases,  operates  a    .      .      .     470 

in  case  of,  must  be  an  account  if  demanded  by  a  partner  or  a 

party  in  interest 511 

in  a  suit  in  equity  for,  and  an  account,  alleging  an  agreement 
that  dividends  of  profits  were  to  be  made  at  certain  periods, 
the  court  may  decree  the  payment  of  the  sums  due  thereon 
before  the  final  distribution  of  assets 512  n.  (k) 

of  a  limited  partnership  notice  should  be  given,  unless  it  comes 

by  original  limitation  of  time,  or  by  some  act  of  law      .      .     536 

of  a  joint-stock   company,  a  change  in  the  members  would  not 

operate  a,  as  in  a  common  partnership 545 

DISSOLUTION  BY   DECREE, 

Ch.  XIV 457 

for  misconduct  of  a  partner 457 

courts  of  common  law  unable  to  grant 457 

cases  in  which  courts  of  law  might  dissolve  a  partnership      ,     .     457 

courts  of  equity  have  full  power  to  grant  a 457 

(See  Decrek,  and  Equity.) 
usually  for  causes  occurring  after  formation  of  partnership  .     .     458 
excluding  one  elected  trustee  in  an  unincorporated   company 

may  be  good  ground  for  a 459  n.  (f) 

where  misconduct  is  not  charged 460 

for  bankruptcy  or  insolvency 460 

will  be  granted  for  any  cause  which  takes  from  a  partner  all  his 

ownership 461 

pecuniary  inability  of  one  partner  to  fulfil  material  engagements 

with  the  other  partners  sufficient  cause  for 463 

inability  of  a  partner  to  do  his  duty  to  the  firm,  caused  by  a 

permanent  loss  of  health 463 

■would  be  granted  for  insanity 464 

where  the  appointment  of  guardians  would  cause  much  delay, 
a  court  of  equity  would  receive  a  petition  from  the  next 
friend  of  the  insane,  and,  upon  cause  shown,  grant  .     .      .     466 
where  the  continuance  of  the  partnership  has  become  impracti- 
cable, will  be  granted  in  equity    .......••     467 


646  INDEX. 

DIVISION   OF  PROFITS, 

provision  for 249 

{See  Articles.) 

DORMANT   PARTNER, 

usually  understood  as  one  both  sooret  and  inactive       ....       33 
difference  between  a  dormant  and  an  open  partnership    .      33  n.  (p) 
{See  Pautneks.) 

liable  when  discovered G2  n.  (a) 

unless  they  plead  in   abatement,  an  action   may  be  maintained 

against  them  alone 62  n.  (rr) 

non-juinder  of,  in  an  action  by  or  against  a  firm 290 

where  the  goods   of  the  ostensible  partner  are   attached  and 

another  creditor  discovers  a,  and  makes  him  defendant.     .     360 
■where  the  ostensible  partners  were  not  dealt  with  on  partner- 
ship account 360 

rights  and  obligations  of,  as  to  the  real  estate  of  a  partnership     368 

rights  of,  when  retiring 415 

(See  Notice  of  Retirement.) 

liable  for  debts  contracted  during  the  partnership 416 

who  is  a  new  partner 436 

(See  Incoming  Partner.) 
need  not  give  notice  to  cut  off  his  personal  liability  for  future 
debts ;   but,  qiicere,  how  is  it  as  to  property  left  by  him  in 

the  firm  after  his  retirement 497 

on  the  discovery  of,  creditors   may  elect  whether  to  proceed 
against  the  ostensible  partners  alone,  or  against  the  actual 

firm  property 500 

where  non-joinder  of,  either  in  an  action  by  or  against  a  firm,  is 

not  an  objection  to  the  maintenance  of  the  suit    .     .    500  n.  (g) 

DOWER  IN   REAL  ESTATE   OF  PARTNERSHIP, 

where  land  is  coiivej'ed  to  partners  as  tenants  in  common    .     .     374 
(See    Real   Estate    of    Partnership,    hov^^   Treated    in 
Equity.) 

DUTIES.     (See  Partners,  Rights  and  Duties  of.) 


E. 

EQUITY, 

of  questions  between  partners  cognizant  only  by  courts  of  equity 

(Ch.  VIII.,  Sec.  III.) 288 

when  it  may  decree  specific  performance  of  a  contract  to  enter 

into  partnership 13  n.  (?i) 

whether  equity  will  give  relief  where  security  is  taken  of  a 
higher  nature  than  the  debt,  determined  by  the  intention 
of  the  parties 109 

where  a  partner  attempt?  to  bind  the  firm  by  a  specialty,  but,  for 

want  of  authority,  binds  himself  only 109 


INDEX.  647 

EQJJITY  —  continued. 

Low  it  will  treat  the  transferee  of  one  partner's  interest  in  the 

firm 169 

will  cotnpel  a  specific  performance  of  articles 234 

may  decree  a  specific  performance  of  agreement  to  enter  into 

partnership 235 

may  prohibit  a  partner  from  dissolving  the  firm       .      .      .  236  ri.  (o) 

may  decree  a  partnership  as  of  a  past  day 237 

will  not  peimit  settled  accounts   to  be  opened  without  good 

reason 242 

(See  Accounts.) 
where  one  partner,  in  violation  of  his   agreement,  engages  in 

business  on  his  own  account 244 

has  full  power  to  decree  dissolution 244,  301 

has  power  to  remove  a  coj)artner 244 

when   would  sustain   conduct  of  majority  not    authorized   by 

articles 249 

will  not  nlieve  against  liquidated  damages,  if  legally  due    .     .     251 

will  not  enforce  a  sale  of  good-will 262 

questions  between  partners  cognizant  only  in 288 

instances  of  a  resort  to 295 

when  will  declare  the  partnership  void  ab  initio  .  .  .  296  n.  (k) 
methods  and  processes  of,  applicable  in  cases  of  partnership  .  297 
what  is  necessary  to  give  jurisdiction  to,  in  cases  of  partnership  302 
will  grant  relief  to  a  partnership  as  against  third  persons     .     .     340 

effect  of  a  decree  of  dissolution 381 

how  real  estate  of  partnership  is  treated  in 441  n.  (o) 

will  give  relief  in  cases  of  negligence  or  gross  mistake  by  sur- 
viving partners 442 

will  not  prevent  surviving  partners  from  becoming  purchasers 
from   the    representatives   of   the  share   of  the    deceased 

partner 442  n.  (r) 

power  of,  in  case  of  a  dissolution  of  partnership 403 

will  restrain  the  surviving  partners  from  continuing  in  business 

under  the  credit  and  risking  the  effects  of  the  old  firm  .     .     443 
in  case  of  insanity,  where  the  aj)pointment  of  guardians  would 
cause  mischievous  delay,  would  receive  petition  from  next 
friend,  and,  upon  cause  shown,  decree  dissolution     .     .     .     446 
will  not  interfere  to  decree  the  specific  execution  of  an  agree- 
ment for  a  partnership 459  n.  (ff) 

would  decree  a  dissolution  on  the  marriage  of  a  partner  who  is 
a  single  woman,  if  circumstances  prevented  its  operating  as 

such 462 

where  the  continuance  of  the  partnership  has  become  impracti- 
cable, will  decree  dissolution 467 

will  not  generally  enforce  an  agreement  to  refer  any  question 

to  arbitrators 467 

might  decree  a  dissolution  on  the  award  of  arbitrators     .     .     .     467 


648  INDEX. 

EQUITY  — co7ifmued. 

all   partios   interested  must  be  joined  in  suits  in,  ■whether  as 

plaintilTs  or  defendants 475 

rule  in,  that  in  bankruptcy  of  a  firm,  joint  property  forms  a 
joint  fund  appropriated  to  the  joint  creditors,  and  the  sev- 
eral property  of  each  partner  a  several  fund  for  private 

creditors 480 

two  firms  having  a  common  member  may  maintain  an  action 

between  themselves  in 480 

when  and  how,  will  enforce  the  lien  of  partners  on  the  partner- 
ship property  for  their  claims 502  n.  (?/) 

may  postpone  a  sale  in  bankruptcy  for  the  general  benefit  of 

creditors 606  n.  (w) 

will  compel  partners  to  keep  a  correct  account  of  all  the  busi- 
ness of  the  firm  in  their  charge 509 

has   full    power   to  grant  a  partner  or  his  representatives  an 

account 510 

will  not  interfere  for  a  breach  of  the  partnership  agreement 

where  law  can  give  relief 510  n.  (d) 

when,  will   entertain  jurisdiction,   although   account  or   other 

action  will  lie  between  the  parties 510  n.  (cZ) 

sometimes  infers  judicially  fraudulent  purposes  in  the  settle- 
ment of  an  account,  from  circumstances  indicating  it,  515  n.  (r) 
may  sometimes  infer  an  agreement  between  partners  to  settle 
their  accounts  in  a  certain  way,  and  direct  the  account  to 

be  taken  in  a  similar  manner 519 

has  jurisdiction  in  matters  of  account  between  part-owners  of  a 

ship 558  n.  (t) 

-has  jurisdiction  wherever  there  is  an  express  agreement  between 

the  part-owners  as  to  the  employment  of  the  ship     .     558  n.  (i) 
{See  Account,  Dissolution,  Injunction,  Receiver,  Part- 
nership, Bankruptcy.) 
ERROR, 

opening  an  account  for 135 

(See  Account.) 
agreement  between  parties  that  account  shall  not  be  opened  for 

error  will  be  respected,  unless  fraud  is  shown      ....     513 
EVIDENCE, 

where  the  signature  of  the  firm  has  been  attached  to  a  paper  by 
a  partner  when  the  burden  is  on  them  to  show  that  it  was 

fraudulent 201 

that  a  bill  has  been  accepted  by  one  partner  in  fraud  of  the  firm 
did  not  oblige  the  plaintilf,  being  indorsee,  to  prove  under 
what  circumstances  it  was  indorsed  to  him      .      .     .    211  n.  (k) 
by  a  partnership  that  the  note  or  bdl  on  which  it  is  sued  was 

in  fraud  of  their  rights 212  n.  Q) 

burden  of  proof  on  creditors  of  the  partnership  to  show  that 

property  is  partnership  property 257 


INDEX.  649 

EXECUTION, 

against  a  partnership  discharged  by  bankruptcy  of  the  firm  .     .     476 
(See  Attachment.) 

EXECUTOR, 

when  liable  as  a  partner 146 

when  the  deceased  has  made  his  partner  his  executor      .     .      .     450 
where  a  surviving  partner  is,  he  is  not  entitled  to  an  allowance 

for  carrying  on  the  business  after  his  partner's  decease,  451  n.  (i) 
or  trustee  carrying  on  the  business  of  a  deceased  partner  pledges 

his  own  responsibility  to  tlie  creditors 454 

where  an,  without  any  authority  from  the  will,  trades  with  the 
assets,  the  testator's  estate  will  not  be  liable  in  case  of  his 

baiikru[)tcy 454  n.  (g) 

to  authorize  an,  to  carry  on  a  trade  with  the  testator's  property, 
the  most  distinct  authority  must  be  given  by  the  will 
itself 455  n.  (t) 


F. 

FACTORS  AND   BROKERS.   (See  Partnehs  as  to  Third  Per- 
sons.) 

FALSIFICATION, 

what  it  is 517 

FELONY, 

effect  on  partnership  of  conviction  of  a  partner  for      ...     .     399 
(See  Dissolution  of  Partnership.) 

FEME   COVERT.     (See  Married  Women.) 

FINAL  BALANCE.     (See  Account  Stated.) 

FIRM   NAME.     (See  Name  of  Firm.) 

FIRMS   HAVING   A   COMMON  MEMBER, 

can  be  no  action  at  law  between 288 

may  be  in  equity 480 

in  an  action  against  one,  the  other  cannot  be  summoned  as  a 

trustee 288  n.  (0 

demands  between  them 288 

FRAUD, 

fraudulent  use  by  a  partner  of  the  name  or  property  of  the 

firm 103,112,164,201,210 

presumption  of,  never  absolute 112 

but  not  rebutted  by  knowledge  of  the  other  partners  that  the 
obligation  of  the  firm  had  been  applied  by  one  partner  to 
pay  his  own  debt 112  n.  (<) 

FUNDS,   JOINT   OR   SEVERAL  (See  Debts.) 484 


650  INDEX. 

G. 

GAZETTE.     (See  Notice.) 
GENERAL   I'ARTNER, 

dt'fiiiitioii  of 34 

GENERAL   PARTNERSHIP, 

admission  by  one  that  he  is  partner  with  others,  not  sufficient  to 

prove  their  partnership 195  n.  (s) 

(See  Partneuship.) 
GOOD  FAITH, 

between  partners,  required  with  great  strictness 222 

GOOD-WILL  OF   THE   FIRM 261 

definition  of 262 

treated  b}'  law  and  equity  as  a  valuable  property 262 

sale  of,  will  not  be  enforced  in  equity 262 

when  realizi'd  by  the  executor  of  a  deceased  partner  .     .     .     .  263 

as  to  professional  partnerships 264 

when  a  retiring  partner '' sells  out" 409  n.  (h) 

goes  to  the  survivors  of  a  firm,  without  payment  therefor  on  their 

part 444 

GROSS   EARNINGS.     (See  Partner.) 
GUARANTY,     (See  Surety.) 

where  transfen-ed  from  the  firm  to  a  partner,  or  from  a  partner 

to  the  firm 337 

GUARANTY   AND   BOND   OF   INDEMNITY     .     .     .     .    331  n.  (z) 
change  in  the  firm  discharges  the  surety 333 

GUARDIAN, 

when  a  partner  is  put  under  guardianship,  his  guardian  becomes 

tenant  in  common  with  the  other  partners 463 

GUARDIANSHIP.     (See  Persons  under  Guardianship.) 

H. 

HEIR.     (See  Real  Estate.) 

HUSBAND   AND   WIFE, 

may  in  some  countries  be  partners  ;  effect  of  in  this    ....     327 


ILLEGAL   CONTRACTS, 

no  action  can  be  maintained  on 341 

ILLEGAL   OBJECTS, 

which  m;ike  a  partnership  void,  instances  of 10 

whether  our  courts  would  take  notice  of  a  breach  of  foreign  law       10 


INDEX.  651 

IMPOSSIBILITY.     (See  Dissolution.) 
INCAPACITY   OF  PARTNERS.     (6'ee  Dissolution.) 
INCOMING   PARTNER, 

definition  of 34 

addition  of  a  partner  in  law  terminates  the  former  copartnersbip       34 

where  one  is  received  and  treated  as  incoming  partner     .     .     .     161 

liable  for  all  subsequent  debts  of  the  firm 435 

not  liable  for  the  old  debts,  unless  he  assumes  them  for  consid- 
eration    433 

not  liable  for  goods  ordered  before  but  not  delivered  until  after 

he  enters  the  firm 433  n.  (y)' 

where  goods  are  sold  to  a  firm,  and  it  is  dissolved,  and  one  of  the 

old  partners  unites  with  a  new  one  and  forms  a  new  firm,  433  n.  (?/) 

admission  into  the  firm  is  consideration  enough  to  bind  him  to 

those  from  whom  the  consideration  comes 433 

a  contract  between,  and  the  old  members  of  the  firm,  that  the 
incoming  partner  shall  be  liable  for  the  old  debts,  like  the 
other  members  of  tlie  firm,  valid  as  between  the  partners  .     434 

not  bound  to  creditors  of  the  old  firm  by  a  contract  with  the  old 

members  to  become  responsible  for  them 434 

not  bound  to  the  old  creditors,  unless  on  a  promise  for  consider- 
ation, which  may  be  express  or  implied 435 

circumstances  that  would  warrant  a  jury  in  finding  an  assumption 

of  the  old  debts  by  an 435 

no  difference  in  regard  to  an,  who  is  a  dormant  partner,  except 
that  a  known  partner  is  liable  on  the  credit  he  gives  as  well 
as  his  interest,  and  a  dormant  partner  on  his  interest  only  .     436 

if  he  is  a  dormant  ])artner,  and  agrees  to  assume  the  debts,  he 
stands  in  the  same  position  of  a  known  partner  who  assumes 
them 436 

not  liable  for  the  rent  on  a  lease  of  real  estate  taken  by  the  old  firm     437 

but  if  he  joins  with  the  old  partners  to  pay  an  increase  of  rent, 

he  will  thereafter  be  liable  for  such  an  increase    ....     437 

■where  the  bargain  between  the  partners  is  that  he  shall  be  a 

partner  as  of  a  preceding  day 437 

INFANT, 

incapacity  of,  to  enter  into  partnership 17 

may  be  a  partner  in  a  mercantile  house,  his  father  supplying  the 

capital 18  n.  (^) 

promise  of,  voidable  and  not  void 18 

may  be  ratified  by  him  after  of  full  age 18 

ratification  may  be  express,  or  implied  by  his  acts,  or  inferred  by 

law 18 

statutes  respecting 19 

a  mere  acknowledgment  that  the  debt  exists  is  not  always  a  rati- 
fication of  the  promise  to  pay 19 

where  an  infant  enters  a  partnership  as  an  adult,  and  does  not 

withdraw  after  he  comes  of  age 20 


652  INDEX. 

INFANT  —  continued. 

right  of,  to  avoid  his  contract  gives  no  right  of  avoidance  to  the 

other  contrac'ing  party 21 

privilege  of  avoiding  extends  to  his  legal  representatives  .  .  21 
a  decree  of  bankruptcy  against  an  infant  void  at  law  .  .  .  22n.  (w) 
where  a  contract  is  made  with  a  firm,  and  one  of  the  members, 

who  is  an  infant,  repudiates  his  liabdity 22 

INFANT  PARTNER, 

if,  on  coming  of  age,  he  repudiates  his  liability  for  debts  of  a 

partnership,  must  repudiate  as  to  the  ])rofits 437 

when  he  comes  of  age,  may  escape  the  obligations  of  the  firm, 

under  plea  of  minority 437 

when,  by  remaining  in  the  firm  after  full  age,  he  confirms  the 

debts  contracted  during  his  minority 437 

may  not  claim  a  share  of  the   oint  funds  of  the  old  partnership 

and  forbid  an  application  of  it  to  the  firm  debts    .     ,     .     .     437 

INHERITANCE   OF  REAL   ESTATE   OF   PARTNERSHIP. 

(See    Real    Estate    of    Partnership,    how    Treated    in 
Equity.) 
INJUNCTION, 

a  decree  for,  when  and  how  granted 302 

power  of  ecjuity  to  decree  an  injunction 303 

when  equity  will  grant  injunction 303 

may  issue  without  a  dissolution 304 

to  restrain  a  partner  frqm  using  the  partnership  property  im- 
properly   304 

form  of  the  order  for 305  n.  (7tt) 

where  the  partnership  having  been  dissolved,  one  of  the  part- 
ners attempts  to  carry  on  the  former  business  in  a  way 

injurious  to  the  former  partners 305 

where  an  account  has  been  settled  between  the  partners  .  .  .  305 
where,  on  settlement,  it  is  agreed  that  a  partner  shall  not  carry 

on  a  certain  trade  within  certain  limits 306 

where  one  partner  carries  on  a  business  injurious  to  the  part- 
nership    306 

where  a  partner   makes  use   of  the  name  of  the  firm  in  any 

wrongful  way 306 

where  one  of  the  partners  has  deceased 307 

will  not  be  granted  at  the  instance  of  one  partner  after  judgment 

at  law  against  the  firm 309  n.  (c) 

how  obtained,  (See  Equity,  and  Courts  of  Equity.) 

INQUISITION   OF  LUNACY.     (See  Insane,  and  Lxsanity.) 

INSANE, 

incapacity  to  enter  into  a  partnership 28 

a  verdict  of  inquisition  of  lunacy  has  no  retrospective  influence 
so  as  to  affect  any  honest  transaction  which  took  place  pre- 
vious to  it 466 


INDEX.  653 

INSANITY,  ' 

a  ground  for  a  dissolution  of  a  partnership 456 

whether  it  does  of  itself  dissolve  the  partnership 466 

when  determined  by  due  inquest  and  public  notice  given,    it 

would  per  se  operate  a  dissolution 466 

INSURANCE, 

by  a  partnership,  of  the  joint  property 335 

by  one  partni-r  in  his  own  name,  of  the  joint  property     .     .     .     336 
authority  of  a  part-owner  of  a  ship  to  insui-e  may  be  inferred  .     557 
{See  Pakt-owxkrs  of  Ships.) 
INTEREST, 

money  advanced  to  the  firm  for  its  use,  by  a  partner,  bears  no 

interest,  without  specific  bargain 229  n.  (y) 

{See  Paktxeus.) 

J. 

JOINDER  OF   PARTIES.     (See  Actions.) 

JOINT   CREDITORS, 

in  England,  are  entitled  to  prove  under  a  separate  commission, 

fur  the  purpose  of  voting  in  the  choice  of  assignees       ,     .     483 

in  this  country,  they  may  not 483 

who  are 484 

where  a  partner  owes  a  balance  to  the  firm,  joint  creditors,  they 

cannot  prove  it  against  liis  several  fund,  unless  the  balance 

is  caused  by  a  fraudulent  abstraction  from  the  joint  funds     600 

where  they  elect  to  proceed  against  the  several  estate  of  a 

partner,  the  several  creditors  of  the  latter  may  proceed 

against  the  joint  fund  for  an  equal  amount 501 

JOINT  ESTATE, 

where  larger  at  the  time  of  bankru{)tcy  on  account  of  any 
fraudulent  act  against  one  partner,  his  several    creditors 

may  proceed  against  it  for  that  amouut 500 

JOINT-OWNERS, 

either  joint-tenants,  tenants  in  common,  or  partners  ....     548 
JOINT  PROPERTY, 

what  is 491 

JOINT-STOCK  COMPANIES,   Ch.  XVIII 541 

transfer  of  shares  in,  effect  of 161 

regulated  by  statute  in  England 541 

are  subject  to  the  law  of  partnership 541 

where  all  the  property  Is  in  the  hands  of  trustees,  and  the 
shareholders  under  an  indenture  which  declares  the  trust 

have  an  equitable  estate 542 

usually  have  a  counnon  name 542 

what  right  they  have  to  change  their  name 542  n.  {/) 

may  have  their  by-laws  and  rules  of  proceeding  by  which  they 
regulate  the  election  of  officers  and  the  transaction  of 
business 543 


654  INDEX. 

JOINT-STOCK    COMPANIES  —  continued. 

cannot  have  any  common  seal,  and  therefore  cannot  make    a 

deed  of  any  kind 543 

in  Enjfland,  they  are  bound  by  contracts  made  by  a  competent 

board  of  directors 543  n.  (Jt) 

cannot  limit  their  liabilities  and  become  a  corporation  or  a  lim- 
ited partnership  by  tlieir  own  act,  without  compliance  with 
the  re(iuirements  of  the  law 544 

the  directors,  unless  restrained  by  statute  or  the  deed  of  settle- 
ment, have  all  the  authority  given  to  partners  at  common 
law 544  n.  (A:) 

a  member  of,  liable  precisely  as  a  partner 544 

a  member  of,  may  recover  compensation  for  services  rendered 
the  company  previous  to  his  having  become  a  member  of 
it 544  n.  (0 

an  action  cannot  be  maintained  between  a  joint-stock  company 

and  one  of  its  members 546  n.  (Z) 

change  in  the  members  would  not  operate  a  dissolution  .     .     .     545 

the  death  of  a  member  does  not  operate  a  dissolution      .     .     .     545 

respects  in  which  they  are  like  a  partnership 546 

JOINT-TENANCY, 

all  the  incidents  of,  may  be  given  to  tenancy  in  common  by  agree- 
ment of  the  parties 548 

JUDGMENTS, 

an  unsatisfied  judgment  against  ostensible  partner  may  be 
pleaded  in  bar  to  a  suit  for  the  same  cause  against  both 
ostensible  and  secret 65 

where  obtained  against  one  partner 107 

where  confessed  by  one  partner  against  his  firm      .     .     ,    178  n.  ((/) 

L. 
LABOR, 

may  be  the  only  contribution  of  a  partner 65 

{See  Partnership  Property.) 
LAW, 

presumption  that  all  persons  dealing  with  a  partnership  know 

the  law  of  partnership 233 

LEASE, 

made  to  partners,  effect  of  on  the  retirement  of  one  partner     .     417 
of  real  estate  held  by  a  firm,  a  new  partner  coming  in  after  the 

lease  would  not  be  liable  for  the  rent 437 

LEGACY.  (See   Legatee.) 
LEGATEE, 

where  property  is  left  to  two  or  more  persons  by  will,  and  they 

take  hold  and  use  it  as  partners 53 

where   the   will  contained    expressions  which   would  give  the 

property  the  quality  of  a  joint-tenancy 54 

{See  Devisee.) 


INDEX.  655 

LEVY.     (See  Attachment.) 

LIABILITIES, 

arising  from  annuities.     (See  Statute  of  Vict.) 

where  it  is  certain,  and  not  dependent  on  the  amount  of  profits, 

tlie*annuitant  is  not  a  partner,  instances  of      .     .     .    136  n.  (f7) 

■where  it  arises  from  loans 140 

■where  money  is  lent  to  a  firm  for  more  than  legal  interest     .     .     140 
arising  from  loans  where  money  is  lent  to  a  firm  and  the  lender 

is  to  receive  a  certain  share  of  the  profits 141 

arising  from  loans  ;  what  is  the  test  of  partnership  in  such  cases     142 

arising  from  leases 143 

classification  of  contracts,  by  which  the  profits  are  to  be  divided 

between  the  parties 143 

■where  an  owner  of  a  farm  lets  it  out  on  half  profits ;  this  does 

not  constitute  a  partnership 143 

LIABILITY, 

of  a  partner,  -where  sought  to  be  put  upon  one  who  is  only  a 

nominal  partner 119 

■where  persons  have  the  same  firm  name,  and  do  the  same  busi- 
ness, liable  to  inference  of  identity  of  partnership    .      .      .     120 

■where  one  is  a  partner  in  a  house  for  a  particular  business  and 

the  other  partners  carry  on  another  business 121 

declarations  or  acts  tending  to  show  that  the  parties  are  part- 
ners may  make  them  liable  as  such  to  third  parties    .     .     .     122 

■where  a  person  not  publicly  declared  to  be  a  partner  is  held  out 

as  such,  with  his  consent,  to  one  customer 130 

■where  held  out  to  one  customer,  ■with  an  injunction  of  secrecy  ,     131 

LIBEL.     (See  Actions  and  Torts.) 

LIEN,     (See  Material-Men,  Ship's  Husband.) 

for  the  purposes  of  the  lien  on  ships,  the  States  are  considered 

foreign  to  each  other 568 

LIEN   OF   A   PARTNER, 

on  the  common  property 265 

LIMITATION, 

may  grow  out  of  the  nature  of  the  transactions  or  business  of 

the  partnership 100 

Statute  of  9  Geo.  4,  ch.  14 184  n.  («) 

Statutes  of,  when  they  begin  to  run  after  death  of  a  partner      .     307 

LIMITED   PARTNERSIIir,    Ch.    XVII 526 

definition  of 526 

general  principles  of 528 

principles  of  the  statutes  of  the  several  States  in  regard  to        .  630 
unless  all  the  requirements  of  the  statutes  respecting,  are  com- 
plied with,  the  partners  will  all  be  liable  as  general  part- 
ners     53 

the  capital  of,  must  not  be  reduced  during  the  partnership    .     .  532 


656  INDEX. 

LIMITED   PARTNERSHIP  —  coniinned. 

in  New  York,  an  arrangement  of  the  firm  for  preference  among 
their  creditors,  or  to  provide  for  a  special  partner  as  a 
creditor,  is  void 533 

all  suits  nm.-t  be  brought  by  and  against  the  general^ partners, 
unless  the  special  partner  has  become  a  general  pawner  by 
a  violation  of  law  or  otherwise 534,  537,  n.  (e) 

but  if  the  plaintiff  seeks  to  hold  the  special  partners  beyond 

their  limited  liability,  he  must  join  them 535 

if  renewed  after  its  expiration  by  its  original  limitation,  there 

must  be  a  renewal  of  the  certificate,  publication,  and  record     535 

different  ways  in  which  it  may  be  dissolved 535 

■when  defects  in  the  certificate,  or  in  publication  of  record,  or  in 
any  compliance  with  the  requirements  of  law,  if  merely  for- 
mal, do  not  vitiate 538 

if  substantial,  they  leave  all  liable  as  general  partners     .     .     .     538 

affidavit  to  accompany  the  certificate  of,  need  not  follow  the 

exact  words  of  the  statute 538  n.  (?t') 

certificate  of,  jvimd  facie  evidence  of  its  own  truth,  but  cannot 
rebut  positive  testimony  of  its  falsehood,  on  any  material 
point 539 

LIQUIDATED   DAMAGES, 

when  courts  will  disregard  agreement  for 250 

when  courts  will  sui>tain  agreement  for 251 

must  be  agreed  upon  for  one  distinct  breach  only 251 

LOSSES, 

caused  by  a  breach  of  duty  by  one  partner,  effect  of   ...     .     224 

LOSSES,   SHARING  OF.     (See  PartxNeks.) 

LUNATIC.     (See  Insanity.) 


M. 

MAJORITY   OF   THE    PARTNERS, 

power  of 218 

in  dealing  with  third  persons 219 

in  reference  to  the  partners  themselves 220 

as  to  excluding  a  partner 384 

MANAGING   OWNER, 

who  is 569 

(See  Ship's  Husband.) 
MARRIAGE, 

of  a  female  partner,  effect  of 399,  462 

(See  Dissolution  of  Partnership.) 

MARRIED   WOMEN, 

incapable  of  entering  into  partnership  at  common  law      ...       23 
the  custom  of  London  as  to 23 


INDEX.  657 

MARRIED   WOMEN"  —  continued. 

where  a  man  never  lived  in  that  State  of  the  Union  in  which  his 

wife  resides 23  n.  (u) 

where  a  single  woman  is  a  member  of  a  firm,  her  marriage  dis- 
solves the  partnership 26 

where  a  wife  holds  shares  in  a  joint-stock  company  ....  26 
where  a  man's  wife  inherits  an  interest  in  a  partnership  ...  26 
where  the  property  was  given  to  trustees  for  the  sole  benefit  of 

the  wife 26 

MASTER  OF  A   SHIP, 

where  he  is  a  part-owner 561 

(See  rART-owNEKS  OP  Ships  and  Admiralty.) 
where  a  part-owner,  and  the  majority  wish  to  displace  him  .     .     562 
(See  Partners  of  Ships  and  Admiralty.) 
MATERIAL-MEN, 

who  are 568 

lien  of,  against  the  ship  for  the  amount  due  them  for  repairs  or 

supplies 568 

MINES.     (See  Partnership  Property.) 

MISCONDUCT  OF   A  PARTNER, 

provisions  for,  and  damages  for 250 

MORTGAGE   OF  A   SHIP, 

in  case  of,  the  party  who  has  actual  control  of  the  ship  is  the 

owner  for  the  time  and  purpose 571 

if  not  made  known,  will  not  affect  a  third  party 571 

MORTGAGEE   OF  A   SHIP, 

rights  and  liabilities 570 

MORTGAGOR  OF  A   SHIP, 

rights  and  liabilities 570 


N. 

NAME  OF  FIRM, 

every  partnership  should  have  one 125 

need  not  be  prescribed  in  the  articles,  or  determined  by  agreement,     125 
may  grow  out  of  the  custom  of  the  firm  ;  instances  of.      .  125  n.  (_/) 

where  it  avoids  having  one 125 

whei-e  there  is  an  adopted  and  recognized  style 126 

where  a  partnership  style  has  been  agreed  on,  and  another  name 

is  also  employed  ;  instances  of 126 

where  the  name  of  one  partner  alone  is  the  proper  name  of  the 
firm,  this  name,  with  the  addition  of  Co.,  will  not  operate  as 

a  signature  of  partnership 128  n.  (m) 

may  be  the  name  of  one  of  its  members 128  n.  (/) 

provisions  respecting 204 

where  another  name  is  used  by  a  partner 254 

42 


658  INDEX. 

NAME   OF   TmU  —  contmued. 

the  sanction  of  the  firm  to  a  change  in  the  name  may  be  implied,  255 

a  firm  cannot  be  bound  by  any  name  but  its  own     .         ...  255 

a  firm  may  have  two  names ,  255 

fictitious  names  prohibited  by  statute  in  New  York     ....  255 

where  not  agreed  upon  in  the  articles 255 

■where  attempted  to  be  used  by  an  executor  of  a  deceased  part- 
ner       263 

NEGOTIABLE   PAPER 199 

waiver  of  notice  by  one  partner  where  the  note  is  made  for  his 

own  benefit 201 

defences  of  partners  to 200 

■when  taken  with  knowledge  that  it  was  given  for  the  debt  of  one 
partner  only,  presumed  in  this  country  to  have  been  taken 

fraudulently 202 

with  the  firm  name,  where  the  transaction  is  fraudulent,  effect 

of 202n.  ((£) 

given  by  one  partner,  when  consent  of  the  others  may  be  im- 
plied, without  a  new  consideration  202n.  ((Z) 

bearing  the  signature  of  the  firm  given  by  a  partner  to  a  third 

party  for  his  own  debt,  effect  of 202 

doctrine  of  the  English  courts  in  reference  to  this 204 

where  given  by  one  partner  in  payment  of  his  separate  debt,  and 

for  a  larger  amount  than  the  debt,  effect  of 205 

where  received  bearing  only  the  signature  of  one  partner,  effect 

of 213 

credit  given  on,  only  to  those  whose  name  it  bears  .  213,  274  n.  (.<) 
where  usage  of  the  firm  is  to  sign  by  only  one  partner  .  .  .  213 
where  signed  in  a  fictitious  name,  if  authorized  or  adopted  by 

the  firm,  effect  of 213 

may  be  signed  by  one  partner,  so  as  to  hold  all  jointly  and  him- 
self severally 213 

of  one  of  two  firms  connected  in  business  and  using  the  same 

name,  effect  of 214 

indorsing  of  paper  which  does  not  belong  to  the  firm,  by  one  who 

is  a  partner ;  presumption  against  authority  so  to  indorse  it,     215 

indorsed  by  the  firm  to  one  partner 327 

who  must  sue  on 333 

promissory  note  indorsed  in  blank 333 

a  person  taking,  on  the  credit  of  several  persons,  in  ignorance 
of  the  fact  that  they  are  partners,  may  prove  against  the 

parties  severally,  or  against  the  firm 498 

where  taken  with  knowledge  that  the  names  were  the  names  of 

partners 499 

NET  PROFITS.     {See  Partners.) 

NEW   HAMPSHIRE, 

statute  of,  concerning  actions  between  copartners 285 


INDEX.  659 

NOMINAL  PARTNER, 

ostensible  partner  a  nominal  one  also 31 

usual  meaninji;  of  this  designation 31 

may  be  called  by  his  [)artner  as  a  witness 31  n.  (n) 

how  dilfennt  Irom  dormant 31   n.   (o) 

converse  of  the  secret  partner 32 

where  oblij^ed  to  pay  the  debts  of  the  firm,  may  recover  from 

the  firm 273  n,  (u) 

NOTICE, 

of  a  stipulation  to  one  member  of  a  firm  is  notice  to  all,      95  n.  (v) 
where  a  partner  gives  notice  to  a  particular  person,  or  the  pub- 
lic generally,  that  he  is  not  re.«;ponsible  for  the  acts  of  the 

others 95  n.  (r) 

where  the  fact  that  a  partnership  is  engaged  only  in  a  particular 
trade  is   known,  this  is  a  limitation  of  the  authority  of  a 

partner;  instances  of 99 

of  dishonor  to  one  of  the  joint  indorsers  of  a  note  who  are  not 

partners,  not  sufficient 196  n.  (ji) 

to  one  of  joint   lessees,  sufficient   if  they  are  partners ;  other- 
wise, not 197  n.  (y) 

to  one  partner  is  notice  to  the  firm 196 

of  dissolution  in  case  of  the  death  of  a  partner  not  necessary     .  449 

of  dissolution  not  necessary  in  case  of  bankruptcy 473 

NOTICE   OF   RETIREMENT  OR    DISSOLUTION, 

must  be  given  by  retiring  partner 410 

manner  of  giving 411 

as  to  former  customers  and  new  customers 412 

rule  as  to 412 

by  public  advertisement 413 

when  unnecessary 413 

whether  a  person  has,  a  question  of  fact 413 

there  must  be  dealing  with  the  firm  directly,  in  order  to  entitle  a 

person  to 414 

what  dealing  would  entitle  a  person  to 415 

as  to  a  dormant  partner 415 

as  to  a  dormant  partner,  when  known  to  any  customer    .     ,     .  416 

governed  by  rules  applicable  to  notice  in  other  cases  ....  417 

in  what  manner  it  should  be  given 417 

must  be  such  as  the  usage  of  merchants  requires 418 

by  the  notoriety  of  the  act 418 

cases  in  which  a  jury  might  infer 418 

when  given  in  a  newspaper 419 

given  to  one  of  a  partnership,  binds  the  firm 420 

to  an  agent,  binds  the  principal 420 

where  given  to  a  stockholder  in  a  corporation 420 

where  casually  given  by  advertisement  to  a  director  of  a  bank  .  420 

where  given  to  a  director  expressly  for  the  bank 420 


660  INDEX. 

o. 

OBLIGATIONS, 

of  the  partnership  and  the  several  obligations  of  a  partner  may- 
be cumulative 149 

where  obligation  of  the  firm  purports  to  be  superadded  to  that 
of  a  partner,  no  presumption  that  the  firm  obligation  is 

discharged 149 

OFFICES, 

no  partnership  in 37 

if  held  by  two  persons,  govei-ned  by  rules  distinct  from  partner- 
ship    38 

(See  Partnership.) 

OSTENSIBLE  PARTNERS, 

who  they  are 30 

when  held  out  as  partner  with  his  consent 30 

no  especial  way  of  holding  such  partner  forth 30 

where  a  partner  generally  unknown  is  made  known  to  any  one 

man 30 

contract  with,  does  not  survive  to  a  dormant  partner  ....     333 
(See  Nominal  Partner.) 
OWNERSHIP, 

questions  as  to  the,  of  goods,  effects,  or  lands,  determined  by 

the  general  principles  of  the  law  of  contracts       ....     491 

P. 

PARTIES.     (See  Actions.) 
PARTNERS, 

any  persons,  competent  in  law  and  fact  to  transact  business  on 

their  own  account,  may  become  partners 16 

competency  of,  in  law  and  in  fact 16 

kinds  of 80 

who  are  as  to  each  other  (Ch.  V.) 41 

community  of  interest  the  basis  of  the  relation 41 

one  or  more  may  be  guaranteed  by  the  others  against  loss  .  .  41 
if  one  does  not  participate  in  profits,  but  is  liable  for  losses, 

may  still  be  a  partnership 41 

must  be  a  community  of  interest  for  business  purposes  ...  42 
clubs  for  social  and  charitable  purposes  not  partnerships,  42  n.  (b) 
there  must  be  a  community  of  interest  resulting  from  the  work 

done 44 

may  be  as  to  the  buying  of  goods  and  the  sending  of  them 

abroad,  and  not  in  the  return  cargo 45 

when  physicians  or  lawyers  are 46 

effect  of  the  bargain  where  it  was  provided  that  one  should  find 

all  the  money,  and  the  other  do  all  the  work,  and  the  j^rofits 

be  divided 51 


INDEX.  661 

PARTNERS  —  contuwed. 

if  two  mercantile  houses  recommend  consignments  to  each  other, 
and  divide  the  gross  commissions  on  sales  of  goods  so  rec- 
ommended, they  are  quoad  hoc  partners     ....     51  n.  (n) 
an  a<rreement  to  participate  in  profits  raises  a  strong  presump- 
tion of  partnership 51 

but  is  not  decisive 67,  72 

if  a  known  partnership  enter  into  a  bargain  for  purchase,  sale, 
and  joint  profit,  with  a  third  party,  for  a  single  transaction, 
all  are  partners,  but  only  as  to  that  transaction    ....       52 

same  person  may  be  a  partner  in  distinct  firms 52 

a  firm  cannot  sue  a  firm,  if  one  person  be  a  partner  in  both,    52,  289 

where  a  partner  so  situated  transfers  his  interest 52 

when  persons  are,  in  regard  to  each  other,  summed  up    .     .     .       54 
each  need  not  bring  into  the  common  stock  labor  and  property,       55 
difference  between   an   undertaking  by   a   number  of  persons 
jointly  with  intent  to  diminish  a  loss,  and  one  for  the  sake 

of  profit 57 

the  capital  may  remain  the  property  of  only  one 57 

whether  partners  as  to  each  other  must  be  determined  by  them- 
selves       58 

who  are,  as  to  third  parties  (Ch.  VI.,  Sec.  I.) 61 

persons  may  be  held  as  partners  as  to  third  parties  Avho  are  not 

so  between  themselves 61 

general  grounds  of  liability 61 

an  absolute  liability  for  the  whole  of  every  debt  due  from  the 

firm  rests  upon  each  partner 61 

a  person  may  be  charged  either  because  he  is  a  partner,  or 
because  he  has  been  held  forth  as  such  with  his  knowledge 

and  assent 61 

but  only  to  those  who  have  trusted  the  firm  on  his  credit      .     .       65 

secret  and  known  partners  equally  liable 61 

when  a  partner  is  liable  as  actual  partner 66 

may  by  agreement  made  known  to  their  customers  qualify  the 

obligations  of  one  in  reference  to  their  customers     ...       67 
a   person   receiving  a  specific  proportion   of  profits  as  wages 
or  compensation   for  services,  is  not  made  thereby  a  part- 
ner      51,  71,  92 

so  of  a  person  working  land,  sailing  a  ship,  hiring  an  inn,  for  a 

share  of  the  profits 72 

where  persons  make  known  an  agreement  to  become  partners, 
but  have  no  actual  community  of  interest,  they  are  not  in 
fact  partners,  but  might  be  bound  as  such  to  those  to  whom 

they  have  so  called  themselves 87 

where  a  person  is  held  out  as  a  partner  with  his  own  consent,  he 

is  liable  as  such 87 

where  a  person  declares,  in  a  contract  or  elsewhere,  that  he  is 

not  a  partner,  but  in  fact  is  such,  then  liable 88 


662  INDEX. 

PARTNERS  —  continued. 

difference  between  receiving  gross  receipts  or  net  profits  ;  cases 

examined 88  n.  (5) 

every  one  wlio  lias  a  right  to  an  account  is  not  necessarily  a 

partner 92 

Stat.  28  &  29  Vic.  ch.  86,  intended  to  determine  wliat  partici- 
pation of  profits  makes  the  taker  liable  as  partner   .     92  n.  (t) 

how  far  stipulations  between,  affect  third  parties 93 

where  parties  enter  into  a  contract  of  partrier?hip,  and  also 
stipulations  which  in  whole  or  in  part  deny  or  qualify  the 
liability,  of  some  of  thtm 93 

where  stipulations  between  partners  are  made  known  to  third 

parties,  they,  generally,  are  affected  by  them       ....        93 

where  there  is  a  provision  in  artiirles  that  the  partners  would  not 
come  under  liabilities,  nor  confer  on  each  other  rights  and 
powers  belonging  to  partnership 94 

stipulations  unknown  to  third  persons  inoperative  as  to  them      .       95 

in  relation  to  the  business  of  the  firm,  every  partner  has  full 

power  to  bind  all  the  members  of  it 95 

but  he  binds  the  firm  only  when  he  acts  in  and  uses  the  name 

of  the  firm 95 

authority  of  each  partner,  usually  only  an  implied  one    ...       95 

inference  of  authority  of  each  partner  cannot   be  made  when 

disclaimed  by  act  and  word 95 

it  is  a  question  of  fact,  whether  an  alleged  paj'tner  has  disproved 

the  evidence  of  authority  on  the  part  of  his  partners     .     .       95 

a  person  may  not  at  the  same  time  secure  the  gains  of  partner- 
ship and  guard  against  its  losses 98 

custom  in  Continental  Europe  to  designate  one  of  a  firm,  in  a 
circular,  as  the  partner  having  power  to  sign  their  name  to 
negotiable  paper 98 

reason  why  all  are  bound  by  acts  of  one 101 

firm  may  permit  a  partner  to  act  lor  the  firm,  in  his  own  name,     101 

parties  cannot  enter  into  an  unlimited  partnei'ship  as  regards 
its  advantages,  and  at  the  same  time  protect  themselves 
from  its  liabilities 102 

if  a  partner  exempted  by  agreement  is  made  to  pay  any  loss,  he 

can  recover  it  from  his  copartners 102 

where  a  partner,  in  violation  of  his  stipulations  as  partner,  enters 

into  a  contract  with  a  third  person,  effect  of 103 

where  a  person  deals  with  a  fraudulent  partner,  in  an  ignorance 

which  implies  gross  negligence  on  his  part,  effect  of      .     .     103 

when  credit  is  given  to  one  partner  only 103 

where  a  creditor  of  a  firm  takes  a  judgment  or  bond  against  an 

ostensible  partner 109 

attempting  to  bind  the  firm  by  a  specialty,  but  failing      .     .     .     109 
{See  Equity.) 

where  using  the  credit  of  the  firm  for  personal  advantage,  with- 
out authority   Ill 


INDEX.  663 

F  ARTNETXS  —conHmted. 

where  property  is  purchased  by  one  partner  in  his  own  name 

with  funds  of  the  firm 113 

a  fraudulent  use  of  the  firm's  name  should  be  at  once  repudiated,     113 

rights  of  seller  who  discovers  that  the  orderer  of  goods  and  the 
receiver  to  whom  he  sent  them  were  partners  in  the  trans- 
action       113 

where  the  orderer  and  receiver  were  not  to  enter  into  partner- 
ship until  the  products  which  had  been  ordered  were 
manufactured 113 

where  a  person  liable  because  he  is  held  out  as  such    .     .     .     .     115 

where  a  creditor  seeks  to  put  the  liability  of  a  partner  on  one 

who  is  only  nominally  a  partner 119 

where  conversations  and  acts  are  insufficient  to  prove  a  part- 
nership as  between  the  partners,  if  third  parties  are  not 
interested 122 

everyone  authorizing  another  to  believe  him  a  partner,  is  liable 

as  a  partner  as  to  such  person 123 

a  partnership  may  have  whatever  name  the  partners  choose,  125,  254 

in  assumpsit  by  a  firm,  plaintiifs  must  prove  who  constitute  the 

tirm 128 

of  the  effect  of  using  such  a  name  as  usually  indicates  a  part- 
nership   130 

a  partner  with  authority  to  act  for  the  firm,  whose  name  is 
used  as  the  name  of  the  firm,  may  by  his  representations 
bind  the  firm  to  an  innocent  party,  however  fraudulently 
he  may  act  towards  the  firm 130 

where  the  liability  of,  turns  upon  the  force  and  meaning  of  his 

acts 132 

where  not  liable  as  such,  unless  held  out  with  his  own  concur- 
rence       132 

where  a  person  signs  his  name  to  an  instrument  importing  that 
the  subscribers  intend,  upon  the  fulfilment  of  certain  con- 
ditions, to  enter  into  ]iartnership 132  n.  (s) 

where  a  person  knew  that  he  was  held  out  as  partner,  but  neither 

consented  nor  refused 134 

chargeable  because  so  held  out,  may  be  joined  with  the  other 

partners  in  a  suit  against  them;  instances  of      .     .     134  n.  («') 

persons  may  sue  and  be  sued  as  partners,  where  a  contract  is 

made  with  them  as  such 134 

where  a  person  lends  money  to  a  firm,  and  is  to  receive  a  certain 

share  of  the  profits '     141 

shipment  of  goods  on  half-profits  does  not  constitute  a  partner- 
ship     144 

where  the  owner  of  a  vessel  lets  her  in  consideration  of  a  share 

of  her  earnings,  this  does  not  constitute  a  partnership,  144  n    (I) 

where  a  testator  directs  a  certain  amount  to  be  retained  in  the 

old  firm,  his  assets  not  liable  beyond  that  amount     .     .     .     147 


664  INDEX. 

PARTNERS  —  coniiimed. 

interference  with,  or  even  control  of,  the  affairs  of  the  partner- 
ship not  sufficient  to  render  a  person  liable  as  partner  .     .     147 
joining  in  an  order  for  any  mercantile  transaction  not  sufficient 

to  render  a  person  liable  as 147 

when  and  how  far  liable  m  solido  for  the  torts  of  other  partners,     160 
liable  for  the  tort  of  one,  if  committed  by  him  in  the  partner- 
ship business 150 

when  liable  in  solido  for  the  frauds  of  other  partners,  want  of 
evidence  that  money  raised  by  the  fraud  of  one  of  the  part- 
ners was  applied  to  the  use  of  the  firm  will  not  relieve  tlie 

others  from  liability 152 

where   a  partner  steals  money,  and  deposits  it  to  partnership 

account,  and  innocent  partners  not  liable 152 

where  liable,  assumpsit  for  money  had  and  received  might  lie  .     152 
where  it  was  the  business  of  the  firm  to  receive  goods  on  de- 
posit, and  one  of  the  partners  stole  some  of  the  goods  so 

deposited,  firm  liable 153 

where  one  of  the  firm,  a  trustee,  applies  the  trust  fund  to  the 
use  of  the  partnership,  firm  liable  if  other  partners  knew  and 
assented  ;  whether  liable  if  they  did  not  know  and  assent, 

not  settled 154,  155 

to  whom  goods  were  consigned  for  sale,  liable  for  the  pledge 

thereof  by  a  fraudulent  partner 155 

where,  from  the  nature  of  the  tort  committed  by  one  partner,  it 

is  shown  to  be  only  a  several  act,  firm  not  liable ....     156 
when  liable  in  solido  for  tort,  may  be  sued  either  jointly  or 

severally 167 

a  release  to  one  operates  as  a  release  to  all 157  n.  (i) 

case,  the  proper  action  against  partners  for  injuries  by  their 

servants      157  n.  (c) 

liable   also   in   actions   quasi  ex  contractu;  which  are,  in  fact, 

actions  of  contract 157 

a  person  must  become  such  by  his  own  act 162 

one  has  no  exclusive  right  to  any  one  particular  portion  of  the 

stock  of  the  partnership 167 

how  partnership  property  owned  by 168 

may  sell  his  interest  in  the  firm 168 

foundation  and  general  extent  of  the  power  of 170 

when  a  transaction  by  a  partner  with  a  stranger  is  foreign  to 
the   business  of  the  firm,  what  duty  of  inqun-y  is  on  the 

stranger 175 

after  dissolution,  for  partnership  debts  may  be  regarded  as  joint 

contractors 184  n.  (n) 

of  the  power  to  vary  the  business  of  the  partnership  .     .     .     .     197 

duties  of  partners  as  to  each  other 223 

must  not  deceive  his  copartner 225 

is  not  liable  to  copartners  for  an  honest  mistake 225 

gaining,   by   a  bargain  with  tliird   persons,  advantages  which 

belong  to  the  firm,  must  account  to  the  firm 225 


INDEX.  665 

PARTNERS  —  continued. 

obtaining  floods  for  the  partnership  by  barter  of  bis  own  goods, 

effect  of 226 

how  far  may  transact  independent  business 227 

of  allowance  of  interest 230 

with  the  concurrence  of  all,  may  alter  the  terms  in  which  they 

carry  on  business,  at  pleasure 238  n.  (s) 

where  one  may  reluse  to  pay  to  the  firm  money  he  owes       .     .     241 

where  money  is  advanced  by  the  firm  to  one 241 

agreement  between,  cannot  affect  the  liability  of  their  debtor  .     330 
separate  property  of  a  partner  liable  first  to  separate  creditors 

of  the  partner 347 

each  partner  liable  in  solido  for  the  whole  partnership  debts      .     349 

right  of,  in  the  partnership  property  defined 350 

right  of,    to   disencumber  his  interest  from  the  rights  of  the 

others 351 

may  sell  out  his  interest  to  a  stranger 352 

such  sale  and  transfer  will  not  liberate  his  share  from  the  debts 

of  the  firm 352 

where  a  single  woman  is  a,  and  marries,  her  husband  cannot 

claim  to  be  admitted  as  a  partner 462 

each  partner  is  liable  for  all  the  debts  of  the  firm ;  but  as  a 

principal   debtor  for  his  own  share,  and  as  surety  for  the 

other  partners  for  the  remainder 477 

where  one  is  defrauded  into  advancing  money  to  become  a,  and 

the  fraudulent  party  becomes  a  bankrupt 479 

rights  of,  to  property  owned  in  his  own  right  cannot  be  affected 

by  allowing  the  firm  to  employ  it  on  terms  satisfactory  to 

them  and  in  perfect  good  faith 492 

a  transfer  of  property  from  the  paitnership  to  a  partner  in  good 

faith,  and  without  any  expectation  of  bankruptcy,  will  be 

valid 492 

where  the  several,  in  a  firm,  appear  before  the  world  as  distinct 

traders 498 

lien  of,  on  the  partnership  effects,  for  the  balance  due   them, 

enforced  by  a  court  of  equity 502  n.  (I) 

interest  of,  in  a  foreign  enterprise  not  lost  by  the  seizure  of  the 

goods,  provided  any  part  of  them  be  restored      ....     503 
where  resident  in  different  countries  between  which  war  breaks 

out  and  the  firm  property  seized  by  one  country  and  com- 
pensation made  to  the  partner  resident  there 504 

right  of,  to  an  account 508 

may  transfer  his  right  to  an  account  to  his  representatives    .     .     508 
duty  of,  to  keep  accurate  accounts  of  all  the  business  of  the  firm 

under  their  charge 509 

an   action  will  lie   betvveen,  where   a    balance   of  accounts  is 

struck 510  n.  (d) 

cannot  sue  each  other  at  law  for  any  business  or  undertaking  of 

the  partnership 510  n.  (d) 


QQ6  INDEX. 

PARTNERS  —  continued. 

but  may  sue  each  other  at  law  for  a  breacli  of  any   distinct 

engagement  in  the  partnership  agreement  .      .     .     .    610  n.  (d) 
PARTNERS   IN   A   SIIIF, 

neither  of  tliem  can  make  a  claim  against  the  other  for  expenses 

incurred  about  their  common  property fl.OS 

one  partner  in  a  ship  may  transfer  the  whole  property,  by  way 

of  a  mortgage  or  pledge 567  n,  (a) 

PARTNERS   INTER   SE, 

on  the  remedies  of  (Ch.  VIII.,  Sec.  I."),  general  considerations,     267 
a  partner  cannot  charge  the  firm  for  the  extra  value  of  his  ser- 
vices   22.3 

of  a  suit  against  a  partnership  by  the  firm  name 267 

the  law  will  seldom  take  cognizan  'e  of  questions  wliich  relate  to,     268 
one  partner  may  not  maintain  an  action  against  the  partnership, 

for  his  expenditures  for  the  firm 268  n.  (c) 

no  account  between,  can  be  taken  at  law 269  n.  (/" ) 

may  sue  each  other  on  affairs  not  connected  with  partnership    .     270 
but  not  for  money  received  on  partnership  accotmt,  unless  all 

the  accoutits  are  adjusted 270 

may  sue  each  other  on  a  claim  arising  before  the  partnership, 

altliough  referring  to  it 271 

account  books,  where  admissible  evidence 272 

a  partner  redeeming  lands  is  entitled  to  contribution  .      .     287  n.  (s) 
fraudulent  purpose  of  the  firm  no  defence  to  a  bill  by  a  partner 

for  a  settlement 29.5 

PARTNERS,    QUESTIONS   BETWEEN, 

of  which  courts  of  law  take  cognizance 270 

PARTNERS,   REMEDIES   AGAINST 342 

PARTNERS,    REPRESENTATIONS   AND   ADMISSIONS    OF, 
evidence  of  private  conversation  not  admissible  to  rebut  evi- 
dence of  partnership 13 

general  effect  of  conversations,  admissions,  &c 122 

as  to  debts  barred  by  the  Statute  of  Limitations     .     .     .    184  n.  (/*) 
to  bind  the  firm,  must  be  in  the  business  of  it  and  during  its 

existence 184 

if  the  partnership  is  in  existence,  a  partner  may  revive  a  debt 

barred  by  the  Statute  of  Limitations 189 

but  aliter  if  partnership  is  dissolved 190 

after  a  dissolution,  how  far  may  affect  former  copartners,  191  n.  (j)) 

after  dissolution,  as  to  balance  of  account 191  n.  (p) 

relating  to  the  business  of  the  firm  bind  it     ......     .     192 

admissions  of  one  not  competent  evidence  of  partnership  to 

all 194  n.  (r) 

but  binding  on  him 195 

if  a  partner  has  not  received  his  certificate,  his  admissions,  though 

made  after  bankruptcy,  may  bind  the  firm  .     .     .     .     195  n.  (i) 
where  some  of  the  firm  are  dormant 195  n.  (<) 


INDEX.  667 

PARTNERS,     REPRESENTATIONS      AND     ADMISSIONS      OF  — 

continued. 
of  one  who  is  not  a  party  to  the  suit  in  which  they  are  offered 

in  evidence 195  n.  (<) 

binding  on  linn,  if  rehiting  to  the  transaction  of  its  business     .  197 

PARTNERS,   RIGHTS   AND   DUTIES   OF, 

between  themselves,  (Ch.  YII.) 159 

of  the  right  of  choice  as  to 159 

PARTNERS,    SEPARATE   INTEREST, 

not  generally  open  to  attachment  or  execution 355 

PARTNERSHIP, 

law  of,  a  system  by  itself 2 

Roman  law,  how  far  similar 2 

not  a  modified  tenancy  in  common  nor  a  joint-tenancy    ...  2 

what  partnership  is 6 

how  partnership  may  be  made 6 

may  be  made  by  agent 6 

no  partnership  until  some  joint  transaction  has  been  undertaken,  6 

contract  of,  usually  in  writing,  not  necessarily  so 7 

■whether  partnership  exists,  a  question  of  fart;  what  it  is,  a  ques- 
tion of  law 7 

may  grow  out  of  transactions  or  relations  between  parties,  with- 
out express  agreement 8 

contract  mast  be  formed  for  a  legal  purpose 9 

distinction  between  a  partnership  for  objects  mala  in  se,  and 

one  for  objects  only  mala  prohibiia 9  n.  (h) 

contract  of,  must  be  voluntary 11 

no  person  can  be  introduced  into  a  firm  without  the  consent  of 

all  the  members  of  it 10 

consent  may  be  implied,  or  inferred  from  acts 12 

where  articles  of  copartnership  provide  that  a  copartner  may 
transfer  his  interest  in  the  firm  to  a  third  person,  who  by 

force  of  the  transfer  becomes  a  copartner 12 

an  agreement  to  admit  a  new  member  into  a  partnership  does 

not  invest  him  with  the  character  of  a  partner      ....  12 

existence  of,  how  proved 12 

contract  of,  avoided  and  annulled  by  fraud  or  coercion    ...  13 

contract  of,  must  be  made  by  competent  patties 13 

equity  may  decree  specific  performance  of  a  contract  to  enter 

into 13  n. 

when  it  begins  ;  usually  determined  by  contract  of     ...     .  13 
presumption  of  law  that  it  began  when  the  written  articles  were 

executed 13 

express  stipulation,  in  contract  of  jjartnership,   that  it  should 
have  a  retrospective  effect,  could  not  make  them  partners 

as  to  third  persons,  except  from  date 13 

not  created  until  all  the  conditions  of  the  agreement  are  fulfilled,  14 


668 


INDEX. 


PARTNERSHIP  —  continued. 

when  it  begins,  where  imijlied  by  law  from  certain  transactions,      14 

purposes  and  kinds  of 36 

may  be  for  buying  and  selling  land 37 

for  buying  and  selling  land,  affected  by  the  Statute  of  Frauds  .       37 
{See  Statute  oi-'  Frauds.) 

may  be  general  or  special 38 

an  instance  can  seldom  if  ever  occur  of  universal  partnership  .       38 
the  riglits  and  obligations  of  partnership  exist  only  so  far  as  the 

partnersliip  extends 40 

no  distinct  dividing  line  between  general  and  special  .     ...       40 
may  exist  for  other  purposes  than  buying  and  selling;  as  pro-       42 

fessional  partnerships 42 

where  a  product  arises  from  a  contribution  to  the  common  stock 

of  different  things  by  the  different  partners 43 

where  such  a  product  is  to  be  divided  between  them  and  not 

fur  sale,  there  is  no  partnership  in  the  product     ....       44 
may  be  in   property  and  profits,  although  bought  by  funds  of 

one  partner 47 

may  be  in  the  profits  where  none  in  the  property 48 

not  necessary  that  it  should  cover  the  whole  ground  of  the  kind 

of  business  done 51 

community  of  interest  in  the  profits  essential  to 67 

generally,   community  of  interest  in  the  profits  will  suffice  to 

constitute  partnership 67 

when  it  begins  with  the  effect  of  casting  upon  the  members  the 

liability  of  partners 113 

where  a  person  purchases  goods  upon  his  own  credit,  and  it  is 
afterwards  discovered  that  they  have  been  applied  to  the 

use  of  a  partnership 113 

where  no  partnership  is   in  contemplation  when  the  goods  are 

obtained 114 

where  the  circumstances   attending  the  transaction  indicate  a 

partnership,  it  will  be  held  to  exist;  instances  of      .    128  n.  (0) 

to  what  extent  5?/ast  corporations 171,267 

of  the  power  to  vary  the  business  of 197 

where  a  partner  enters  into  a  new  branch  of  business  in  the 

name  of  the  firm 198 

that  every  person  is  presumed  to  know  the  law  of  partnership  ,     233 

renewal  of 239 

where  limited  to  a  certain  time  continues  after  that  time  without 
new  articles,  or  a  formal  renewal  of  the  old  ones,  presump- 
tion that  old  articles  continued  in  force,  except  as  to  lim- 
itation of  time 239 

continued   on  old  articles  is   dissolvable  at   the  will  of  either 

partner 240 

where  the  fact  of,  is  disputed 322 

change  of,  discharges  a  surety  to 333 

contracts  by,  for  insurance  on  property  of  the  firm     ....     335 


INDEX.  669 

rARTNERSHIP  —  continued. 

wh&n  illegal 341 

as  a  tenancy  in  common  or  a  corporation 343 

where  a  partner's  interest  in  the  firm  property  has  been  attached 

for  a  private  debt 357 

cannot  hold  the  legal  title  of  real  estate,  but  may  the  equitable 

title  .     .     • 3G6 

extent  and  duration  of 379 

once  formed  presumed  to  continue 380 

dissolution  of,  how  it  may  take  place 380 

where  formed  for  a  single  adventure 384. 

may  continue  by  express  or  implied  agreement 384 

of  a  change  in  the  partnership  and  its  elfect 406 

dissolved  by  the  marriage  of  a  partner  who  is  a  single  woman  .     462 
where  one  person  is  a  member  of  two  firms,  whether  and  when 

one  firm  can  prove  in  bankruptcy  against  the  other  .     .     .     480 
•where  one  firm  is  liable  for  the  joint  debts  of  another,  it  cannot 
prove  agairist  the  estate  of  that  firm,  in  competition  with  the 

creditors 480 

•where  any  person  holds  his  property  out  as  partnership  property,     495 
upon  dissolution  of,  each  partner  has  a  lien  on  the  partnership 
effects  for  his  indemnity,  and  for  his   proportion  of  the 

surplus 502  n.  (Z) 

where  some  of  the  members  of  a  firm  carry  on  an  entirely  dis- 
tinct business,  and  the  two  firms  deal  with  each  other,  in 
case  of  bankruptcy  one  may  prove  against  the  other      .     .     501 
or  the  creditors  of  either  may  prove  against  its  own  fund      .     .     501 

PARTNERSHIP  LIMITED.     (See  Limited  Partnership.) 

PARTNERSHIP  PROPERTY, 

each  partner  owns  the  whole,  subject  to  the  rights  of  the  others  ; 
and  no  one  can  commit  burglary  or  larceny  on  the  property 

of  the  firm 168 

what  constitutes 256 

in  general,  whatever  belongs  to  the  firm 256 

may  be  real  property 256 

when  property  becomes 259 

consists  of 257 

property  given  or  devised  to  a  partner  does  not  thereby  become,     257 
seized  in  time  of  war,  and  afterwards  one  partner's  share  re- 
stored to  him  ;  the  goods  restored  held  never  to  have  lost 

their  character  of 257  n.  (n) 

where  a  personal  office  is  purchased  with  partnership  funds,  fur 

the  benefit  of  the  partnership    .      .  258 

partners  may  agree  to  own  in  any  proportions  i\wy  please    .     .     258 

(.S'ee  PuKsuJirrioNS  of  Law.) 
the  good-will  of  the  business  is  partnership  property  ....     263 

trade-name  whether  partnership  property 265 

trade-marks  are  so 265 


670  INDEX. 

PARTNERSHIP   PROPERTY  —  continued. 

can  be  no  division  of  until  all  the  accounts  of  the  partnership 

have  been  taken 512  n.  (/() 

PART-OWNERSHIP  OF   SHIPS. 

peculiar  nature  of 548 

PART-OWNERS   OF   SHIPS,  Ch.  XIX 548 

more  than   ordinary  tenants  in   common,  but  not  so  much  as 

partners 548 

may  be  tenants  in  common  as  to  the  ships,  and  partners  as  to 

their  cargoes  or  earnings 549 

different  ways  in  which  they  may  acquire  their  interest  .  .  .  550 
riglits  and  relations  the  same  whether  they  arise  in  one  way  or 

another 550 

not  necessarily  partners,  though  they  may  be  partners  .  .  .  550 
the  presumption  of  law  would  be  against  a  partnership  of  .  .  551 
may  be  partners  as   to  an   adventure  or  enterprise,   and  yet 

remain  part-owners  as  to  the  ship 551 

possess  some  of  the  powers  and  rights  of  partners  ....  552 
their  names  and   rej^pective   shares   should  be  inserted  in  the 

register 552 

rights  and  obligations  of,  in  relation  to  each  other  ....  553 
one  may  have  a  claim,  at  law,  against  the  other  for  his  share  of 

expenses  incurred  in  making  repairs  about   the  common 

property 553 

to   obtain   an  adjustment  of  the   ship's   accounts,  proceedings 

between  may  be  instituted  in  equity 553  n.  {in) 

where  one  part-owner  incurs  expenses  for  repairs,  without  the 

consent  of  the  other  ownitrs 554 

a  part-owner  may  sell  his  share  to  any  person,  and  on  any  terms, 

at  his  own  pleasure 555 

a  part-owner  has  no  power  over  the  shares  of  the  other  owners,  555 
where  they  are  partners,  the  right  of  one  to  sell  the  ship  .  .  556 
where,  if  one   part-owner  did  sell  the  ship,  the  other  owners 

might  bring  trover  against  the  seller 556 

at  common  law,  one  part-owner  of  a  ship  cannot  wrest  the  pos- 
session of  it  from  the  h^nds  of  another 556 

a  part-owner,  in  order  to  gain  possession  of  the  ship,  must  go 

into  admiralty 556 

one  part-owner  cannot  transfer  the  whole  property,  by  way  of 

mortgage  or  pledge 556 

one   part-owner  cannot  recover  damages  against  another,  for 

fraudulently   sending  the    ship    on   a  foreign  voyage  and 

causing  her  loss 557 

nor  for  careless   management  whereby   the   ship  was   lost   by 

tire 557 

one  part-owner  has  no  authority  to  insure  the  interest  of  the 

others  for  them,  although  he  be  ship's  husband    ....     557 


INDEX.  671 

PART-OWNERS   OF    SHIFS  — continued. 

a  part-owner  may  sell  or  transfer  his  whole  interest,  or  it  may 
be  taken  from  him  by  a  creditor,  and  it  passes  by  death  or 
bankruptcy  to  his  representatives 557 

■where  they  diiFer  as  to  the  employment  of  the  sliip,  admiralty 

interferes 558 

power  of  the  managing  owner  when  the  part-ownerslilp  is  dis- 
solved      558 

where  the  majority  wish  to  use  the  ship  in  any  particular  way    .     559 

where  the  master  is  a  jjart-owner 561 

where  a  majority  wish  to  displace  the  master,  who  is  a  part- 
owner     562 

cannot  sue  each  other  for  injury  to  the  common  property,  unless 

it  amounts  to  destruction 562 

where  a  part-owner  detains  a  ship,  and  prevents  a  voyage  towards 
wliich  the  others  have  contributed,  without  notice  of  dissent 
from  him 562 

where  a  part-owner  dissents,  and  a  voyage  is  undertaken  and 

the  ship  is  lost 562 

each  must  account  for  any  profits  received 563 

of  the  lien  of • 663 

have   no  lien  on  the  ship  for  a  balance  arising  from  accounts 

independent  of  it 563 

nor  for  a  balance    arising  from  charges  for  the  ship  itself  in 

former  vo)ages 564 

rights  and  obligations  of,  as  to  third  parties 564 

power  of  a  part-owner  to  represent  the  other  owners       ,     .     .     564 

power  of  a  j)art-owner,  in  the  absence  of  the  other  owners,  to 

make  contracts  to  repair  the  ship 565 

where  credit  is  given  to  the  part-owner  dealing,  no  others  are 

holden 566 

■will  not  be  discharged  only  because  the  debt  is  cliarged  to  the 

master  or  other  agent 566  n.  (  p) 

where  one  part-owner  dissents  from  an  act  of  another,  and  can- 
not then  be  bound  for  it 567 

one  part-owner  cannot  bind  the  others  by  any  act  which  does 

not  rest  on  necessity  or  certain  expediency 568 

how  far  bound  for  the  torts  of  each  other  and  their  servants     .     571 

PATENT   RIGHTS, 

held  by  partnership 265 

PAYMENT, 

effect  of,  to  a  partner  after  dissolution 396 

payment  to  partner  who  is  insolvent,  effect  of 396 

to  the  executor  of  a  deceased  partner 396 

PAYMENTS   BY   A  FIRM, 

after  the  death  of  a  partner,  when  one  of  the  firm  is  executor  of 
tlie  deceased,  shall  not  be  considered  as  payments  by  that 
partner  as  executor,  if  they  have  the  effect  of  barring  the 
Statute  of  Limitations 451 


672  INDEX. 

PENALTY, 

for  wrong-doing,  cut  down  to  a  compensation 250 

PENNSYLVANIA, 

statute  of  April    14,    1838,  concerning    abatement  of  actions 

against  partners 288  n.  (t) 

PERSONAL  PROPERTY  OF  A  PARTNERSHIP, 

what  it  consists  of 256 

PERSONAL   REPRESENTATIVE.     {See  Executors.) 

PERSONS   UNDER  GUARDIANSHIP, 

spendthrifts 29 

drunkards 29 

when  partnership  avoided  by  temporary  intoxication     .     .    29  n.  (i) 

PLAINTIFF, 

making  a  bankrupt  partner  who  has  been  discharged  a  defendant 

will  have  judgment  against  all  the  partners  but  him      .     .     475 

POLICY   OF   INSURANCE.     {See  Insurance.) 

POWER  OF   A   PARTNER, 

foundation  of 170 

{See  Partner.) 
to  bind  the  firm  in  the  regular  course  of  the  business.     .    170  n.  (w) 

rests  on  pro[)erty,  as  well  as  agency 170 

general  extent  of 171 

how  qualified 172 

extends  over  all  contracts  within  the  business  of  the  firm     .      .     172 

to  receive  payment  of  debts  due  the  firm 172  n.  (to) 

to  compromise  debts 172  n.  (to) 

to  release  a  debt 172  n.  {tv) 

to  represent  the  firm  in  legal  proceeding 172  n.  (mj) 

to  release  an  action 172  n,  {lo) 

to  release  the  acceptor  of  a  bill  from  an  action  on  it  by  the 

firm 172  n.  {lo) 

to  give  time  to  a  debtor 172  n.  (w) 

where  the  firm  engages  in  any  business  outside  of  its  regular 

business  ;  instances  of 172  n.  {w) 

to  act  for  the  firm  in  a  suit;   exception 172  n.  (w) 

under  the  bankrupt  laws 172  n.  {lo) 

to  appoint  an  agent  to  transact  the  joint  business  .     .     .   172  n.  {w^ 
to  bind  the  firm,  only  extends  to  acts  within  the  regular  business 

of  the  firm  ;  instances  of 175  n.  {x) 

to  submit  to  arbitration 176 

where  such  submission  would  be  held  obligatory 177 

to  affix  a  seal 178 

contracts  of  a  firm  must  be  unsealed 178 

not  sufficient  to  affix  the  seals  of  his  copartners,  or  of  any  of 

them 178  n.  (^) 


INDEX.  673 

POWER   OF   A  FXRT'SER  — continued. 

cannot  bind  the  firm  hy  a  sealed  instrument,  but  would  bind 

himself 178  n.  (^) 

to  bind  his  copartners  by  a  specialty,  must  be  given  him  for  that 

express  purpose 180  n.  («")    181 

to  authorize  an  agent  to  bind  the  firm  by  the  discharge  of  a  debt 

due  it 182  n.  (A;) 

limited  by  business  of  the  partnership 199 

to  put  the  name  of  the  firm  to  negotiable  paper  implied  .    199  n.  (a) 
of  not  strictly  trading   partnerships,    no    such   power  prima 

facie 199  n.  (a), 

POWER  OF   A  PART-OWNER, 

in  the  absence  of  the  other  owners,  to  make  contracts  concerning 

the  ship 565 

by  what  contracts  or  acts  he  may  bind  the  other  owners       .     .     568 
(See  Part-owners  of  Ships.) 

POWER  OF   APPOIXT.MENT, 

when  given  by  the  articles 451 

if  no  agreement  is  made  between  the  partners  to  that  effect,  no 

one  has  any 451 

POWERS   OF   A  MAJORITY, 

provisions  for 249 

where  given  by  articles 249 

will  not  be  extended  by  implication 249 

confined  to  matters  in  the  conduct  of  partnership  business  .     .  249 

acting  under  articles,  in  case  of  difficulties  between  partners     .  249 

PRESUMPTION, 

of  fraud,  never  absolute 112 

(See  Fraud.) 

PRESUMPTIONS   OF   LAW, 

where  a  partner  gives  an  obligation  of  the  firm  for  a  debt  due 

by  himself HI 

where  a  partner  releases  a  debt  due  to  his  firm,  in  consideration 

of  the  release  of  a  debt  due  by  him 112 

absolute,  that  a  person  is  a  partner,  where  held  out  as  such  with 

his  assent 119 

that  a  person  who  is  charged  as  partner,  because  held  out  as  such, 

was  so  held  out  with  his  ovm  consent 133 

where  a  partnership  exists  as  to  third  parties,  law  presumes 

prima  facie  a  partnership  as  between  themselves       .     .     .     135 
in  favor  of  an  equality  of  in  erest  in  case  of  partnership  prop- 
erty      258  n.  (o) 

(See  Partnkusiiip  Property.) 
may  be  rebutted  by  evidence  of  modes  of  dealing  from  which  a 

contract  may  be  Implied 259 

that  an  infant  remaining  In  a  firm  after  full  age  confirms-  the 

debts  contracted  during  his  minority 437 

43 


674  INDEX. 

PRESUMPTIONS   OF   LA^V —  contimted. 

that  the  credit  is  given  to  the  part-owner  against  whom  the 

charges  are  made 5G6 

PRINCIPAL.     (See  Surety.) 

PRIVATE  CREDITOR,  SUIT,  ATTACHMENT  AND  LEVY  OF, 

against  a  partner  personally  indebted  to  him 350 

can  secure  the  right  his  de!  tor  has,  and  only  that 350 

may  attach  the  interest  of  the  debtor  partner  in  the  partnership 

property 352 

attachment  of  interest  of  a  partner  by  his  private  creditor  when 

avoided  in  favor  of  joint  debtor 353 

where  he  attaches  a  definite  portion  of  the  partnership  goods    .     352 
how  far  affected  by  a  private  agreement  between  partners    .     .     354 

when  he  may  attach  a  partner's  separate  interest 355 

when  and  how  he  may  levy  on  the  partner's  interest  in  the  copart- 
nership property  357 

manner  of  enforcement  of  his  right 358 

purchaser  at  a  sale  by  execution  of  a  partner's  interest  would  not 

be  a  partner 359 

attachment  of   a  partner's  interest   by  his    separate    creditor 

avoided  by  insolvency  of  the  partnership 360 

in  case  of  a  dormant  partner 360 

may  not  prove  in  bankruptcy,  under  a  joint  commission  for  the 

purpose  of  voting  in  the  choice  of  assignees 4S4 

where  a  firm  is  indebted  to  one  of  the  partners,  his  private  cred- 
itor may  not  prove  his  debt  against  the  joint  fund     .•     .      .     500 
of  a  partner  may  proceed  against  the  joint  estate  at  bankruptcy, 
if  it  is  larger  on  account  of  any  fraudulent  act  against  that 

partner 500 

where  joint  creditors  elect  to  proceed  against  the  several  estate 
of  an  ostensible  partner,  and  not  against  the  joint  fund,  pri- 
vate creditors  of  that  partner  may  proceed  against  the  joint 
estate  for  an  equal  amount 501 

PROFESSIONAL  PARTNERSHIPS 43,  156 

good-will  of  firm 264 

PROFITS, 

agreeing  to  pay  a  person  a  certain  part  of  the  profits  does  not 
necessarily  give  him  an  interest  in  them  as  profits,  or  make 
him  a  partner 69 

gross  profits  or  net  profits yS 

PROMISE, 

where  new,  and  no  new  consideration 110 

PROMISE   OF   INFANTS.     (See  Infants.) 

PROMISSORY  NOTE, 

where  given  in  the  partnership  name  partly  for  a  partnership  debt 

and  partly  for  a  separate  debt  of  one  of  the  partners,    112  n.  (5) 


INDEX.  675 

PROMISSORY  NOTE  —  continue^l 

where  the  lan<,niage  of,  is,  "  I  promise  to  pay,"  but  it  is  signed 

by  the  partnership  name 127  n.  (k) 

■where  on  its  face  it  purports  to  be  the  act  of  one  partner,  and 

made  to  secure  his  individual  debt 127  n.  (k) 

where  signed  jointly,  not  evidence  of  copartnership  between  the 

parties 148  n.  (w) 

has  been  held  otherwise  where  they  signed  a  bill  of  ex- 
change       148  n.  (w) 

making  use,  and  indorsing  of 199  n.  (a) 

when  made  or  indorsed  fraudulently 211 

oint  and  several  by  all  the  members  of  the  firm,  not  a  partner- 
ship note 215 

in  case  of  insolvency  signed  by  some  of  the  partners,  only  effect 

of 215 

non-negotiable,  assignee  of 289  n.  (u) 

where   the  holder  is  a  member   of  a  firm  which  is   the  first 

indorser 289  n.  (ii) 

when  made  by  one  who  is  a  member  of  two  firms,  in  the  name 

of  one  firm,  and  payable  to  a  member  of  the  other  .    289  n.  (m) 

if  indorsed  in  blank,  may  be  sued  by  any  holder,  in  his  own  name,    333 

indoi'sed  by  a  firm  before  dissolution,  but  negotiated  afterwards,     391 

effect  of  parol  authority  to  continuing  partners  to  sell  note  made 

to  the  firm  before  dissolution 392 

PROVISIONAL  COMMITTEE, 

a  new-member  of  a,  not  liable  for  services  performed  after  he 
joins,  if  tie  order  had  been  given  previously  to  bis  join- 
ing      433  n.  (t/) 

PROVISIONS, 

for  the  determination  of  differences  by  arbitration       ....     247 
Common  Law  Procedure  Act,   11th  sec.  —  17  &  18  Vic.  ch. 

125 247  n.  (r) 

(See  Articles.) 

PUBLIC   PARTNERS, 

how  different  from  ostensible 30 

PUBLICATION   OF   RECORD   OF   LIMITED   PARTNERSHIPS. 
(See  Limited  Partnership.) 

PURCHASE, 

by  one  partner  in  the  course  of  their  regular  business  binds  the 

firm 1G3  n.  (£f) 

PURCHASER, 

of  a  partner's  interest  in  a  firm,  under  execution,  not  made  a 

partner  there1)y 359 

right  of,  to  call  for  an  account 369 


676  INDEX. 


R. 

RATIFICATION, 

by  adult  of  acts  done  while  an  inrant.     (See  Infant.) 

REAL   ESTATE, 

when  and  by  wbat  means  real  estate  becomes  partnership  prop- 
erty      863 

not  always  material  how  bought,  or  how  conveyed  to  the  part- 
nership    364 

will  not  be  presumed  to  belong  to  one  partner 365 

ownership  of,  determined  by  intention  of  the  partners      .     .     .  366 

title  of,  in  law,  cannot  be  held  by  a  partnership 366 

where  purchased  by  the  general  partners  of  a  limited  partnership,  539 

REAL  ESTATE   OF  A  PARTNERSHIP 362 

general  considerations  (Sec.  I.) 362 

how  courts  of  law  treat  (Sec.  HI.) 366 

no  partner  can  convey  real  estate  not  held  of  record  in  his  name,    367 

where  devised  by  the  legal  holder 368 

when  and  how  Statute  of  Frauds  would  apply  to  transfer  of      .     368 

as  to  dormant  partners 368 

who  must  convey 369 

is  considered  in  equity  as  part  of  the  partnership  stock,  and  sub- 
ject to  partnership  debts 4tl  n.  (o) 

may  not  be  claimed  either  by  the  widow  or  heirs  of  a  deceased 

partner  until  the  claims  of  the  firm  creditors  are  satisfied,  441  n.  (o) 
surviving  partners  have  an  equitable  lien  on,  for  the  debts  of 

the  firm 441  n.  (o) 

effect  of  acts  of  partners,  as  to 

(^See  Real  Estate  of  a  Partnership,  how  treated 
IN  Equity.) 

REAL  ESTATE  OF  A  PARTNERSHIP,  HOW  TREATED  IN 

EQUITY 369 

how  far  regarded  as  personal  estate 369 

effect  of  Statute  of  Frauds 7,  368 

rule  in  England 869 

to  whom  it  descends  in  England 371 

American  rule 371 

of  dower 372 

Englii-h  rule,  as  to  dower 372 

American  rule 373 

where  the  property  passes  out  of  the  partnership  to  a  stranger,  373  n.  (d) 

of  inheritance 373 

the  heir  holds  as  trustee  for  the  firm  or  their  creditors      .     .     .  373 
when  it  caimot  be  sold  to  pay  debts  until  the  personal  property 

is  exhausted 373 


INDEX.  677 

REAL  ESTATE   OF  A  PARTNERSHIP,  HOW   TREATED   IN 
EQUITY  —  continued. 
conveyed  to  partners  as  tenants  in  common,  and  one  of  them 

dies 374 

lands  conveyed  to  partners  as  joint  tenants 374 

land  devised  to  partners  for  partnership  purposes 374 

riglit  of  creditors  of  tlie  firm  to  its  real  estate 375 

personal  estate  first  applied  to  the  payment  of  the  debts  .     .     .  376 
death  oF  a  partner  holding  the  firm's  real  estate      .     .     .    376  n.  (?•) 
right  and  power  of  the  partners  as  to  the  real  estate  of  the  part- 
nership      376 

one  partner  may  not  transfer  the  real  estate  of  the  firm    .     .     .  376 

•where  a  partner  sells  his  interest  in,  to  a  stranger 377 

conveyance  of,  to  a  stranger 377 

conveyed  by  the  partner  holding  the  legal  title,  to  a  purchaser 

without  notice,  for  value 377 

RECEIVER, 

a  decree  for,  its  efTect 312 

appointment  of,  ousts  a  partner  from  all  control 312 

appointment  of.  when  and  why  made 313 

exclusive  possession  by  one  partner  is  not  of  itself  sufficient 

cause  for  appointment  of 314 

■where  the  party  applying  for,  has  the  property  in  his  own  pos- 
session        315  n.  (s) 

appointment  of,  temporary 315 

■where  appointed  to  wind  up  a  business 315 

application  for,  addressed  to  the  discretion  of  the  court   .    316  n.  (x) 

may  be  appointed,  although  there  is  only  one  acting  partner     .  317 

who  may  be  appointed 317 

may  earn  interest  on  the  money,  if  not  prevented  by  the  terms 

of  the  appointment 318 

powers  and  duties  of 320 

the  property  which  a  receiver  takes  into  his  possession     .  320  n.  (p) 

trustee  of  all  the  assets  for  the  firm  creditors 320 

rule  governing  a  receiver 320 

appointment  of,  in  certain  cases,  operates  a  dissolution   .     .     •  470 

RELEASE, 

where  two  are  arrested  on  a  joint  ca.  sa.,  and  the  plaintiff's  dis- 
charge of  one  of  them  is  a 'discharge  of  the  other      .    172  n.  (w) 

of  one  partner  of  a  joint  debt,  to  have  the  effect  of  discharging 

the  firm,  must  be  under  seal 172  n.  («) 

to  one  partner  may  be  accompanied  with  such  conditions  as  to 

prevent  its  discharging  the  firm 172  n.  (w) 

■where  given  by  one  partner  for  a  consideration  which  is  known 

to  inure  only  to  his  own  benefit 210 

of  a  debt  of  the  firm  by  one  partner 32">  n.  (/) 

where  an  assignment  of  property  has  been  made     .     .     .     32'Jn.  (';) 


678  INDEX. 

REMAINING   TARTNER.     (See  Retiring  Partner.) 

REMEDIES    BY    PARTNERS    AGAINST    THIRD    PARTIES, 

Ch.  IX 325 

for  broach  of  contract 325 

two  firms  Laving  a  common  partner 325  n.  (/>) 

■where  a  party  has  a  defence  against  one  of  the  partners   .     .     .  325 

where  a  partner  releasing  a  debt  is  a  dormant  partner     .     .     .  326 

REMEDIES    OF    THIRD    PERSONS   AGAINST    THE  PART- 
NERSHIP AND   AGAINST  PARTNERS,  Ch.  X. .     .  342 

RENEWAL   OF  PARTNERSHIP, 

by  tacit  continuation  of  business 239 

when  a  tacit  renewal,  it  is  di.'^solvable  at  will  of  either  partner  .  240 

(See  Partnership.) 

renewal  of  limitation  of  time  seldom  presumed  from  acts  .     .     .  240 

REPAIRS, 

if  made  by  a  part-owner  of  a  ship,  he  has  a  claim  against  each 

of  the  others,  for  his  share  of  the  expense,  at  law     .     .     .  553 

REPUTED   OWNERSHIP, 

statute  of  6  Geo.  4,  ch.  16,  §  3 494  n.  (g) 

statute  of  6  Geo.  4,  ch.  16,  §  72 495  n.  (m) 

RETIRING  PARTNER, 

one  leaving  an  existing  firm 34 

in  law,  retirement  of  any  partner  terminates  a  partnership    .     .  34 

how  retirement  affects  the  liability  of 408 

neither  loses  property  nor  relieves  himself  from  liability  .     .     .  409 
if  he  pays  more  than  his  share  of  the  old  debts,  may  have  con- 
tribution from  his  partners 409 

where  he  "sells  out" 409 

may  set  up  the  same  business  in  the  immediate  vicinity,  in  the 

absence  of  any  agreement 409 

effect  of  promise  of,  not  to  carry  on  the  same  business     .     .     .  409 

when  obligation  of,  is  determined  by  the  language  of  the  articles,  410 

how  he  may  terminate  his  liability  for  the  partnership  debts  .     .  410 

notice  of  retirement  must  be  given  by 411 

manner  of  giving  notice  of  retirement 411 

difference  in  liability  of,  as  to  old  and  new  customers  ....  412 

rule  as  to  notice  of  retirement  ' 412 

where  knowledge  is  equivalent  to  notice 397 

consenting  to  a  use  of  his  name  by  the  old  partners     ....  414 

where  a  dormant  partner 415 

liability  of,  when  an  existing  contract  contemplates  future  pay- 
ments to  any  extent 417 

notice  of  retirement  by  notoriety 418 

sufficient  lapse  of  time  may  snpi)ly  want  of  notice 418 

casts  in  which  a  jury  might  infer  knowledge  of  the  retirement   .  418 


INDEX.  679 

RETIRING   PARTNER  —  continued. 

must  show  that^the  notice  of  retirement  was  such  as  the  usage 

of  merchants  requires 418 

right  of  action  against  remaining  partners  for  breach  of  contract 

to  pay  the  debts 421 

■when  discharged  by  creditors 421 

agreement  between  him  and  those  who  remain,  of  no  effect  as  to 

creditors 421 

should  be  included  in  any  action  against  the  firm,  for  a  debt 

contracted  while  he  was  a  partner 421 

execution  against  the  firm  may  be  satisfied  from  property  of     .     421 

where  held  only  as  surety  for  the  firm  debt 424 

where  a  creditor  retains  the  old  securities  against  the  firm   .     .     424 
where  a  creditor  expressly  retains  his  rights  against    ....     425 
the  creditors  receiving  interest  from  the  new  firm  will  not  neces- 
sarily discharge 425 

facts  from  which  a  jury  might  find  an  implied  assent  to  dis- 
charge of 426 

liability  of,  for  trust  money  used  in  the  partnership  by  one  part- 
ner, with  the  knowledge  of  all 426 

when  discharged  by  appropriation  of  payment 427 

when  a  partner  puts  into  the  firm  the  money  of  a  stranger,  this 

does  not  make  the  stranger  a  partner 427 

liability  of,  for  existing  debts 429 

not  liable  fcr  debts  created  after  his  retirement 429 

when  money  is  paid  after  his  retirement,  right  of  the  new  firm  to 

appropriate  it 429 

not  bound  by  an  appropriation  of  payment,  fraudulent  or  inju- 

rioi:s  as  to  him 429 

where  the  new  firm,  for  adequate  business  causes,  appropriated 

the  funds  of  the  old  firm  to  the  payment  of  new  debts  .     .     420 
when  permitted  to  pi'ove  his  claim  against  a  bankrupt  partner  .     478 
where  he  has  a  covenant  with  the  remaining  partner  to  pay  all 
the  debts,  and,  the  remaining  partner  becoming  bankrupt, 
he  pays  them,  may  prove  them  against  the  bankrupt's  estate,     479 
who  leaves  Lis  property  in  the  possession  or  at  the  disposal  of 

the  firm,  liability  of 496 

must  give  notice  o!  his  retirement,  and  of  the  purposes  and  limi- 
tations under  which  he  leaves  his  property  in  the  firm  .     .     497 
leaving  some  of  his  property  with  the  firm,  and  giving  notice 
that  the  propertv  so  left  is  his,  and  not  left  for  the  firm  to 
obtain  credit  on,  may  protect  it  from  future  creditors   .     .     497 

RIGHTS    OF  TROPERTY   OF   PARTNERS  INTER   SE,   Ch. 

VII.,  Sec.  Vm 256 


680  INDEX. 


s. 

SALE, 

on  execution  of  one  partner's  interest 400 

secret,  unaccompanied  by  possession,  is  prima  facie  fraudulent 

and  void  as  to  creditors  of  the  firm        496  n.  (»/;) 

of  the  effect,  in  a  bankruptcy 506 

■where  only  a  part  of  the  partners  are  bankrupt,  the  assignees 

have  no  right  to  sell 506 

but  the  court  -will  decree  a,  if  the  assignees  request  it  for  a  good 

cause 507 

may  be  decreed  as  a  preliminary  proceeding,  or  means  of  mak- 
ing account 624 

(See  Assigning  and  Transferring  Property.) 

SALE   OF  PARTNERSHIP  PROPERTY. 
{See  Dissolution.) 
SEAL, 

belongs  to  the  common  law,  while  partnership  belongs  to  the 

law-merchant 182 

when  regarded  by  courts  as  surplusage 183 

SECRET  PARTNERS, 

who  are 30 

the  word  '*  Co."  not  necessary  to  bind  all  the  partners    ...  31 

why  liable 31 

where  announced  to  a  customer,  without  his  own  consent     .     •  31 

where  he  permits  himself  to  be  made  known 31 

liable  upon  all  the  acting  partner's  contracts,  made  within  the 

scope  of  the  partnership  business 62 

SECURITY, 

several  security  of  one  partner,  accepted  by  a  creditor  holding 

the  joint  security  of  the  firm  dees  not  discharge  the  firm,      110 

where  a  partner  disposes  of  security  belonging  to  the  firm,  for 

his  own  debt 209 

SELLER, 

of  goods  to  one  who  orders  them  sent  to  another,  who  is  in  fact 

his  partner 113 

(See  Partners.) 
SEPARATE   CREDITOR.     (See  Private  Creditor.) 

SERVICE   OF  PAPERS, 

as  to  partners 172  n.  (w) 

SETTLED   ACCOUNT.     (See  Account  Stated.) 

SETTLEMENT   BETWEEN  PARTNERS. 

(See  Account  Stated.) 

SETTLING  PARTNER, 

power  of 392 


INDEX.  681 

SEVERAL   CREDITORS, 

who  are 484 

SEVERAL   PARTNER. 

may  sue  at  law  on  demands  against  a  partner  or  partners,  when 

they  are  distinct  from  the  affairs  of  the  firm 270 

where  a  partner  may  sue  a  partner,  on  any  claim  arising  before 

the  partnership,  although  it  refers  to  the  partnership      .     .     271 

SEVERAL  PROPERTY, 

what  is 491 

SHAREHOLDER.     (-See  Joint-stock  Company.) 

SHARES.     (See  Part-owners  of  Suips,  and  Joint-stock  Com- 
panies.) 

SHIPS, 

are  personal  chattels 549 

are  like  real  estate,  in  some  particulars 649 

must  be  registered,  before  they  become  entitled  to  the  privi- 
leges of  American  ships 549 

English  statutes  require  registration  to  make  a  transfer  of  a 

ship  valid 549 

all  transfers  of  ships,  by  way  of  mortgage  or  pledge,  must  be 

registered 550 

employment  of,  where  the  owners  differ 558 

(See  Part-owners  of  Ships.) 

SHIP'S  HUSBAND, 

who  is 569 

not  necessarily  an  owner 509 

duties  and  powers  of 5G9 

if  not  a  part-owner,  all  are  responsible  to  him  in  solido  for  his 

charges  within  the  scope  of  his  authority 569 

if  he  be  a  part-owner,  then  each  owner  is  liable  to  him  only  for 

his  share 569 

may  sue  any  part-owner  who  refuses  or  neglects  to  pay  his 

share 569 

has  a  lien  on  the  proceeds  of  the  ship,  or  the  documents  of 

title,  for  indemnification  upon  his  lawful  obligations  for  the 

ship 570 

lien  of,  does  not  extend  to  the  ship  itself 570 

appointment  of,  may  be  inferred 570 

duty  of 570 

cannot  insure  other  owners,  nor  give  up  their  lien  of  the  ship 

on  the  cargo  for  freight,  nor  borrow  money,  nor  delegate 

his  authority 570 

cannot  begin  and  prosecute  an  action  at  law,  without  express 

authority  from  the  other  owners 570 

where  any  ol  his  acts  are  ratified  by  the  part-owners  .     .    570  n.  (e) 


682  INDEX. 

SIGNATURE.     (See  Partneks,  and  Power  of  Partners.) 

SILENT   PARTNER, 

is  one  who  takes  no  active  part  in  the  business  of  the  firm  .  .  32 
whether  his  name  be  made  known  as  a  partner  or  not      ...       32 

SKILL.     (See  Partnership  and  Partnership  Property.) 

SOLVENT  PARTNERS, 

effect  of  bankruptcy  of  a  partner  upon 471 

hold  the  effects  and  property  in  somewhat  the  same  way  that  sur- 
viving partners  do 472 

cannot  get  the  firm  property  out  of  the  hands  and  possession  of 
the  assignees  of  the  bankrupt,  the  right  to  possession  being 

the  same 473 

continuing  the  business  without  winding  up  the  concern,  do  so 

at  their  own  peril 474 

have  possession  of,  and  full  power  over,  the  partnership  effects,  476 
hold  the  effects  of  the  firm  as  trustees  for  all  interested  .  .  .  476 
committing  actual  or  constructive  fraud,  liable  in  damages,  or 

it  may  be  avoided  by  those  whom  it  injures 477 

rights  of,  against  the  estate  of  a  bankrupt  partner     ....     477 
cannot  prove  against  the  jcint-fund  in  competition  with  joint- 
creditors,  but  may  with  several  creditors 502 

when  rights  of,  against  their  insolvent  partners  are  prior  to  the 

several  creditors  of  the  insolvent 502 

cannot  resist  a  bill  by  the  assignees  of  the  bankrupt  for  a  share 
in  the  profits  of  a  subsequent  trading,  on  the  ground  that 
the  assignees  did  not  require  an  immediate  settlement  .     .     505 

SPECIAL  PARTNER, 

definition  of 35 

must  see  that  all  the  requirements  of  the  statutes  respecting  lim- 
ited partnerships  are  complied  with 532 

if  he  withdraw  any  part  of  the  capital,  and  the  firm  becomes 
insolvent,  he  is  liable  to  the  creditors  for  the  amount  so 
withdrawn,  with  interest 532 

■where  the  general  partner  withdraws  some  of  the  capital,  with- 
out the  consent  or  knowledge  of  the 533 

if  his  name  is  used  in  any  contract  with  his  consent,  or  if  he 
take  an  active  part  in  the  formation  of  any  contract,  he  is 
liable  as  a  general  partner 533 

■when  and  in  what  manner  he  becomes  liable  as  a  general  part- 
ner     ooo  n.  (p) 

liable  as  general  partners  in  all  things,  except  those  in  which  the 

statute  expressly  limits  their  liability 535 

bound,  after  dissolution,  for  the  future  debts  of  the  firm,  unless 
notice  is  given,  or  it  ceases  by  limitation  of  time  or  act  of 
the  law 536 

notice  should  be  given,  in  case  of  death  or  bankruptcy  .     .     .     536 


INDEX.  683 

SPECIAL  PARTNER  —  continued. 

if  they  make  themselves  generally  liable,  after  dissolution,  to 
tlie  holders  of  notes,  the  holders  cannot  come  in  and  claim 
tlie  joint  assets  equally  with  the  previous  creditors  of  the 
firm o37 

holders  of  such  notes  should  join  all  the  partners  in  a  suit  .      .     537 

not  liable  as  general  partners  because  real  estate  had  been  pur- 
chased by  the  general  partners,  and  paid  for  by  the  firm, 
and  the  title  taken  in  the  names  of  all  the  partners  .     .     .     539 

liable  as   general  partners,  where  there  was  a  mistake  made  in 

the  publication  of  a  certificate 539 

(See  Limited  Partnership.) 

SPECIAL  PARTNERSHIP, 

relates  only  to  a  single  transaction,  or  the  use  of  one  thing      .       38 
where  a  note  or  bill  is  signed  or  indorsed  by  two  or  more  per- 
sons   39 

SPECIFIC  PERFORMANCE  OF  ARTICLES, 

bill  in  equity  for 234 

SPECIFIC  PERFORMANCE    OF  CONTRACT, 

decree  for 297 

enforced  in  equity;  instances  of 297  n.  (o) 

in  what  cases  enforced 298 

(See  Equity.) 

STATES, 

are  foreign  to  each  other  in  respect  to  bankrupt  laws       •     .     .     474 

STATUTE, 

2Sth  &  29th  Vic.  ch.  86,  provides  that  lending  money  to  a  firm, 
the  lender  to  receive  a  certain  share  in  the  profits,  does  not 

make  him  liable  as  a  partner 92  n.  (<) 

of  Kentucky,  promissory  notes  have  all  the  legal  effect  of  bonds 

under  seal 183  n.  (m) 

9  Geo.  4,  ch.  14,  on  limitations 184  n.  (n) 

of  New  Hampshire,  concerning  actions  between  copartners       .     285 
of  Pennsylvania,  April  14,  1838,  concerning  abatement  of  ac- 
tions against  partners 288  n.  (f) 

STATUTE   OF   LIMITATIONS. 

(See  Limitations;  Limitations,  Statute  of;  and  Pay- 
ments BY  A  FllUI.) 

STATUTES, 

of  the  several  States,  in  regard  to  limited  partnership     .       530,  532 

STIPULATIONS, 

as  to  retrospective  effect  of  contract  of  partnership    ....       13 
between  partners,  how  far  they  alRct  third  parties      ....       93 
(See  Partner.) 


684  INDEX. 

STIPUL  ATIOXS  —  continued. 

notice  of,  to  one  member  of  the  firm 95  n.  (&) 

between  partners  exempting  some  of  the  firm  from  liability  of, 

no  effect  as  to  creditors 102 

between  partners,  violations  by  one,  effect  of 103 

STOCK.     (See  Partnership  Property.) 

STOCKHOLDER, 

of  a  joint-stock  company  by  a  transfer,  may  give  good  title  in  the 

property  to  his  transferee 546 

(See  Joint-stock  Company.) 

STRANGER.     (See  Dilectus  Personarum,  and  Partners.) 

STYLE   OF  FIRM.     (See  Name  of  Firm.) 

SUBMISSION.     (See  Arbitration.) 

SUB-PARTNERSHIP, 

duration  and  effect  of 383 

SURCHARGE, 

■what  it  is 517 

SURETY, 

no  partner  may  become  surety  for  a  debt,  and  thereby  bind  the 

firm 216 

SURVIVING  PARTNERS, 

powers  and  interests  of 440 

at  the  death   of  a  partner,  have  an  exclusive  right  of  posses- 
sion and  management  of  the  firm  propert}  and  business  for 

closing  tlie  same ...     440 

if  the  authority  of,  for  winding  up  the  concern,  be  unduly  exer- 
cised, the  remedy  is  by  applying  to  a  court  of  equity  for 

the  appointment  of  a  receiver 440  n.  (/) 

where  the  articles  provide  what  shall  be  done  if  a  partner  dies,     440 

where  a  partner  absconds 440 

are  tenants  in  common  of  the  partnership  property  ....  440 
have  a  right  to  collect  all  debts  due  to  the  firm,  and  to  sell  the 

property  of  the  firm 441 

•where  the  deceased  partner,  by  his  will,  provides  for  the  continu- 
ance of  his  interest  in  the  partnership 441 

the  tenancy  in  common  of,  exists  only  as  to  the  property,  and 

not  as  to  the  possession 441 

rights  of,  to  possession  of  the  partnership  property  ....  441 
have  a  lien  on  the  real  estate  of  the  firm  for  indemnity  against 

firm  debts 441  n.  (o) 

are  from  the  death  of  a  partner,  trustees  for  all  concerned  in  the 

partnership 441 

may  not  sell  to  nor  buy  the  property  of  the  firm  themselves  .  442 
power  of,  to  arrange  and  settle  all  the  debts  of  the  firm  .  .  .  442 
equity  will  interfere,  in  cases  of  negligence  or  gross  mistake  by,     442 


INDEX.  685 

SURVIVING  PARTNERS  — co»<tn«e(Z. 

may  only  claim  their  sliares  of  the  firm  property,  after  the  cred- 
itors have  all  been  satisfied 443 

are  not  bound  to  continue  the  business 443 

equity  will  restrain  the,  from  continuing   business  under   the 

credit,  and  risking  the  effects  of  the  old  firm 443 

•where  the  surviving  partners  continue  business  under  the  credit 
and  risk  the  effects  of  the  old  firm,  they  will  be  bound  to 
account  for  the  profit  as  belonging  to  the  firm      ....     443 

if  they  incur  a  loss,  they  are  charged  with  interest  on  the  funds 

they  use 443 

but  if  they  make  a  profit,  which  is  credited  to  the  firm,  they  may 

be  allowed  some  compensation  for  their  services  ....     443 

do  not  bear  more  than  their  share  of  the  losses  resulting  after 
the  death  of  the  deceased  from  transactions  entered  into 
before 443 

may  be  allowed  for  their  time  and  expenses  under  certain  cir- 
cumstances       443 

may  retain  the  good-will  of  the  firm,  without  payment  on  their 

part 444 

Lave  no  right  to  take  the  effects  of  the  firm  at  a  valuation    .     .     445 

creditors  of  the  firm  can  bring  their  actions  only  against      .     .     447 

actions  to  collect  a  partnership  debt  must  be  brought  in  the 

name  of  the 447 

holding  claims  against  the  deceased  partner  are  treated  like 

other  partners 450 

when  the  deceased  has  made  the  surviving  partner  his  executor,    450 
{See  Equity.) 

T. 

TENANT  IN   COMMON, 

liability  of,  to  his  co-tenant  for  the  destruction  of  the  common 

property 323 

land  conveyed  to  partners  as 374 

may  have  all  the  incidents  of  joint-tenants  by  agreement  of  the 

parties 548 

may  bring  trover  against  his  co-tenant  for  an  actual  destruction 

of  the  chattel 556 

TERM  OF  PARTNERSHIP.     (See  Articles  of  Dissolution.) 

TORTS, 

in  order  to  render  partners  liable  for  the  torts  of  each  other,  they 

must  have  been  committed  in  the  partnership  business,  150  n.  (cf) 
where  money,  procured  by  fraud,  becomes  partnership  stock,  the 

firm  not  liable,  without  their  consent  to  the  fraud      .     .     .     152 

remedies  of  partners  against  third  persons  for 337 

instances  of,  in  which  all  the  partners  must  join 338 

against  only  a  part  of  the  members  of  a  firm 338 


686  INDEX. 

TORTS  — cnntinned. 

no  contribution  for  payment  of  juflgment  founded  on  .     .     287  n.  (s) 
demand  of  the  firm  grounded  on  the  tort  of  a  member  thereof  .     263 
(See  Part-owners  of  Ships,  akd  Partners.) 

TORTS   BETWEEN  PARTNERS 321 

where  the  torts  are  personal 322 

trover  will  not  lie  by  one  partner  against  his  copartner    .     .     .     324 

TRADE   NAME, 

of  the  use  and  right  of 265 

false  or  injurious  use  of 265 

TRANSFEREE, 

of  interest  of  one  partner  does  not  become  a  partner,  without  the 

consent  of  the  other  partners 109 

may  require  an  account  and  settlement 169 

TRANSFER  OF  INTEREST  IN  PARTNERSHIP  PROPERTY. 
(See  Assignment.) 

TRANSFER   OF   SHARES   OF  JOINT-STOCK   COMPANIES, 

where  a  statute  prescribes  certain  forms  for,  they  must  be  com- 
plied with 546  n.  (n) 

when  transferee  would  not  be  a  partner,  nor  have  any  claim 

against  the  company  to  become  such 546 

a  transferee  may  require  an  account  and  settlement  so  far  as  to 

ascertain  his  rights  and  the  value  of  his  share 546 

transferee  has  no  right  to  any  particular  thing  in  special,  nor  a 

division  of  the  effects 546 

when  the  company  might  refuse  to  accept  transferee,  as  a  part- 
ner, although  the  stockholders  transferred  his  share  agree- 
ably to  the  rules  of  the  company 546 

transferee  not  bound  to  become  a  partner,  although  the  company 

were  willing  to  receive  him 547 

TRANSFER  OF   SHIPS, 

by  way  of  mortgage  or  pledge,  must  be  registered 550 

in  England,  must  be  registered 549 

TRANSFERRING  PROPERTY, 

right  of,  extends  to  choses  in  action 163  n.  (^) 

one  partner  may  bind  his  firm  by  assenting  to  the  transfer  of  a 

debt  due  on  account 163  n.  (^) 

right  of,  not  affected  by  a  secret  act  of  bankruptcy  previously 

committed  by  another  partner 103  n.  ((/) 

nor  by  the  fact  that  the  proceeds  of  transfer  have  not  come  to 

use  of  the  firm 163  n.  (g) 

no  difference  as  to  right  of,  between  partnership  for  general  pur- 
poses and  one  for  special  purposes 163  n.  (g) 

right  of,  does  not  extend  to  real  estate  of  the  firm  .     .     .    163  n.  (g) 

where  done  in  fraud  of  other  partners,  still  valid  as  to  innocent 

transferee 164 


INDEX.  687 

TRANSFERRING    PROPERTY  —  continued. 

qualifications  of  a  partner's  right  to  transfer  his  interest  in  the 

property  of  the  partnership 169 

where  one  partner  transfers  his  interest  in  a  chose  in  action  to 

his  copartner 329 

TROVER.     {See  Part-owners  of  Ships.) 

TRUST, 

where  implied  as  to  holder  of  legal  title  to  real  estate,  in  favor 

of  a  partnership 365  n.  (^■) 

TRUSTEE, 

a  plaintiff  cannot  summon  himself  as 288  n.  (f) 

a  receiver  appointed  in  a  partnership  suit  becomes  a  trustee  for 

the  firm  creditors 820  n.  (g) 

where  a  partner  is,  and  uses  the  trust  money,  with  the  consent 

of  the  firm,  in  the  business 426 

when  adjudged  a  partner 145 

when  charged,  as  partner  with  cestui  que  trust 145 

when  he  lends  money  to  his  firm,  and  takes  their  note  running  to 

the  cestui  que  trust,  effect  of 146  n.  (q) 

where  one  trustee  forged  the  names  of  his  co-trustees  to  a  power 

authorizing  his  copartners  to  sell,  firm  liable 153 

where  one  of  a  firm,  a  trustee,  with  the  knowledge  of  the  other 
partners,  applies  the  trust  fund  to  the  use  of  the  partner- 
ship, firm  liable 154 

if  trust  money  be  put  into  trade  without  authority,  the  cestui  que 

trust  may  either  take  a  share  ol  the  profits  or  the  interest,  155  n.(z) 

how  far  partners  are 231 

surviving  partners  are,  for  all  parties  in  any  way  interested  in 

the  partnership 441 

surviving  partners  as,  cannot  sell  to,  nor  buy  property  of,  the 

firm  themselves 442 

(See  Executors.) 


UNIVERSAL  PARTNERSHIP, 

strictly,  can  be  none 227 

USURY, 

when  principal  is  at  1  azard,  there  can  Ve  no  usury       .     .     141  n.  (e) , 
borrower  may  plead  usury  against  the  lender     ....     142  n.  (/) 
when  lender  cannot  plead  usury  against  a  third  party  seeking  to 

charge  him  as  a  partner 142  n.  (/) 

where  the  contract  is  that  the  lender  shall  have  legal  interest, 

and  also  a  share  in  the  profits 142 


688  INDEX. 


V. 


VALUATION, 

taking  share  at 445 

(See  Bankruptcy  and  Surviving  Partner.) 


w. 

WAGES.     (See  Partners.) 

WAIVER, 

courts  of  equity  sometimes  imply  from  the  facts 238 

of  provisions  in  the  articles 238 

WAR, 

effect  of 27 

(See  Dissolution  and  Alien.) 

WARRANTY, 

by  a  partner,  effect  of 217 

WIDOW.     (5ee  Real  Estate.) 

WINDING   UP 

the  affairs  of  the  partnership 388 

WITNESS.     (See  Evidence.) 

WRITING, 

not  necessary  to  constitute  a  partnership      ...  ...         7 

(See  Partnership  and  Articles.) 


Cambridge :  Press  of  John  Wilson  &  Son. 


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